Start Budgeting Early

Plan for expenses early enough so that you can make any necessary changes before the completion of your home. Budgeting early allows you leeway in case a task ends up costing more than you originally planned. This gives you the time to obtain additional income to put toward the task or extra time to find an alternative.

Homeowning Expenses Beyond the Mortgage

Getting preapproved for a home loan is an essential first step in the homebuying process, but it is only one consideration. A mortgage isn’t the only recurring expense: homeownership comes with many other ongoing costs, which buyers need to anticipate. These include homeowners’ insurance, utilities, repairs, and maintenance costs. Maintenance alone can add up: The lawn needs to be cut, the snow must be shoveled, and the leaves raked. Buyers also need to consider property taxes.

These expenses can add significantly to your monthly outlays, making a home that seemed affordable on paper pricey in reality. So you should include all of these costs and other regular expenses when determining how much home you can afford. A $1,500-per-month mortgage payment may be palatable, but add $1,500 in monthly expenses, and suddenly your obligations have doubled.

Mortgage lending discrimination is illegal. If you think you’ve been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).


Post-Build Hardscaping and Landscaping


Once the home is nearing completion, it will be time for the driveway concrete to be laid, and sidewalks to be laid if needed / desired. Consult with your builder about the slope of the driveway, if any. You will want water to be able to run off the driveway, but you don’t want the slope to be so as to make parking a problem in wet or icy conditions.


Your builder may frame and pour your driveway for you, but you will need to hire a landscaper to lay sod, unless you want to do this yourself. Typically landscaping is the very last thing to be accomplished with your house.

Start By Identifying What You Want From Your New Home Build

The first step in building a solid budget for your new home is deciding what kind of home you want.

Determine the basics for your new home build, like: 

  • How many bedrooms and bathrooms you’d like

  • About how many square feet you’d like the house to be

  • Where you’d like to build

  • What features/functions are important to you and your family 

Thinking about how you live in your current home and determining what is and isn’t working in that space can help you to hone in on why you feel the need to build. What do you love about your current home? What drives you crazy? Coming up with a prioritized list of wants and needs is an excellent starting point. From there, most builders can give you a rough ballpark of what it will cost to build.

The Finishing Touches

Once your home is built, you’ll need to move in and start decorating! Was your previous home much smaller? If so, you may have added furniture and fixture expenses to pay for. If you know what additional rooms you’ll need to furnish and decorate, you can begin to plan ahead for any sofas, chairs, mattresses, bed frames, and tables you’ll need to purchase.

Pre-Construction Costs

Off-Site Living Expenses

Dreaming of your new home is an exciting time. While planning your budget, it’s important to consider concurrent costs such as living expenses during the period of construction. Financing your new build means securing affordable housing until you can safely move in.

A new home construction can take anywhere from seven to 24 months to complete. The total timeline depends on the availability of materials and builders in your area as well as the accessibility of the site.

Plot of Land Costs

Purchasing the plot of land that you’ll build on is the first expense you’ll encounter. However, land value is not included in our $300,000 average because prices vary widely based on innumerable factors ranging from soil quality to the view from your new front porch. Check plot prices in your desired location.

Water and Sewage Inspection

After you’ve purchased land, you’ll need to inspect the property for water and sewage to ensure that the house can have the proper water supply and waste drainage systems. This is especially important for new builds and waterfront sites. This assessment typically costs about $4,500 but may be cheaper if there are existing lines.

Demolition and Deconstruction

If you’ve purchased a site with an unsalvageable or undesired house, add the cost of demolition to your budget. This can range from $6,000 to $20,000. To save and sell features of the old building, deconstruction can cost $24,000 or more.

House Plans or Architectural Fees

Then, you’ll need to either buy or create house plans. You can purchase pre-designed blueprints online for a minimum fee. If you’d like a truly custom home, budget to pay an architect or draftsperson to design your dream floor plan. Architect fees for residential projects may range from 8 to 12% of the construction cost.

Construction Management Fees

Your architect may recommend a construction management firm to oversee your project. It’s generally a good idea to hire an experienced project manager to help with:

  • Coordinating laborers
  • Organizing material deliveries
  • Managing workmanship quality
  • Completing necessary paperwork

Their fees can range from 5 to 15% of the total construction. Working with an experienced manager you can trust will save everyone involved a lot of time and headaches.

Building Permits and Local Fees

Once you have plans in hand, expect to pay building permits, impact fees and all state or municipal fees before construction can begin.

Be Realistic About the Cost of Each Stage

Be sure your final plan includes a breakdown of each stage of construction and line-item costs within that stage, as close as you can get to the final penny. It may be tempting to do a quick online search of national averages, but remember the cost of labor and materials may be different in your area, and survey data is often published a year after the fact.

Find the most updated data and prices based on your location by evaluating competing bids, asking around about recent nearby builds and talking to designers and tradespeople who understand real-life costs.

4. Save Costs By Becoming A General Contractor

If you have building experience or a large network of skilled labor, you may decide to act as your own contractor and manage the home building process yourself. You may still want to work with an architect or download plans for a home from the internet.

Acting as your own contractor is one way that you can save on costs. If you’re able to do a lot of the work yourself, this can be one of the cheapest ways to build a house.

That said, some of the work should still be done by subcontractors if this is your first time building a house. Correcting your mistakes can be costly and time-consuming, so if you’re not sure of your skills, hiring a professional can save more money in the long run.

Keep the Lines of Communication Open

If you’ve chosen the right architect, general contractor and other professionals, you shouldn’t have any huge issues about the scope and budget. Still, checking in regularly during each phase of building brings problems to light before they become large enough to derail your budget.

A quick update about how the project is going gives you peace of mind and an opportunity to reiterate your priorities and agree on any small adjustments, if necessary. If you do decide to make a change, document it in writing and communicate it precisely to your builder or subcontractor.

“Make sure you have a change order,” Kraetler says. “This is simply a document that says, ‘Our contract calls for X but we’re going to do Y, which will result in a credit or additional charge of Z.’ “

Related Resources

Viewing 1 – 3 of 3

The Pros And Cons Of Buying A House Home Buying – 6-minute read Sidney Richardson – May 02, 2022 The more you know about the benefits and drawbacks of homeownership, the easier it’ll be to make the right decision. Check out our ultimate pros and cons list. Read More

What Is Sweat Equity And How Much Is It Worth? Refinancing – 6-minute read Cathie Ericson – February 26, 2022 Your hard work contributes to the value of your property or your enterprise. That’s the sweat equity you’ve built. Find out how much your sweat equity is worth. Read More

Building A House: A Breakdown Of How Much It Costs Home Buying – 7-minute read Miranda Crace – March 11, 2022 Thinking of building your own home? The average cost to build a house is about $290,000. Check out our total breakdown to see if you can afford a custom home. Read More

9. Unconventional Building Materials

Another option for those looking for something new is simply trying to find ways to utilize unconventional building materials. With the tiny home movement picking up steam there has been an influx of popularity for shipping container homes – houses built using reclaimed storage containers.

The kind of innovation that looked at storage containers and saw durable, home construction materials is the kind of cost-effective creativity you should try and hone in on when building your home. Not only is this recycling of materials extremely sustainable, but it will also clearly save you money on your build.

Your Wants, Needs, No-Ways

As you begin thinking about what your newly-built home will look like, map out what you can’t live without, what you wish it included, and what you definitely don’t want. This will help you prioritize choices when creating your house building budget. Consider some of these questions to get you started:

  • Do you want to build a house in a development or community?
  • Do you need a flat yard or are hills acceptable?
  • How much room do you need around your home?
  • What should your home floor plan look like?
  • What kind of outside living spaces do you want?
  • How big should the garage be?
  • How many bedrooms and bathrooms do you need?
  • Are there any specific materials or features you’d like to incorporate?

When creating your budget, try to focus on the structural necessities (size, stories, etc.) of your home design first. Whatever is left in your budget can be put toward design features and upgrades like a gourmet kitchen with an island or a peaceful sunroom addition.

7. Skip The Expensive Finishes, For Now

If your budget is running low, don’t panic. You can always install flooring or countertops later. Focus on building a strong foundation – finishing touches can always come at a later date.

Cost to Build a House by State

How much it costs to build a house also depends on where you build it. The higher cost of living in some states means you’ll pay more for land, building materials and construction services.

Find expert agents to help you buy your home.

Here’s a look at the average cost to build a 2,000-square-foot home in each state:


Cost to Build a House

























































New Hampshire


New Jersey


New Mexico


New York


North Carolina


North Dakota










Rhode Island


South Carolina


South Dakota














West Virginia






Now, there are many factors that go into the cost to build a house that are out of your control. And if you can’t (or don’t want to) move, the state you live in might be one of them. But don’t worry. We’ll show you one big way you can control some of the costs. So put on your hard hat and read on.


You may have had a piece of property for years, juEveryone has a dream of what they want their home to look like – the number of rooms, the view, the amenities. And they know the setting in which they’d like the home to be placed. The setting is the land on which the home will be built – corner lot in a housing development, close to a lake, with a territorial view, on a slope, etc.  The complexity of the setting, and the climate in the region where the home is being built affects the cost of the build.

You may have had a piece of property for years, just waiting for the time when you’re ready to build it. Or you may have purchased a property with structures already on it which you’ll remove so your builder can start anew…or you are looking for an empty lot to build on.

Each instance will have a different impact on how your home will be designed and built, and, again, its ultimate cost.

What Is the 28% Rule?

The 28% rule is a common "rule of thumb" for how much money you can afford to spend on a monthly mortgage payment. This recommendation is you should not spend more than 28% of your gross monthly salary. This rule isn't always right for every home buyer. For example, theFederal Housing Administration (FHA) recommends consumers can use as much as 31% of their gross income on a mortgage.

Can You Afford the Cost of Building a House?

Remember, these are the national average prices. The actual cost to build your house is up to you. You have the power to make decisions on paper, on purpose before the shovel hits the dirt. You get to decide how to build a house that fits your budget.

If your budget allows you to pay cash to build a house, congratulations! You’re a rock star. If not, don’t give up hope! You can still make that budget, research ways to control costs, and start saving up for your dream house. Or you may decide that you’d rather find an existing home that actually does fit your budget. (They’re out there!)

Whether you decide to build or buy a house, make sure you know how much house you can afford. Don’t build or buy a house with any type of mortgage besides a 15-year fixed-rate conventional mortgage. And your payments need to be no more than 25% of your monthly take-home pay—otherwise, you’d be house poor and risk sacrificing other financial goals!

That 25% limit includes principal, interest, property taxes, homeowners insurance, private mortgage insurance (PMI)—and don’t forget homeowners association (HOA) fees. To feel confident you’re getting a mortgage you can actually pay off fast, talk to our friends at Churchill Mortgage.

Breaking Down Your Home Building Budget: Consider All of the Costs

Now that you have a rough idea of what it’s going to cost (most builders/contractors will provide a range for cost per square foot), It’s time to take that number and begin to build out your budget breakdown in earnest. Here are the key costs to consider when planning for a home building project. 

Cost of the Lot

The lot you purchase is going to be one of the larger costs of your new home build. Take a close look at lots in your ideal area that fit the size of the home you’re planning to build. 

  • How much do those lots cost on average? 

  • What shape are they in? 

  • Have they been excavated and made ready for development? 

  • What kind of infrastructure do they need? Is there access to water, sewer, electricity, cable, etc.?

  • Is there an existing structure on the lot that would need to be torn down? 

All of these observations will help you get a better picture of what’s realistic to spend for your ideal lot, based on what you’ve been pre-approved for.

Cost of any Excavating, Building Tear-Down, or Lot

Cost of any Excavating, Building Tear-Down, or Lot Prep

Working off of that last point, it’s worth mentioning that it pays to purchase a lot that is just about ready for building. Many new homeowners don’t consider the work that goes into making a lot build-ready. 

  • If you purchase a lot that isn’t connected to city services like gas, water, and sewer, you’ll have to foot those utility fees.

  • If your lot hasn’t been excavated or leveled, that’s another cost to consider. 

  • If you plan to tear down the existing structures and start from scratch, that’s an additional cost you’ll need to factor into your home building budget. 

The cost of your land and any effort that goes into preparing that land for building is a big one. Make sure you have allocated plenty of room in your budget to accommodate this first big step of the home building process. 

Cost of Home Designs or Floor Plans

Cost of Home Designs or Floor Plans

The cost of design is an important one. No matter who you work with — a design-build firm, a dedicated architect, or a builder who offers a few set floorplans — there is cost associated with the design of the home and creating construction drawings. This cost will vary depending on who you work with and what you’re looking for — for example, the more specific-to-you or custom the floorplan, the more expensive the design fee is likely to be. In addition, most designers and architects work on an hourly basis so changing your mind during the design process will add to the design cost.

Remember that when it comes to design, you get what you pay for. If you want a truly seamless design that’s made to suit your lot, your wants and needs, and your unique design tastes, it’s worth it to pay a little extra for a design-build firm or architect who can deliver a top-notch customized plan and ready-to-build construction drawings. 

Cost of the Home Build

Cost of the Home Build

We’ve finally come to the cost of the build. This part of the budget is associated with any task starting from the foundation all the way to installing windows and putting the roof on. Any work that goes into creating the structure that is your new home is part of the cost of the build, up until you get into finishing the interior. This is a hefty chunk of your home build’s cost, so make sure you’re allowing plenty of room in the budget for this portion of the project. 

If sustainability and green features are important to you, it’s important to note these often require higher up front investments. The good news is that these features will pay off in the long run with lower operating costs and a healthier and more comfortable home for you.

Cost of Finishes, Selections and Appliances

Another big-ticket component of your home build budget is the cost of finishes, selections and appliances both inside and out. From the cabinets you want in the kitchen to the bathtub you’d like in the master bath to the color of your exterior siding, finishes and selections are all of the components that make your new house feel like a completed home. 

It’s important to set a budget for and make decisions on your selections sooner, rather than later. Many finishes and selections can take weeks or even months to ship, so builders prefer that you’ve made choices on selections before they’ve even started building. Any time you change your mind on a finish, your builder will have to make a “change order” which will not only hold up the building process but will also add to the overall cost of your project. 

To set a solid budget for your home build project, it’s important to consider what kinds of finishes you’d like and make your decisions early. The sooner you decide, the less you’ll spend and the faster your home build project will go. 

It's also important to remember that the furnishin

It’s also important to remember that the furnishings, i.e., furniture, window treatments, rugs, etc., are not included in the cost of the home build. 

Cost of Landscaping

Most builders and contractors provide minimal landscaping in their contracts. Usually, grass seed or sod can be included, but for any type of foundation plantings or specialized landscaping — you’ll have to work with a landscaping company to come up with a design for your lot. This is an additional cost to consider in your custom home financial planning.

More Articles

More Articles

10-Year Financial Goal Planning

How Much Does It Cost to Carpet One Room?

Cheap Ideas for Porch Railings for Log Homes


Leave a Reply

Your email address will not be published.