Here’s How Much Money You Need to Build Your Dream Home

If you’re thinking about buying a house, there’s no doubt that building one instead has crossed your mind. That way you can get all your musts — location, layout, floor plan — just the way you like it.

Plus, with the average sales price of a single-family home nearing $300,000, according to data from the National Association of Realtors, it might seem cheaper to do it yourself and get exactly what you want in the process.

Thinking of building a house?

Find a top agent near you who can help.

According to HomeAdvisor, it can cost anywhere from $150,000 to $450,000 to build your own home. This cost will vary depending on region, square footage, and materials used to build. There’s also a cost difference between a custom home and a production build, where developers have planned subdivisions with various lots and floor plans to choose from.

Whether you choose a custom build or a developed lot, a top-ranked agent can help you pick the right custom home builder, find the right lot, or draft up contracts with a developer, according to Beth Steinke, a real estate agent who ranks in the top 1% of Dallas/Fort Worth Metroplex agents.

“Get everything in writing,” she says.

“Whether it’s a custom home or production build, you just want to get everything in writing. This is where the expertise of a Realtor can be so valuable.”

Cost varies by region

Region is one of the biggest cost factors in building your own home. According to the ”U.S. Census Bureau Survey of the Median Price per Square Foot” of new single-family homes in 2017, the average cost was $161.53 in the Northeast, $139.48 in the West region, $100.01 in the South, and $106.79 in the Midwest. It will cost you the most to build in the Northeast.

Steinke also says that there are build restrictions that vary by city, county, and state. Check the land rules and regulations before embarking on construction, which an agent can also help you do.

“Having a Realtor who knows the local area mitigates your risk,” Steinke says.

If you’re trying to save money by building in a rural area in particular, you’ll also need to consider the costs of installing a septic system or sewer hookup, propane for heating, and how much concrete you’ll need to reach the road.

Systems that are considered more luxury or high-end, including plumbing, electrical, and HVAC, can cost around $34,000. The HVAC alone can cost anywhere from $3,250 to $12,586 for a 2,000-square-foot home, while plumbing and electrical work will cost around $10,000 each, depending on the size of the home and number of bathrooms.

Chiseling out your own lot to build your dream home.
Source: (Szabo Viktor/Unsplash)

Designing a dream home vs. a developed one

It can be enticing to build a custom home on your ideal lot and with a personalized floor plan, but it’s cheaper to go with a developed lot, where you can still have that unlived-in charm. In fact, it can save you up to 15%, according to HomeAdvisor.

To design your floor plan, hiring an architect will cost about $1.50 per square foot to more than $2.50 per square foot, or around $5,000. However, you can save a bit by working with a drafter instead, which will cost around $1,800.

The materials and labor of a custom home accounts for around 75% of your final costs, while the cost of the land, financing, finishing out the lot, landscaping, and more will make up the remaining total.

Expensive taste means a more expensive home

Your interior and exterior finishes will also have a huge impact on your budget when constructing your dream home.

Foundation

The cost to pour concrete foundation can be anywhere from $4,500 to $21,000. While a simple slab is on the lower end, if you want to create a basement (to potentially furnish later!), costs increase with more material, reinforcement with rebar, and additional excavation.

“Honestly, one of the most expensive things in a house is the cost of concrete — not the refrigerator, not the counters,” Steinke says.

Finishes and fixtures

Want coveted granite countertops or marble floor tiles? These high-end options will come at a premium cost ($40 to $100 per square foot). Choosing hardwood flooring ($6 to $8 per square foot) will also cost you. Keep these aesthetics in mind when it comes to your budget.

Type of roof

A new roof typically costs $7,311 to install, but these prices go up if you want options beyond the traditional asphalt.

For example, energy-efficient solar panels will cost $10,000 to $15,000, depending on where you live.

Appliances

Most major appliances can cost anywhere from $50 to several thousand dollars when you go high-end. Plus, you need to include wiring and plumbing expenses as part of your budget before building.

The kitchen you build in your custom dream home.
Source: (Sidekix Media/Unsplash)

Additional features

A deck or a porch can run you up to $20,000. Want an indoor pool? That’ll cost at least $28,000. Need landscaping help? Sod will cost you another $1,000. These features also have additional upkeep costs that need to be considered.

Square footage impacts cost

According to the 2017 Construction Cost survey by the National Association of Home Builders, the average cost to build a home is $154 per square foot. The average new-construction home size is 2,776 square feet, so the total average cost is $427,893. However, that range (again) can vary depending on region and materials used.

On average, it will cost you:

  • $154,000 to build a 1,000-square-foot home
  • $231,000 to build a 1,500-square-foot home
  • $308,000 to build a 2,000-square-foot home
  • $385,000 to build a 2,500-square-foot home
  • $462,000 to build a 3,000-square-foot home
  • $539,000 to build a 3,500-square-foot home
  • $616,000 to build a 4,000-square-foot home

What you can afford with your budget

There are some unique options out there to build a home with a smaller budget, from a tiny house to a shipping container. With all this in mind, here’s what you can get with your budget:

If your budget is under $50,000

The lowest-cost option is to build a tiny home, which costs $25,000 to $35,000 to have built for you — but you can build one yourself for less.

These dwellings typically sit on trailers, so they are mobile. Tiny houses average between 100 and 400 square feet.

You do need to find or rent the land to place them and meet the building codes of that area, but they are a very affordable option.

However, if you want higher-end materials and luxury appliances or want to further customize, tiny homes can run up to $150,000, as seen in the ones built by Tiny Heirloom and featured on HGTV’s Tiny Luxury.

If your budget is under $100,000

Small houses will range from 600 to 1,000 square feet and cost anywhere from $60,000 to $100,000 to build.

These homes typically consist of two small bedrooms and a living space, or one master bedroom. This cost and what you can get will vary depending on the region where you’re building, as well as the materials and labor costs.

Your small custom dream home.
Source: (Niklas Tidbury/Unsplash)

If your budget is under $150,000

Another affordable option is a pole-barn house — a barn-like structure with no foundation. With shells averaging around $50 per square foot, a 2,400-square-foot pole barn will cost around $120,000 with added insulation and appliances. But the price of your pole barn will largely depend upon its size.

Living in a shipping container may seem like a wild idea, but you can get the shell for one of these abstract homes for around $6,000. With insulation, foundation, and interior furnishings, a large home built from shipping containers can cost around $150,000, which still comes in at half the price of a traditional home. Even better, shipping container houses take about 30% less time to build than a traditional home — so you can move in fast.

If your budget is under $200,000

On average, you can build a modern home of about 1,300 square feet with this budget. This equates to a small two-bedroom home, which typically costs between $93,000 to $155,000 to construct.

Another option is a modular home, which are pre-assembled, and you will get more space while still staying under budget at about $100 per square foot, depending on how large you want your home.

If your budget is under $300,000

You can get about 2,000 square feet of construction with this budget. A three-bedroom home would fit into this budget, as the average cost is between $248,000 and $310,000 to build, or you could bump up the high-end appliances and finishes on a two-bedroom home.

If your budget is under $400,000

For $400,000, you could build a modest four-bedroom home, which typically costs $388,000 on the lower end, or a 2,500-square-foot home.

This is also the price range at which building a three-bedroom in the Northeast or West becomes more feasible, as land and labor is more expensive in these regions.

If your budget is under $500,000

With a budget of half a million dollars, you can more comfortably construct a four-bedroom home of approximately 3,000 square feet. This is also the cost of a more luxurious 1,500-square-foot home — think granite countertops, hardwood floors, and high-end appliances.

If your budget is under $1 million

With this cushy budget, you have a lot to work with. This is where you can construct at least a 4,000-square-foot home or a luxurious 2,500 square-foot-home with aspirational flooring, design, cabinets, and appliances. This will also get you a smaller home built in regions that are more expensive.

Your large custom dream home.
Source: (Alex Ranier/Unsplash)

Is it cheaper to build or buy a home?

At the end of the day, it will be more affordable to purchase a pre-existing home than to construct one. According to data from the National Association of Realtors, the median cost of buying an existing single-family house is $271,300, whereas the average cost to build is $427,893 — almost double the price.

In addition to paying for the construction of the home, you’ll also need to pay for septic or sewer work, and the land — and it can be difficult to secure a land loan. Unless the loan is wrapped into a construction loan, it poses a high risk for the lender, and these loans are often rejected, according to Steinke.

The only way to really save money on a custom-built home, according to Steinke, is to do it yourself — if you’re a general contractor.

“I personally don’t think it’s more affordable to build than buy existing, but for a certain subset of people, designing and building the home of their dreams is attainable,” she says.

Header Image Source: (Tuân Nguyễn Minh/Unsplash)

Find a top agent in your area