If you've been thinking about building a new home, there are many factors to consider--and cost is an important one. It can be difficult to get exact numbers for what new construction will cost per square foot, but breaking down the construction process will help you arrive at a better estimate. Here is a step-by-step guide that can assist you in determining new construction costs:
Choose Your Builder Wisely
Your choice of builder can make or break the outcome of a construction project--influencing both the budget and the timeline of the job. Select a builder that regularly constructs homes that are comparable in size and features to the one you want to build. A builder who has built homes similar to yours will be able to tell you the price per square foot that they usually charge, and they can give you a ballpark estimate of the total costs.
Think Beyond Square Footage
Although it's helpful to get information pertaining to the cost per square foot, it's important to keep these figures in perspective. Determining the cost to build a home isn't as easy as multiplying the cost per square foot by the total square footage of the house-- this is because there are many other expenses that need to be considered. Another factor that adds to the confusion is the notion of "total square footage". When you get an estimate for the cost per square foot, that quote only includes finished or heated areas of your home. The basement, garage and other unfinished areas of the house aren't considered in this estimate and will be added to the total cost.
Look at the Big Picture
If the cost per square foot only provides part of the overall picture, what accounts for the rest? A number of other expenses need to be considered:
- Cost of land: Before you build your dream home, you may first have to purchase a lot. This process can be surprisingly complicated and costly-- zoning issues, drainage problems and utility connections are just a few expenses that may crop up.
- Financing: Obtaining financing for new construction is a multi-step process. First, you'll need a construction loan to pay for the general contractor, subcontractors and architect. This loan provides the funds you need to cover the costs of building. Once construction is complete, you'll get a mortgage on the new home which will pay off the construction loan. Keep in mind that each of these loans comes with various fees and/or closing costs.
- Plans and designs: Plans for a home don't come cheaply, especially if you're designing a higher-end home. Many people fail to account for planning costs when they budget for new construction.
- Inspections and permits: Building permits can be a headache to obtain, but they're also expensive, often costing thousands of dollars. Your new home will also require multiple inspections over the cost of construction-- these may seem like trivial expenses, but they really add up.
- Landscaping and hardscaping: You'll at least want a walkway and a driveway for your new home, but you might also want extra features like a deck. In addition, you'll want to landscape the property with trees, shrubs and flowers. Be sure to account for these costs when you plan your budget.
The Bottom Line
You can search for the current national average for cost per square foot; however, your actual cost may be quite different. Location can have a big impact on the cost of new construction-- costs vary dramatically by region or even zip code. Any customizations you request will also influence the total cost.
While this guide can help you arrive at a fairly accurate estimate, it's always a good idea to build a bit of a cushion into your budget--there's always a chance that unexpected costs will come up. When you plan ahead and know what you can spend, you can design a home that has all the style and features you want but also works with your finances.