Determine Home Building Costs For Budgetary Purposes and Financing Options

Rermining your home building costs is the first step in preparing a budget. You will need this to determine your financing options.

If you are building your own home, either by yourself or with a building consultant, you will need to solicit bids from potential subcontractors and suppliers. In addition, you will need to shop around for deals on material supplies. The women are best at this as they seem to find the best deals.

home building costs

Home Building Costs

The cost of building a house consists of hard costs and soft costs to accurately portray the true cost of building your own home. How do I calculate my home building costs you say?

I am going to help you achieve this objective by providing you with a detailed cost estimate form that you can use to prepare your final budget. This estimate includes the majority of items that you will need to consider in your home building costs. You can add other items if they are a part of your design.

Land Cost

Land Clearing and Grading

Permits and Tap Fees

Septic Tank (if necessary)

Water Well (if necessary)


– Slab

– Crawl Space

– Basement

Termite Treatment and Pest Control (pre-treatment)


– Materials

– Labor


– Asphalt Shingle

– Cedar Shake

– Clay Tile

– Metal Panel

– Venting System

Exterior Doors and Windows

Exterior Siding

– Wood Siding

– Vinyl Siding

– Hardie Plank Siding

– Brick

– Stucco

– Stone

Mechanical Trades

– Plumbing

– Electrical

– HVAC (Heating, Ventilation & Air Conditioning)

Cornice Work ( soffit and fascia)

– Wood

– Vinyl

Garage Door

Insulation (floor, ceiling and walls)


– Materials

– Labor

– Special Finishes (plaster, stipple, popcorn, etc.)

Interior Trim

– Materials

– Labor

Interior Doors


– Exterior

– Interior

Cabinets, Vanities and Countertops

Fireplace and Surround

Light Fixtures


– Door

– Bath Accessories

– Ventilated Shelving


Floor Covering

– Vinyl

– Wood

– Tile

– Carpet and Pad


Exterior Columns and Handrail (front porch)

Concrete Flatwork (driveway, patio, sidewalks, etc.)


Dumpster and Porta-John



Construction Interest

Inspection Fees (Lenders charge a fee to inspect for draws)

Closing Costs

The majority of these home building costs will be provided by the bids submitted by your subcontractors and suppliers. If you have purchased your house plans from Donald A. Gardner Architects you will receive material lists so that you do not have to hire a specialist to do the takeoffs for you. This may look like an insurmountable list, but you can get through it. Just persevere. It will be worth it.

Remember, construction estimating is not an exact science.There may be some items that come up that will have to be addressed. It is all necessary to determine the total cost of building a house and to prepare your home building budget. Please click on this link to learn about estimating your home building costs.

Now, if you are using a new home builder, the home building costs list is much smaller since he will give you a firm bid on the total construction of your new home. You will have to add the other items that he excludes to complete the estimate to determine the total cost of building a house.

Home Building Loans

All of the above is a prelude to obtaining your home building loans by shopping with several lenders who provide both construction loans and permanent loans. These loans are based on your home building costs.

The terms offered by the lenders will vary all over the map. You need to shop for the best deal. Many times, the local lenders will provide these home building loans and then they sell them (the permanent loan) to the big companies like Countrywide and IndyMac.

Home building loans are usually based on an 80% loan-to-value calculation. This means that you have to provide for the remaining 20%. This could be in the form of your lot or if you are building your own home, with or without a building consultant, the 20% represents your instant equity.

You should be able to purchase the lot and build your house for the 80% construction loan. That is your goal.

If you are using a new home builder, your 20% will have to be in the form of cash investment or the value of your lot if you purchased it in advance.

Home building loans usually have a term of 9 months to 12 months in duration. You do not want to exceed this time period because you will be paying way too much for construction interest and it will eat into your equity in the property. You do not want to have to come out-of-pocket for the additional costs. Lenders frown on this.

Many people fail to include all the items listed above in calculating the true cost of building a house and then, they run into financial trouble. Do not get into this situation.

Don’t forget to include the closing costs on both the construction loan and your permanent loan. Usually on the permanent loan, they are incorporated into the loan itself and amortized over time.

This is your golden opportunity to personalize your home by calculating your home building costs in advance and utilizing your shopping skills. Take the time do this step thoroughly.

There is no greater feeling than to build your own home at a cost of $200,000 when the appraised value is $250,000. That $50,000 equity is very comforting and a valuable asset to have.

I know because this is exactly what we did in 1995 when we designed and built our last home. We went through the very process that I outlined above to achieve our goal. As a side note, that house appraised for three times that amount within ten years.