How Much Does It Cost to Build a House?

Building a home can be a dream come true, but it’s a dream that comes with a large price tag. It’s crucial to be prepared for the expense with a detailed budget so that your new home can be an exciting adventure rather than a series of unexpected financial stresses.

The exact cost of your home will depend on the specifics you select, as well as your location and the current market. But you can get an idea of what to expect by understanding the various expenses that will be included and the average costs for each line item.

Costs to Get Started

First, you have to have land on which to build a home. Unless you already own land where you plan to build, you’ll need to start by purchasing land. The average cost of a buildable lot is $49,500, according to the National Association of Home Builders (NAHB).

Most lots will require clearing and other excavation work. The NAHB estimates finished lot costs at about $91,000. Other necessary site work will include building permit fees, water and sewer fees, and engineering fees, totaling an average of about $15,000.

Before you can start building on your lot, you’ll have to purchase house plans. It’s important to select a house plan that will work well on your specific lot. A builder or home designer can help you determine the size and style that will work best. You can purchase a set of pre-designed plans online for about $500, or you can work with your own home designer or architect and pay about $2,000 or more, according to figures from Home Advisor.

If you’re building a home in a planned development with a designated builder, the costs for land, site work and possibly house plans may be rolled into the final price of your home.

A Strong Foundation

Every new home begins with a foundation. Your home will either be built on a concrete slab, a basement or a crawl space. The foundation you choose will depend on the layout of your lot and your personal preference, as well as costs. For instance, a sloping lot may work better with a basement or crawl space than a slab. However, basements cost significantly more because of the extra labor to dig the basement out and the concrete required for basement walls.

Foundation costs include excavating, concrete, retaining walls and backfill. If you’re planning an average size house on a concrete slab, these costs may average about $25,000, according to NAHB.

Frame Your Future

Your framing package will be one of the largest expenses in building your home. The framing package includes all the lumber to frame all the walls of the home, including the roof, which may require wooden trusses.

It takes a lot of lumber to build the frame and roof of a home. You can expect to pay an average of $41,000 for labor and materials for framing your home and roof, according to NAHB.

The Perfect Finishes

After the frame is built, your home will need a variety of finishes to turn the frame into a series of walls and start looking more like a house that will keep you out of the weather. In selecting your finishes, you’ll have lots of options to choose from at a variety of price points. But it will be helpful to have a spending limit in mind before you start making choices to help you stay within budget.

Your home’s exterior finishes include bricks, siding, windows, doors, and shingles. Together, all exterior finishes cost an average of $33,000.

On the inside of your home, all the finishes include insulation, drywall, paint, cabinets, appliances, plumbing fixtures, lighting, flooring, countertops, and fireplace. In an average house, interior finishes cost about $68,000.

All Systems Go

Your house wouldn’t quite be a modern home without electrical, HVAC, and plumbing systems. These are the major systems required in all new homes, but you may also choose to install other systems such as a central vacuum system or smart home technology system.

In an average home, it costs about $32,000 to install the three major systems—electrical, HVAC and plumbing, according to NAHB. The exact price you’ll pay will depend on the size of your home and the local market rates. For instance, a larger home may require two or even three HVAC units, while an average home may just need one unit.

The Final Touches

After your home’s structure is completely built, you’ll probably still need to add landscaping, a driveway, and maybe a porch or deck. The NAHB says these final touches usually cost about $16,000.

Financing Your Home

Once you’ve determined how much your new home will cost, you need to figure out how to pay for it. Most people don’t have funds available to pay for their new homes in cash, so they need to work with a mortgage lender.

If you’re paying the bills for the construction of your home along the way, you may need to start with a construction loan. This type of loan is similar to a line a credit, in that your lender agrees to provide you with access to a certain amount of money based on your house plans and your qualifications to borrow. As the house is built, you can draw money from the construction loan to pay the bills for the foundation, electrical, and so on. Throughout the construction phase, you may only need to pay interest on the amount you’ve withdrawn so far. When the home is complete, you can usually roll the construction loan into a regular mortgage loan and begin paying it off.

If you’re purchasing a new construction home in a planned development, you may be able to skip the construction loan. Many builders in this situation will allow you to select a house plan and finishes after signing a contract to purchase the home, but will not require you to pay until the construction is complete. At that point, you can simply purchase the finished house with a regular mortgage loan.

Regardless of when you start paying for your home, it’s crucial to have a detailed understanding of how much a new build will cost so you can budget appropriately. When you’re prepared for the expense of a new home, you’ll be able to enjoy your new digs much more.