Start with your municipality and see what requirements they have for minimum square footage, plan review, and inspections. If your property is in a county with “unrestricted” land, you could build a cabin in the same fashion as an accessory (storage) building.
Given the target size (500 SF) you’re really creating a residence. Where recreational units and accessory buildings have a great latitude of use, something built for Residential purposes may still have requirements despite the “unrestricted” use class.
The garage apartment (barndominium) approach offers lots of options, especially as your property already had a residence on it (old mobile home) and was therefore issued an official mailing address.
Given that you’re budget conscious, I would carefully consider the long-term advantage of going the official Residential route or staying clearly on the accessory building track where you may have more allowance (at least more limited disallowance).
Just a few thoughts to save surprises and introduce some considerations.
Happy to discuss.

Live Large — Go Tiny!
Thom Stanton

