Build Your Own House

House Building Budget

Summary: Before you can build a new house or buy a new home you need a budget. A home building budget is based on how much you can borrow plus a down payment.

Carl, My wife and I plan on building a house in 2 years on some property we have already purchased. We were told that we could save a lot of money if we were to build it ourselves.

I have been a son of a carpenter all my life and have some knowledge of building homes, but not enough to do it on my own. We have purchased your book, “Be Your Own House Contractor” and would really like to try to do this own our own. Is there any advice as to where we need to start? Thanks, Lesley

Hi Lesley,

The number one problem in construction is either not having a budget or going over budget during construction! This is true even with professional home builders or general contractors.

It is essential for everyone to start a home building project or a remodeling project with a realistic budget.

Since you already purchased your land, you can now determine the rest of your home building budget.

Go to my Getting Started page and you’ll find all the steps to getting started building your new home in numerical order.

For those of you who don’t already own their building site do not worry as step number 4 deals with that common situation.

Budget = your available cash plus the amount of money you can borrow on a home mortgage loan or home construction loan.

For example, using $100.00 per sq. ft. for new home building costs, determine how many sq. ft. of house you can build.

For example, if you have a budget of $200,000 and you spend $40,000 on the land, you will have $160,000 left to build your new house. Divide $160,000 by $100 per sq. ft. and you get 1600 square feet.

That’s the size of house you should start looking for on new home plan web sites or elsewhere as discussed on my How to Read House Plans.

When you find a home plan or two that you like, run it (them) through the Cost to Build Calculator several times adjusting design, quality and size until the total cost to build fits your building budget (excluding land).

You don’t have to actually buy the plans to perform this analysis!

This amount of information should keep you busy for awhile.

Later on, as your home building project progresses and you start getting actual building material and subcontractor bids and estimates, you can use a new home building budget spreadsheet. I have them available on my “Spreadsheets” page.

If you have any questions, let me know at Ask Carl

Carl Heldmann