Women and man laying on tarp browsing paint colors.

10 Tips For Building A House + Free Budget Checklist

9-Minute Read
Published on March 22, 2022
Share:

Building your own home is exciting, but it can often feel overwhelming. Knowing what to expect can help your build process go more smoothly so you can stay cool, calm and collected.

That’s why we’ve put together these tips for building a house. From deciding how to build all the way through your home loan and final inspection, these tips can help you navigate the construction process.

Here’s what to know before building a house: 

Table Of Contents

    Need tips for building a house on a budget? Don’t forget to snag our free budgeting checklist to help you stay on top of your project finances!

    1. Choose The Right Building Method For You

    When building your home rather than buying, the first thing you need to do is decide which building method is right for you. In general, there are three paths you could take:

    1. Working with a builder
    2. Designing a custom home with a contractor
    3. Building the home yourself

     

    Budgeting tip: DIYing your home build will be the most budget-friendly option if you have the right skill set. If you don’t feel comfortable building yourself, it’s usually more affordable to work with a builder than to design a custom home.

    Pros and cons of home building methods.

    Working With A Builder

    Working with a builder is a one-stop shop. Building companies typically buy parcels of land, hire all necessary labor and offer predesigned layouts to choose from.

    This option is great if you don’t want the hassle of gathering all the necessary paperwork and hiring team members yourself. Builders also usually have model homes, so you can see approximately what your home will look like before investing. The downside is less control over design aspects – sometimes builders have set options to choose from for paint colors, cabinets or other features.

    Budgeting tip: If working with a builder, be aware that the list price of the model home is usually a base price that doesn’t include any upgrades. If you want different flooring, countertops or other upgrades, plan to pay more. 

    Design A Custom Home With A Contractor

    If you want total control over your home build, consider designing a custom home with a contractor. With this route, you’ll need to assemble your own team, purchase land, gather the necessary permits and oversee all other aspects of the project, including choosing your floor plan. While it’s more involved than working with a builder, you’ll have complete creative control.

    Budgeting tip: If you don’t mind losing control over the floor plan, you can save money by buying pre-drawn plans rather than custom designing your layout with an architect. Custom floor plans will typically cost you about 5% – 10% of the cost of the home and take weeks or months to deliver. Pre-drawn plans are quickly delivered and affordable.

    DIY Building With No Contractor

    If you have construction experience, you’ll probably save the most money by investing some sweat equity and building the home yourself. Just be sure you have the appropriate permits and that your build is up to code. If you don’t feel confident in any one aspect of building, you can always hire help where it’s needed – like with plumbing or electrical.

    If saving money is your main goal, you may not have to DIY the build. Check out these other affordable ways to build a home.

    Budgeting tip: If this is your first build, it may be worth hiring professional help to avoid costly mistakes – like an incorrectly laid foundation or a leaky roof

    2. Buy The Right Plot Of Land

    Once you know how you’ll be building your home, it’s time to consider land. If you aren’t working with a builder, you’ll have to find land on your own or with an agent. Because there are several considerations for buying the right land plot, it’s usually a good idea to work with a real estate agent who’s experienced in land purchases.

    When choosing your land, be sure to consider: 

    • Zoning: Is the land zoned for residential? Is it in a historical district that may impact building requirements?
    • Location: Is the land located in a flood zone? Some plots may look perfect when dry but can later become hugely problematic if located in a flood area.
    • Deed restrictions: Sometimes land deeds come with special restrictions – like minimum or maximum square footage for dwellings. Your real estate agent should get you this information.
    • Easements: If you don’t check your land for easements before buying, you may run into surprises. Easements allow people or entities rights to a property even if they don’t own it. That means someone may have the right to cross your property to reach their own, interrupting your privacy.
    • Utility sources: Check with the water and utility companies that would be servicing your land to gauge costs. Remote locations can be expensive to hook up to utilities.

    Limitation checklist for buying land.

    Budgeting tip: Walk through the entirety of the land prior to purchasing to make sure there are no unforeseen costs associated. For example, you may find a structure on the land you didn’t know about. Removing unwanted structures can be costly, but if you know about it beforehand you may be able to negotiate removal costs with the seller.

    Take the first step toward buying a house.

    Get approved to see what you qualify for.

    Start My Approval

    3. Check For Any HOA Restrictions

    One of many things to consider when building a house is whether it’s governed by a homeowners association (HOA). Even rural areas can be subject to HOAs. If you do have an HOA, request a copy of the association’s covenants, conditions and restrictions (CC&Rs), which outline any restrictions on the property. Some HOAs may regulate minimum or maximum square footage requirements, exterior paint options, landscaping or other home design factors.

    Budgeting tip: Failing to comply with HOA restrictions can lead to costly fines, so it’s always best to check guidelines first before doing anything with the land or property.

    4. Obtain The Necessary Permits

    The types of permits you need will vary by location. Different municipalities will have different rules. It’s best to check with your local building department before beginning your project to get an idea of what permits you will need.

    Depending on the work you’re doing and where you’re living, you may need the following permits: 

    • Demolition permit
    • General building permit
    • Electrical permit
    • Plumbing permit
    • Mechanical permit
    • Solar panel permit

    Budgeting tip: Fees for each permit will vary depending on the type of permit and where you live, but sometimes you can get discounts by purchasing them at the same time.

    5. Hire The Right Team

    If you aren’t working with a builder, you’ll likely need to hire some or all of your building team. This could include:

    • Contractors
    • Architects
    • Designers
    • Plumbers
    • Electricians
    • Inspectors

     

    If you are working with a builder, you still need to do your research to find the right company. According to the National Association of Home Builders,1 there are a few different ways you can identify potential builders: 

    • Contact your local home builders association for a list of builders in your area.
    • Check the real estate section of your local newspaper for builders and projects. This can help you learn which builders are active in your area, and which ones are building homes you like that are in your target price range.
    • Ask a local real estate agent, as well as friends and relatives.

     

    If possible, you should try to talk to homeowners who have had homes built by the companies you are considering.

    Ask plenty of questions, and don’t ever think your question is too insignificant. You should ask about warranties, completion dates, licensing, business experience and much more. Take your time when selecting your team, and most of all, be thorough!

    Budgeting tip: If you’re worried about builders or other team members going over budget, you may be able to write limitations in your contract to prevent going over a certain amount.

    6. Have A Flexible Timeline

    Having a flexible timeline is one of the most important things to know when building a house. Shipping delays, supply shortages, weather conditions or other unexpected challenges can all push back your expected move-in date.

    Because of this, it’s a good idea to have a backup plan in case any delays occur. Scope out month-to-month rental options or see if you can stay with your family just in case it becomes necessary.

    You may also want to consider whether you’ll be able to afford property taxes or HOA dues that may need to be paid if your timeline is delayed. If you aren’t sure exactly what your property taxes will be, you can estimate based on your state’s property tax rate.

    Budgeting tip: If closing is delayed, your mortgage rates may increase. Be sure to lock in your rate and discuss how delays may affect your lock-in period. It’s best to negotiate “what ifs” with your lender or builder before they happen. 

    7. Know Your Budget

    Your budget for building a house will vary depending on many factors, from the cost of your builder to the type of layout, to the labor involved and the cost of materials. For example, a house that’s built on a slope might be more problematic and expensive to build than one on level ground.

    On the other hand, building a square or rectangular house with a few odd angles and curves will be less pricey than a complicated custom layout with twists, turns and turrets.

    If you’re going to be financing your new home with a construction loan, you should talk to a home loan expert and get preapproved. Once you know how much you can finance and afford, build out your budget with the following considerations: 

    • Identify your priorities. What is most important to you? Is it a professional-grade kitchen? Multiple bedrooms? A home office? Make a list of everything that you must have and calculate the potential cost.
    • Figure out your trade-offs. Maybe you want an all-marble kitchen but realize that it has a heftier price tag than you bargained for. What would you be willing to lose instead? Is the fancy kitchen more important to you than the library you wanted? Would you be willing to scratch one or the other off of your plans?
    • Complete a cost and benefit analysis. Figure out what is and what’s not worth the cost. When you go to sell your home, is the pool going to be worth the cost it takes to put in? Are you going to get a significant return on investment for certain features of your home?

     

    When you’re constructing your budget, don’t forget to factor in outdoor features that you plan on adding. It’s especially important to make an allowance for landscaping – unless you’re going for that “fresh from the construction lot” dirt-and-rubble look.

    Women reading budget template sheet on laptop.

    Budgeting tip: There are several basic construction choices that can hugely impact the cost of your new home. Choosing a two-story home over a ranch-style home will generally cost less because you will use less material per square foot. When it comes to foundations, concrete slabs cost the least, and basement foundations are the most expensive.

    8. Consider Going Green

    When building your new home you might also consider making it a “green” home. Energy Star homes are much better for the environment but can cost about 4% – 8% more at the outset.

    However, you’ll experience many benefits from having an energy-efficient home, including improved air quality, better comfort and temperature in your home, and most of all, reduced energy bills.

    Although the initial cost is higher, it will likely pay for itself over time, and may even raise your asking price when you are ready to sell your home.

    Budgeting tip: If you don’t have the budget for all the green features you’d like to include in your home, start small. Using Energy Star-certified light bulbs can cost as little as $8 for a pack of six and reduce energy usage by 70% – 90%.

    9. Be On The Lookout For Cut Corners

    Sometimes in the rush of trying to meet deadlines and stay on schedule, builders may miss a few things. To make sure your home meets the quality standards you have in mind, you’ll want to be involved throughout the building process. Keep an eye out for potential problems and commonly cut corners, such as:

    • Cracks in sheetrock
    • Unblended patches on walls
    • Leaky faucets
    • Hard-to-close drawers
    • Incorrect materials (was a laminate countertop installed when you chose granite?)

     

    You shouldn’t need to worry about large structural issues. Building a home comes with many home inspection checks. The city wants to make sure your home is up to code as much as you do. 

    Budgeting tip: Asking for quality improvements as you see them during the build may help you avoid paying for fixes out of pocket after the builders leave. 

    10. Keep Your Head Held High

    Building your home can put you on a roller coaster of emotions. You may face decision fatigue or frustration if things don’t go according to plan. If problems arise, try to take a step back and remember what’s important. Sure, maybe your cabinets needed to be oak instead of cherry because of the available supply, but does it really matter?

     

    Try to see the forest through the trees. If you feel stressed during the building process, remind yourself what it’s really all about: creating your place to call home.

     

     

    If you’re building a new home, congratulations! It’s an exciting process. By following these home-building tips and locking in your mortgage rate, you can more easily navigate the process and make it much smoother for yourself and the builder. And don’t forget to protect your new home with the right homeowners insurance!

    Sources:

    1. National Association of Home Builders

    View Your Refinancing Options

    See expert-recommended refinance options and customize them to fit your budget.

    Start Your Refinance Online

    See What You Qualify For