Building a house typically incurs higher costs compared to purchasing one, yet it grants you the creative freedom to craft your ideal home, right down to the smallest details. When opting to build a home, keep in mind that the price tag hinges on factors like location, construction quality, and labor expenses. The national average cost of building a home hovers around $300,000, with the price range spanning anywhere from $150,000 to $445,000.
Building a Home vs Buying a Home
The cost contrast between building and buying a home varies significantly. For a more precise estimate, it's advisable to research prices within your specific market. For instance, the cost of constructing a home in Texas might considerably differ from the cost of building a home in Boise, Idaho.
Whether you're inclined to buy or build a new home, you likely have preferences in mind. If you possess a specific vision and the financial means, building could be an avenue worth exploring. Loans are attainable to fund a home construction project if immediate cash isn't available. However, it's vital to exercise financial prudence to avoid overextending.
On the flip side, purchasing an existing home offers convenience and affordability. This route can be relatively swift, especially in comparison to building. After securing mortgage prequalification, finding your desired home, and making an offer, you might be ready to move in promptly based on the seller's terms. This faster transition is particularly beneficial for those who require swift relocation, as opposed to the often longer process of building a custom home.
Steps to Build Your Home
Owning a brand-new house comes with advantages like tailored design, energy efficiency, reduced maintenance costs, warranties, and confidence in quality. Prior to commencing home construction, securing financing and obtaining necessary permits are prerequisites. To initiate the process, determine the type of loan required and how to obtain it. Note that loans for custom-built homes may carry higher interest rates than conventional mortgages.
The initial stages of securing a mortgage for a custom-built home mirror those for purchasing an existing one:
Meet with a lender.
Determine your affordability range.
Get prequalified.
Outline your needs and preferences.
Explore different homes and communities.
After these steps, you must choose between a custom-built home and a production home. A custom home involves an architect designing a house tailored to your preferences. Comparatively, a production home is typically purchased from a builder who owns a piece of land and is constructing multiple houses.
In production home scenarios, design plans, architects, and contractors might already be in place. You may opt to purchase one of the homes already planned by the builder. While you'll have some input on design and potential additions, your choices will likely be confined to the builder's predetermined blueprints and neighborhood vision. Production homes are generally more budget-friendly than custom-built ones.
What is the Average Cost of Building a House?
The National Association of Home Builders provides a relative cost breakdown for building a house:
Site work: $18,323
Foundations: $34,850
Framing: $51,589
Exterior finishes: $41,690
Major systems: $43,668
Interior finishes: $75,259
Final steps: $20,116
As mentioned above, costs fluctuate based on location, architects, contractors, materials, permits, loans, and more. These costs are average, and building a house, or finding new homes for sale in Boise may reflect greater prices than these, depending on the current housing market.
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What are the Benefits of Building Your Own Home?
The primary advantage of constructing your own home is the customization it affords. You can design every aspect to align with your vision, unless you're opting for a production home.
A production home offers a middle ground, allowing some style input while working within a builder's predetermined options. For example, you can select a floor plan, paint colors, and materials from the builder's offerings. However, these choices will be limited to the builder's established parameters for that particular neighborhood or land.
Regardless of whether you choose a custom-built or production home, another benefit is the potential for future returns. Newer homes are often valued higher due to aesthetics, lower maintenance costs, and energy efficiency. Updated heating/cooling systems and plumbing in newer homes can also contribute to their higher value compared to older counterparts in need of repairs.
What Are the Downsides of Building Your Own Home?
Building your own home can pose financing challenges, potentially requiring a higher credit score for construction loans.
The process takes an average of around 7.7 months, which could extend to over a year depending on home size and potential permit or construction delays.
Higher costs are often associated with interest rates and the overall expense of custom-built loans.
Construction costs might escalate during the process, but this can be mitigated through careful communication and working with a reliable builder.
Loan Options for Turning Your Dream Home into Reality
When building your home, you may require loans such as construction loans and mortgages. A construction loan serves as short-term financing for the construction phase, while a mortgage is applied for once the house is complete.
Various types of construction loans include:
Construction-only loan: A high-risk, high-interest, short-term loan designed to cover construction over about a year.
Construction-to-permanent loan: Similar to the construction-only loan, it covers a year of construction with interest-only payments, transitioning into a permanent mortgage after the home is built.
Renovation loan: For home renovations, enabling simultaneous home purchase and renovation under one monthly payment.
Owner-builder loan: If qualified, this loan allows you to act as your own contractor.
End loans: A lower-interest, long-term loan repaying construction loans upon project completion.
As an aspiring homeowner, the prospect of designing your own home is undeniably appealing and, in certain cases, feasible. However, ample considerations are required before deciding between an existing home, a production home, or a custom-built home.
One of the best things you can do before starting to design your custom home is to find a suitable lot to build on that matches your individual wants and needs. Searching for your ideal lot, with the help of the best real estate agents in Boise, is a great place to start on your custom home building journey.
Related: What is a Down Payment on a House and How Does it Work?
King & Edge Real Estate in Boise, Idaho
As experienced Boise real estate agents, we are honored to have the opportunity to serve you and be a part of your real estate journey. Let us guide you towards a successful and rewarding experience, where your goals become our goals, and your vision becomes a reality. Contact us today and discover the unparalleled service and expertise that sets King & Edge Real Estate apart as we help you sell your home in Boise or find your place to call home.
