If you built your own house, how much money did you save by doing so?

Average New House Cost Per Square Foot

The average American family of three to four people can fit comfortably in a house of roughly 2,000 square feet. Builder-grade new house construction costs around $150 per square foot, while luxury or custom homes can cost as much or as little as financing allows.

Type of Cost Amount

Average Cost

$150

Highest Cost

$500

Lowest Cost

$100

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How Much Can I Save Building My Own House?

So we know you can save money by managing the process as the general contractor and by doing some of the physical labor yourself.  But let’s take a closer look at how these savings add up.  Assuming you take on the general contractor role, you can reasonably expect to save twenty percent if you do the job right.  Now let’s say you do some of the physical labor (i.e. cleaning, painting, trim carpentry,…etc.) and you save another five percent.  If your new home costs $250k to build, your savings will be $62,500.  That may not sound like a lot, but you also need to consider the tax consequences.

6. Get a Credit Card with 0% APR

Building your dream home may not be cheap, but you’ll save oodles of money if you take advantage of a credit card with 0% APR. These cards offer 0% APR – as in zero interest – for anywhere from 12 -21 months, which means you can charge some of your home-related expenses without paying interest for a year or longer. No matter how you cut it, that’s a pretty sweet deal!

Here is the top 0% offer to help you save money while you build your dream home:

Discover it® card – Another 0% APR card you should seriously consider is the Discover it® card. With this card, you’ll get 0% APR for a full 18 months. Meanwhile, you’ll earn 1 point per dollar spent on all of your purchases, plus 5X points in categories that rotate every quarter. Once you start racking up the points, you can turn them in for statement credits that can help you save even more money on your new dream home. This is honestly one of the BEST DEALS for anyone building a new home. With 18 months at 0% APR and rewards, this card is an absolute no-brainer. Read here to learn more about the Discover it® card

Insist on Standard Sizes

Whether you’ve opted for off-the-rack blueprints or splurged on a custom plan, make sure the windows and doors are all standard sizes. Oddly-sized or shaped windows and doors require customization that can drive up the overall cost of purchase and installation. You can also shop around for remnants at construction supply stores that often have standard windows and doors priced to sell.

How To Afford Building Your Own Home

As you’ve now seen, none of this will come cheap. While hopeful home buyers can apply for a mortgage loan to finance the purchase of an existing home, hopeful home builders don’t have that same option, as you typically can’t use a traditional mortgage to fund the building of a home.

If you don’t have the cash to fund this project, what you’ll need is a home construction loan. These are short-term loans that are used to fund the building of a new home. You can get a home construction loan that converts to a traditional mortgage loan once the construction has been completed.

You can also get a construction-only loan that covers the costs of construction and then, once the project is completed, apply for a traditional mortgage to pay off the construction loan.

While Rocket Mortgage® doesn’t offer construction loans, you can use our services to get a loan for a newly built house.

12. Have a Heart to Heart With Your Builder

Communication with your builder needs to be stronger than the communication in your marriage.  Seriously.  If you don’t tell them what you want, how are they going to know? Be specific, and make sure you are all on the same page.  Trust me — it will save you many headaches and arguments in the end.

Building a house based on your budget

Remember, the actual cost of building a home will be based on several factors, including where you live and whether you’re hiring a production builder or customized builder. You’ll also save money if you build the home yourself rather than hire someone, but you’ll need a license and a special type of construction loan.

Can you build a house for $100,000?

You may be able to afford to build a home for $100,000 if your house is 1,000 square feet or smaller. You should be able to fit two bedrooms and one bathroom in a 1,000-square-foot home.

Can you build a house for $200,000?

It’s possible to build a home that’s 2,000-square-feet or smaller for $200,000. You could probably build three or four bedrooms and two bathrooms in this space.

Can you build a house for $300,000?

You might be able to build a 3,000-square-foot home for as little as $300,000, but that’s leaning toward the conservative side. In a 3,000-square-foot house, you can fit four or five bedrooms and three bathrooms.

A Breakdown Of The Average Cost To Build A Home

Let’s take a look at the different steps that make up the home building process and break down how much each step typically costs. Keep in mind these costs can fluctuate with demand for land, materials and labor. For example, costs for building materials have spiked during the COVID-19 pandemic due to high demand, with prices increasing 5% – 10% in 2021 alone.

Buying And Prepping Land ($80,000)

Before you can build a house, you need land to build it on. Not only will you have to purchase a plot of land, but you’ll have to have it cleared. This can include tree removal and having the land leveled.

The cost of purchasing an empty lot will vary depending on a variety of different factors, including the size of the lot and its location. Based on HomeAdvisor’s data, the average cost of purchasing land is $76,500, with undeveloped lots in rural areas available for as little as $3,000. You can also expect to spend between $1,500 – $3,000 on land preparation before breaking ground on construction.

Drawing Up Plans And Getting Permits ($7,200)

Once you’ve got your land, your general contractor and subcontractors will start preparing to build the house. This stage includes having an architect draw up floor plans for the home and purchasing all the necessary permits.

On average, house plans cost around $5,000 but the exact cost will vary depending on how simple or complex your house is going to be and what types of building permits and preliminary inspections you may need. Building permit requirements will differ between locations, but on average cost around $2,200.

Prepping And Building The Foundation ($14,500)

After all the prep work is taken care of, it’s finally time to break ground. A crew will come and begin digging out a space for your home’s foundation.

Then, they’ll pour the concrete according to which type of foundation you’ll have: slab, crawl space or basement. Typically, a concrete slab foundation is the cheapest, followed by the slightly more expensive crawl space and the most expensive basement foundation.

Which foundation you choose will depend on your budget and preferences. Each type has its pros and cons, so be sure to do your research.

Prepping and building your foundation will, on average, cost $14,500.

Framing The Home ($35,000)

Next up is framing. Think of this step as building the skeleton of your home. Floors will be framed and then covered with plywood. Walls will be framed, raised and then sheathed with plywood or oriented strand board. Then, the trusses that will frame the roof are built and placed on top of the wall frames.

All in all, this process will cost between $20,000 – $50,000, depending on size and floor plan, averaging around $35,000.

Installing External Elements ($50,000)

Once the skeleton is built, all the necessary external elements of the walls, roofs and openings will be installed. This means exterior finishes like the siding will be put up on the walls, then windows and doors will be put in, after which the roof will be sheathed – covered in roofing felt and nailed-on shingles. In total, this costs around $50,000.

Installing Plumbing And Electrical ($52,500)

Now it’s time to install all the major systems that make your home hum with water, air and electricity. At this stage, plumbing and HVAC systems will be installed, and an electrician will wire your home and get you connected to the power grid.

No fixtures will be added at this time; this step is about getting all the behind-the-scenes stuff like pipes and ducts set up. Major system installation costs average around $52,500.

Adding Interior Finishes ($112,500)

Next are the interior finishes. This includes adding insulation, drywall, flooring, interior doors and all the basic components that will turn the newly constructed structure into a livable home. Cabinets and countertops will be installed, walls will be painted and appliances will be hooked up.

This can easily be one of the most expensive parts of the home building process, and the exact cost will depend on your personal preferences. On average, interior finishes will cost around $112,500, though they may cost much more if you have expensive taste. Once this step is finished, your home’s construction will be all but complete.

Finalizing Additions ($20,000)

The final step includes any other additions you want made to your property, including any outdoor structures like a deck or patio, a driveway or any landscaping. These projects may be completed in the middle of the home building process, in conjunction with some of the steps listed above. Of course, any additions onto your house will also add to the total cost of the project. For example, adding fencing around your yard will cost between $2,000 – $5,000, and driveway paving averages around $6,600.

Once everything is finished, work areas will be cleaned up and all the necessary inspections completed. This can cost around $20,000.

Other Considerations For Building A House

Keep in mind that all these construction costs are averages, so when you’re coming up with your building budget, you should take care to do your research and get estimates for all the jobs that will need to be done to get your house built.

Construction costs can fluctuate greatly depending on the availability of materials, too. With more accurate quotes, you can figure out how much house you can afford and what the final square footage could reasonably be.

Additionally, once you have your total budget, it’s generally a good idea to give yourself some wiggle room with a bit of extra money in case things end up costing more than you originally anticipated.

Advantages of Building a New Home

Building a new home doesn't offer the same convenience as buying an existing house. Not only do you have to find the land, which may not be in an existing neighborhood, you also have to factor in the time to find an architect or builder, and choose every element of the new structure. 

You can limit the risk that your house will go over budget or take longer than you expected by working with a reputable builder and having a good contract in place.

Joining an existing development may streamline the process, though it may limit your degree of choice. You also need to worry about systems, such as whether the land gives you access to municipal water and sewage, or requires a well and septic system, along with any environmental and other permits.

The big advantage is you are much more likely to get exactly what you want. For many, this factor alone is enough to choose to build over buying. Still, there are other advantages, too, like the ability to create a more efficient home that meets new energy codes and standards for heating, ventilation, and cooling, plus insulation, and air filtration. Better efficiency is good for the environment and can save you money on your utility bills each month.

Budget Cushion

Nothing ever goes completely as planned. You might hate the new bathroom or discover that laying tile is much more expensive than originally planned. Add a cushion to your budget that is equal to 10 percent to 20 percent of the total project cost so you can cover your expenses if you end up going over budget.

Putting your home on the grid

Here’s where things can get expensive. If you buy raw land (see above), you’ll need to add all the utilities yourself. Let’s go utility by utility.

Septic

According to Home Advisor: “The national average cost for septic tank installation is $5,462, with most homeowners spending between $2,738 and $8,186. The cost to install a 1,000-gallon tank, typically used for a three bedroom home, can range anywhere from $1,500 to $4,000, with the tank itself costing anywhere from $600 to $1,000.

That’s not terrible in the grand scheme of things, but it is a cost to consider. If you buy a fixer-upper with outdated bathroom fixtures, you’ll spend a big chunk renovating that as well—so this upfront cost isn’t terrible in comparison.

Heat

If you’re lucky enough to live in an area that doesn’t require a heating system, you’re one of the lucky ones. Although, you’ll still probably consider installing air conditioning—but that’s a little easier.

Installing a brand new furnace will cost you. Chances are, you’ll need to hire a professional to do this—and HVAC workers charge a lot these days (great for them, terrible for home-builders). With everything from a furnace to duct work, it can cost anywhere between a few thousand to $14,000 depending on the size of the home.

Electric

This will cost another few thousand dollars (or more). Again, you’ll likely need to hire a professional. Work with electrical companies closest to the site you want to build. Call around to all the electricians in the area and ask what it will cost for new construction wiring—get an estimate from each.

Building Cost Estimator

Labor and material costs make up the bulk of home building expenses, and these depend heavily on supply and demand in your area. Always compare quotes from local construction professionals.

Type of Expense Amount

Off-site living accommodations (7 months)

$8,600 – 11,900

Water and sewer inspections

$4,500

House plans

$500 – $3,500

Construction project management fees

$3,000 – $52,000

Building permits

$3,000

Impact fee or local charges

$3,000

Excavation

$2,300

Foundation

$9,000

Framing

$33,000

Exterior Siding

$11,500

Roofing

$9,200

Exterior windows and doors

$7,750

HVAC

$11,200

Plumbing

$11,000

Electrical

$10,100

Insulation

$5,250

Drywall

$15,550

Painting

$7,000

Trim and interior doors

$11,000

Flooring

$10,250

Cabinets and countertops

$11,800

Plumbing fixtures

$3,200

Lighting fixtures

$3,100

Appliances

$3,550

Driveway

$4,400

Landscaping

$5,860

Cleanup

$2,600

Contingencies/other

$45,000

Ways to Cut Building Expenses

Regardless of how much of the building process you decide to take on, there are some other choices you can make that will help you curb expenses as you try to find the cheapest way to build a house. 

Build a Box

A simple square or rectangular home will be the cheapest to build. By not having any elaborate angles or bump-outs, everything from the slab to the walls to the roofs will be faster to build and therefore less expensive. Afterward, you can use landscaping and exterior elements to add visual interest. 

Build Up Instead of Out

When you’re trying to figure out the cheapest way to build a house, consider building a taller house instead of one that’s simply larger. By increasing space through a second (or third) floor, you’ll reduce expenses on two costly items: foundation and roofing. So you’ll gain the same square footage but at a lower price. 

Reconsider Materials

Reconsider Materials

Some materials are naturally more expensive than others. If you’re looking for the cheapest way to build a house, you should compare prices for the materials you use. Brick walls, for example, will be more expensive, as will tile roofing and hardwood floors. 

If you’re building your dream home, you’ll have to figure out the right balance of budget vs. value. 

Skip the Customization

The more you customize, the higher your expenses will go. This is especially true in the bathroom and kitchen. With an average price between $500 and $1,200 per linear foot, custom-built cabinets can really bump up your costs. In contrast, stock cabinets from your local home improvement store will cost on average somewhere between $60 and $200. 

Stick to a Simple Roof

The slope of your roof can also impact your costs. The steeper the slope, the longer it will take to frame and shingle, driving up costs. For a 1,500 square foot home, a nearly flat roof with a low slope will cost an average between $6,000 and $15,000. A gable roof will cost between $12,000 and $18,000. 

And those prices are for standard roofs. If you upgrade the shingles or choose different materials, such as a tile roof, your costs will be even higher. For that same size roof, asphalt shingles can raise the price to $25,000.

Leave the Final Touches for Yourself

Even if you hired a general contractor, ask them to leave certain final touches out of the bid and take care of them yourself once the main building job is complete. This includes interior painting, staining wood trim and landscaping.

“Just keep in mind that every project requires a certain amount of preparation and a sliding scale of time to accomplish,” says Kraeutler. “Neither of which is obvious in the many popular home improvement TV shows that edit days, weeks and months of hard work down to a few minutes of home improvement bliss.”

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