Compare mortgage and home equity rates from multiple lenders for free
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Building a new house can be a daunting experience, but the end result makes it all worth it. It’s more than understandable that combining all the features and fittings you want into the perfect home — and doing it all on a budget — can be far from easy.
At the end of the day, if you’re building your own home or an investment property, the key factor that comes into play when making decisions is cost. You want your new home to be as affordable as possible and you don’t want to get ripped off by any dishonest builders or tradespeople who think they can get away with overcharging.
So exactly how much does it cost to build a house?
The average figure quoted for the cost of constructing a house is usually around $125 to $150 per square foot.
However, there are range of factors that affect how much it costs to build a house such as:
On top of all that, there are the specifics of your home. What materials are you going to use? Do you want to add a deck, porch or pool? Is there a specific layout you have envisioned? These types of personalizations make it impossible to quote a one-size-fits-all figure.
There is a huge range of factors that affect building costs.
The contractor you choose to complete your construction project is the next factor that can have an impact on the overall price. Builders can vary not only in the type of work they specialize in (for example, custom-built homes versus production homes), but also in how much they charge for their work. It’s essential to obtain quotes from several home builders to get an accurate idea of construction costs, as well as which contractor offers the best value for money.
Here are some important questions you should ask any prospective builder before enlisting their services:
Check that any contractor you consider is properly licensed and insured.
You’ve got two different routes you can take to get a ballpark figure of what you’ll spend to build your new home.
There are a number of building cost calculators available online to help you work out your costs. While these calculators are useful to get a very rough idea of how much money to set aside for your new-home budget, they’re a long way removed from an accurate quote.
So before you use them, make sure you’re aware of any assumptions each calculator makes, and take whatever per-square-foot result you are given with a grain of salt.
For a much clearer idea of how much it will cost to build your house, you’ll need to have detailed design and construction plans drawn up and get quotes from several builders. These will take into account all the specifics of your project, from any site requirements to the size, layout and features of the build.
Just make sure you know exactly what is included in the quote from your builder and what may cost extra. For example, site costs, carpets, driveways, landscaping and fencing are often not included in quotes but can add thousands of dollars to the overall cost.
If you need to borrow money to build your home, you’ll need to apply for a construction loan. These loans can be set up to allow you to purchase a vacant block of land first and then build on that land within a set timeframe or to fund the construction of your home if you already own the land.
Unlike a regular mortgage, where the lender gives you access to a big lump sum when you take out the loan, a construction loan is set up a little differently. The lender calculates the total amount you’ll need to borrow to pay your builder and then allows you to access portions of this amount at specified times so you can pay your builder throughout the construction process. These loan withdrawals are known as progress draws and are a predetermined percentage of the total mortgage amount.
The lender will typically set a timeframe for the construction of your house and typically only require you to make interest payments while your home is being built. Once construction is complete and the builder has been paid, you’ll start making full principal and interest repayments.
Before you can qualify for a construction loan, you’ll need to have full plans drawn up and the project professionally priced by your contractor. Some lenders may impose a slightly higher interest rate during the building process, so it’s important to compare construction loans and interest rates to find the right loan for your requirements.
Although it’s not always the case, production home builders are usually nationally owned companies that have completely systemized their construction process. The main feature that typically attract people to use a volume builder is their extensive range of floor plans that are already priced out and cater to budgets ranging from standard to luxury.
However, when you choose a production home, every aspect of the build is typically finalized before construction starts — every single detail is set. If you’re someone who likes to improvise and change things as you go, you might be happier with a custom built home.
Custom builders are usually hands-on local contractors who pride themselves on the personal quality and uniqueness that they can bring to your home building experience. Custom homes suit people who like the idea of having some level of involvement in the home-building process — though that is completely optional.
With a custom builder, you have the freedom and flexibility to improvise and make adjustments along the way. Although many custom builders may have a range of plans available to inspire you, they generally have no problem working alongside an architect to create plans for your home.
If you’re looking for a low-cost option when building a house, you might want to consider a kit home. These homes are designed and built off-site, and then the materials are delivered by truck to your property for assembly.
Kit homes can be cost-effective, allowing DIY contractors to do much of the work themselves, and come in a wide range of designs.
However, there are several factors that can affect the cost of a kit home.
Before you purchase a kit home, make sure you get an itemised list of what is included in the price. Will you just get the bare essentials, or does the price cover everything you need to move into your home? Will other jobs like site levelling or soil testing cost extra? The last thing you want is a raft of unexpected costs that cause a budget blowout, so make sure you know exactly what you’re getting yourself into before handing over any money.
Below are some rough guides to how much it costs to buy a kit home and get a licensed builder to construct it for you.
|Two-bedroom kit home||Three-bedroom kit home||Four-bedroom kit home|
($25,000–$60,000 for kit and floor +
$30,000–$60,000 for labor and construction)
($55,000–$85,000 for kit and floor +
$65,000–$95,000 for labor and construction)
($65,000–$100,000 for kit and floor +
$85,000–$120,000 for labor and construction)
For some people with a level and easily accessible site, and who have the necessary skills and qualifications to do much of the work themselves, a kit home can be an affordable option. However, others will be able to find contractors that can build a home for around the same price as a kit home, so it’s important to shop around to compare costs.
The key to deciding whether a kit home is the most affordable option for you is to make sure you’re fully aware of what is included in the package and what you will have to pay extra for. You may need to pay for soil testing, laying slabs and any finishes you add yourself.
From the features you want in your home to your bank balance, there are a myriad of factors you need to consider before you start building a home. Make sure to research all your options thoroughly and obtain an accurate idea of the total cost involved before construction begins. This will ensure that your new home is ready on time and, most importantly, on budget.
From hunting dust mites to sweeping ceilings and much more, a deep clean is a targeted cleaning operation. Find out if you really need it.
Got a mold problem? Here’s what to know before you hire a professional including where to find one, costs and frequently asked questions.
Learn what services commercial cleaning companies offer and see average cost per square foot + where to find reliable commercial cleaners.
Each year, Thanksgiving Day sees twice as many house fires as usual — mostly caused by this one source. Find out how to protect yourself.
Looking for a professional carpet cleaning service to remove stains and revive your carpet? Read our guide and learn how to find a reliable service.
Most working Americans pay around $1,489 in premiums each year. Compare costs now.
Peapod is a delivery service that shops, packs and delivers your groceries to your home or business. See a step-by-step guide, customer reviews and what to watch out for.
As a freelancer you may have unpredictable cashflow, but you can still find income protection with term life insurance.
Learn when your home insurance policy would and wouldn’t pay to remove this building material.
Discover insurance costs for your cat’s specific breed, based on the 40 breeds we analyzed.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.