The Cheapest Way to Build a House (2023)

If you’re in the market for a new home, the current seller’s market can be intimidating and even frustrating. Houses are selling in record time and you might even have to get into a bidding war if you find a house you like. Building a house might be a less stressful option, especially if you figure out the cheapest way to build a house.

Is it cheaper to build a house or buy one built?

According to Bankrate, it is cheaper to build. The median price of an existing home is $309,800 and the average cost of building a home is $302,817. But keep in mind, those costs are national averages. Every market is different.

If saving money is your biggest concern, you’ll want to research home prices vs. building prices in your area.And, if you decide to build a home, there are ways you can cut expenses. Let’s look at your options for the cheapest way to build a house.

The Cheapest Way to Build a House (1)

Be Your Own Builder

Roughly 40% of your home building budget will go towards labor, including 5%-15% for a general contractor. You’ll save thousands by being an owner builder.

Every state has different laws, but typically you’ll need to apply for an owner-builder permit, available through your local government. This will effectively make you the general contractor on your home.

How Much Work You’ll Need to Do

The more work you can DIY, the more you’ll save. Of course, not all owners are qualified to handle every aspect of the home building process, which means you’ll still be paying for some labor costs.

If you’re a particularly skilled handyman, you can build the majority of your home yourself. The interior work, in particular, is one most people feel more comfortable completing. And even if you have very little DIY experience, you can take on some of the easier tasks: filling nail holes, sanding, painting, and so on.

But even if you have extensive construction experience, there are some specialty jobs you’ll likely have to sub out. These are the ones that either require years of schooling or special licenses.

  • Architect
  • Plumber
  • Electrician
  • Roofer
  • HVAC installer
  • Concrete contractor

Agents Compete, You Win.

Benefits of Being Your Own Builder

Being your own builder might not be the easiest job you’ll ever have, but there are quite a few financial benefits.

Saving Money

Of course, the biggest benefit is saving money on labor costs. At the very least, you’ll save the money you would have paid the general contractor. Then, depending on how much of the building work you did, you’ll also save money on subcontractors.

If you’re confident in your knowledge base or comfortable with your research skills, being your own builder is the cheapest way to build a house.

Can you build a house for less than 100k?

It is possible to build a house for under $100k. In today’s market, it’s difficult to find a built home for under $150k and building can be a cheaper alternative for the home of your dreams.

Greater Control Over Costs

As your own builder, you’ll also have greater control over each part of the home building process. You’ll be the one picking out materials, hiring vendors and subcontractors, and deciding where to cut costs. This will give you greater control over how much you spend.

This might work out in your favor. For example, if a general contractor tends to work with certain subs, they might not be the cheapest in town. You may be able to find someone to do the work for less. At the same time, without long-standing relationships, a vendor might charge you more than they would a general contractor.

Drawbacks to Being Your Own Builder

Acting as an owner-builder might seem like an easy decision when you want the cheapest way to build a house. Unfortunately, there are some drawbacks you should consider before choosing to build your own home.

Possible Cost Overruns

An experienced general contractor knows how to budget for unexpected events. If you’re acting as your own contractor, you probably won’t have the same expertise. Make sure you leave “wiggle room” in your budget, just in case.

General contractors also have standing relationships with local vendors and subcontractors. They might be able to find material and labor cheaper than you will. Be prepared to negotiate.

Longer Build Time = More Expenses

If you already have a job, whether it’s full- or part-time, you won’t have as much free time to dedicate to building your home. You may end up working mostly nights and weekends, which means it’ll take longer to complete construction.

This could lead to higher costs, if you’ve rented out machinery or have subcontractors waiting for you to finish your job before they can do theirs.

Agents Compete, You Win.

Ways to Cut Building Expenses

Regardless of how much of the building process you decide to take on, there are some other choices you can make that will help you curb expenses as you try to find the cheapest way to build a house.

Build a Box

A simple square or rectangular home will be the cheapest to build. By not having any elaborate angles or bump-outs, everything from the slab to the walls to the roofs will be faster to build and therefore less expensive. Afterward, you can use landscaping and exterior elements to add visual interest.

Build Up Instead of Out

When you’re trying to figure out the cheapest way to build a house, consider building a taller house instead of one that’s simply larger. By increasing space through a second (or third) floor, you’ll reduce expenses on two costly items: foundation and roofing. So you’ll gain the same square footage but at a lower price.

The Cheapest Way to Build a House (2)

Reconsider Materials

Some materials are naturally more expensive than others. If you’re looking for the cheapest way to build a house, you should compare prices for the materials you use. Brick walls, for example, will be more expensive, as will tile roofing and hardwood floors.

If you’re building your dream home, you’ll have to figure out the right balance of budget vs. value.

Skip the Customization

The more you customize, the higher your expenses will go. This is especially true in the bathroom and kitchen. With an average price between $500 and $1,200 per linear foot, custom-built cabinets can really bump up your costs. In contrast, stock cabinets from your local home improvement store will cost on average somewhere between $60 and $200.

Stick to a Simple Roof

The slope of your roof can also impact your costs. The steeper the slope, the longer it will take to frame and shingle, driving up costs. For a 1,500 square foot home, a nearly flat roof with a low slope will cost an average between $6,000 and $15,000. A gable roof will cost between $12,000 and $18,000.

And those prices are for standard roofs. If you upgrade the shingles or choose different materials, such as a tile roof, your costs will be even higher. For that same size roof, asphalt shingles can raise the price to $25,000.

Going The Traditional Buying Route

If this all sounds like too much work and you’d rather buy a house ready to go, you still have some considerations to make. Before you look at homes, you need to know whether you can actually afford to own one. Mortgage payments are generally higher than rent in most states. And even when the prices are close, there are other costs associated with owning your home instead of renting.

Your property taxes will be added to your monthly mortgage payment. And if you put down less than 20% for a down payment, your lender will probably require you to pay for private mortgage insurance (PMI) as well.

You’ll also have to pay some costs that you might not have had to pay while renting: utilities, cable, garbage pickup, and any necessary repairs.

Make sure you can comfortably afford not just your mortgage but also any additional expenses before buying your first home.

If you’ve run the numbers and decided that yes, you can afford homeownership, your next step is to meet with a mortgage lender. You can discuss the different types of mortgages and decide which would be best for you. You’ll also want to be pre-approved for a mortgage before you begin house-hunting.

To get pre-approved for a mortgage, you’ll have to share your financial and employment information with the lender. They’ll require documentation such as tax forms, pay stubs, and more. Once they review and verify your information, they’ll determine whether to approve you for a mortgage. If they do, they’ll let you know your mortgage options and terms.

The lender will also issue a pre-approval letter. You can show this to sellers when you’re looking at homes, to let them know that you’re able to secure financing.

Be Prepared to Negotiate

It’s more than likely that the seller will come back to you with a counteroffer. That’s just part of the negotiations. It’s up to you whether you can comfortably accept their counter, respond with your own counteroffer, or walk away.

Keep your finances in mind and don’t let yourself get carried away in the excitement of buying your first home. No matter how much you might think a house is perfect for you, if you can’t comfortably afford it, it’s time to think twice.

Remember buyers: you need to know what a home will require in order for it to be up to your expectations of build quality. Houses may need a few things fixed either prior to purchasing a home or immediately after. It’s important to be aware of these issues, as it may cause a headache further down the road after you’ve purchased the house.

Often, if the seller is motivated enough to sell the house, they might work with you and include fixes and light renovations as a stipulation in the contract for the sale of the house. Making sure you have inspectors and independent contractors to inspect the house for any major issues can help save you a headache in the long run.

You also need to be aware of the market surrounding the house. If you look around at the neighborhoods close to the home you’re considering, you may find other locations that may be a better price, closer to an important location, or simply newer than the one that you’re considering. Ensuring that you’re aware of the area and not focused on one house can help make sure that you’re making the best choice possible when putting in an offer, and not necessarily choosing the first one on the list.

Ensure you don’t bid either too high or too low on the house. Bidding too high will probably get you the house quicker, but you may end up paying over market value for the home and will probably have to recoup that cost before you can be in a suitable position to generate equity into the home.

Offer too little and the buyer may outright refuse and will greatly decrease your chances of landing the home that you want to purchase. When in doubt, consult a professional Realtor who knows the market.

An experienced local Realtor will be a valuable resource as you build your own house. They can help you purchase land, figure out financing, and discuss ways to add resale value to your home.

If you aren’t working with a Realtor yet, UpNest can help!

UpNest, whichis owned by parent, is a no-cost service for home sellers and buyers to find the best real estate agents locally. The UpNest platform allows you to compare multiple agents in your area so you can compare reviews, commission rates, previous sales, and more.

Our network agents have been carefully vetted and often offer competitive, lower than averagecommission rates to UpNest customers. There is no obligation to sign up with one of our network Realtors, but when you can potentially save thousands on commission – why wouldn’t you? If you’re ready to get started, just enter your zipcode below!

Agents Compete, You Win.

What is the cheapest type of house to build?

In general, ranch style homes are the cheapest houses to build. Their shapes are usually a simple block, so there won’t be any extra costs for custom bump-outs.

How do you build a low-cost house?

Be your own builder. By taking on the role of builder or general contractor, you can save thousands of dollars. If you’re handy, you can even DIY some of labor yourself and save even more money.

Is a 2-story house cheaper to build?

Typically it is cheaper to build up than out. You’ll gain the same square footage, but be able to work with a smaller square footage for the foundation and the roof. This can cut your costs significantly.

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Author: Tish Haag

Last Updated: 12/27/2022

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