Building a custom home can be a dream–or a nightmare. If you’re on a budget there are a lot of ways that you can save money, but only if you follow the right tips. Here are some things to consider when you’re looking to build that dream custom home on a budget.
Custom Home on a Budget

Costs of Building a House

When you think of building a home a lot of things come to mind: the cost of lumber, cement, sheetrock, and tile. But there are a lot more costs that might not come to mind: architectural fees, engineering fees, real estate commissions, permitting fees.

Here are some Costs to Consider


This may seem obvious when you think about a house: of course a bigger house is going to cost more than a smaller house. But are you really aware of how big those differences can be? If your custom home is estimated at $100 per square foot then adding just 250 square feet to your home is $25,000. That can add up.

Must-have features

Do you insist that your new home must have hardwood floors? They’re beautiful, certainly, but now there are so many faux floorings that look just as good, are more durable, and are cheaper. Even if you must have real hardwood in a certain room–the front entry, for example, or the living room–consider putting the faux floors in the less trafficked parts of the house. The same can go for faucets and fixtures: put the nicer ones in the rooms where they’ll be seen, and leave the economical choices for other parts of the house.

Do Your Research

Tour as many new homes as you can to see how they used space and materials so you’ll have a better idea of how to use space and materials. There may be ways to cut a few hundred feet off your house by utilizing certain room arrangements, layouts, or perspectives. And seeing what features other homes have will give you a chance to decide what you love and what you can live without. Remember: on paper everything sounds good. But when it comes time to pay the bill, those features add up.

Source Your Own Materials

You don’t have to rely on the builder to find all the deals–you might find a flooring or a tile or a countertop that is much cheaper than what your builder is suggesting. Talk to friends who have built homes and see what they recommend. Go to antique stores and garage sales–you might find fixtures or accents for pennies on the dollar compared to what your contractor recommended.

Cost to Build Your Own House vs Hiring Home Builders

It’s true that contractors have margins built into their business model–obviously they’re trying to turn a profit, so it might seem attractive to make yourself your own general contractor and build your home yourself. There are some things to consider.

First, you’re right: your contractor is making 10-20% profit off building the home and you could save that money if you acted as general contractor. But you have to think about what it would cost you to do it: would you miss work? Have trouble raising your family? Miss commitments? If time isn’t a consideration and you can juggle many things at a time, then doing it yourself might be for you, but if you’re not up to the time constraints, then maybe pay someone else to do it.

Second, a contractor does this kind of thing every day, so they’re going to be more efficient than you. A job that might take them a day might take you three. So, again, if you have the time to invest, then you can save a lot of money, but know that it will slow you down if you’re not handy at construction.

Third, you might enjoy the thrill of doing something yourself, and be invigorated by challenging projects. Maybe being a contractor is something you’re naturally adept at–and maybe it will make you more endeared to your new home. Maybe involving the whole family in the building process is something that you’ll always treasure. It might take longer, but it might be worth it for the experience.

What’s the Most Expensive Part of Building a House?

Typically, the most expensive part of the house is not the concrete, not the lumber. It’s not the siding or the roofing or even the HVAC system: it’s the interior. Typically the interior costs 25-35% of the entire budget, as the square footage cost of flooring, tile, carpet, paint, etc is much higher than the cost of 2x4s and shingles. This is something to keep in mind when you plan your house–you’re going to be living on the inside, not the outside, so you want it to be nice. But you could save a lot of money by downgrading those interior finishes.

Cost to Build a House on an Existing Foundation

Building a house on an existing foundation can be a great idea–or a big waste of time and money. 

Your best bet is to use the original plans of the house that was going to be built on that foundation, if those plans are still available. If not, architects and engineers will have to come out and make detailed measurements to figure out exactly what can be built where. Also, it’s very hard to adapt one foundation to a different style of house from the original. You’ll have to make some serious design decisions.

You also have to ask why the original house wasn’t built, and what has happened to the foundation in the meantime. If the original house was destroyed in a flood, fire, or other disaster, the foundation itself might be weakened. It might also have damage from having been sitting unused for years–water damage and sinking and cracking.
Also, building codes could have changed since the time the original house was built and the new house will need some retrofitting to make it all work. All of these things may give you pause when you’re trying to build on an old foundation.

Still, the foundation may be an old family home that you want to revive, and there’s no putting a price tag on that.