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How Much Does It Cost to Build a House?

For plenty of people, building their own home is a great idea. Because, let’s be real, home is where most of life’s sweetest memories take place—and who wouldn’t want to live in a brand-new house built exactly the way they want it?

Of course, brand-new things usually come with a high price tag, which means building isn’t for everyone. So how much does it cost to build a house these days? And will you be able to afford it?

What’s the Average Cost to Build a House?

The average cost to build a new single-family home (including the cost of land) is $644,750, according to a survey by the National Association of Home Builders.1 The median sales price for a new house was $436,700 in July 2023, which is probably a little closer to what you might expect to pay to build a house.2

Now, the cost for you to build a house will depend on factors like the home size, location, labor and materials, and current real estate trends. With all those moving pieces, it’s difficult to give a one-size-fits-all answer to how much do new houses cost? But we can take a closer look at what the cost could look like for you if you’re curious about building a house.

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Cost to Build a House by Size

The average cost to build a house by size is about $150 per square foot. This is for a builder-grade home with nothing super fancy. On the other hand, if you’re building a custom home, it could cost up to $500 per square foot or more.3 Here’s the average price range for different home sizes:

Square Feet

Cost to Build











You can see now why tiny homes are so popular! But wait. Before you think about selling all your furniture and purging your closets, think about how much space you’ll realistically need. You don’t want to cram your family into a house that’s way too small, but you also don’t want to waste money on space you don’t need.

Just one extra 11-by-12-foot bedroom (132 square feet) can add $20,000 or more to the overall cost of your home. Seriously. It sounds great to have an extra bedroom for when your best friends from college come to visit, but they can just as easily get a hotel for the weekend (and save you the time and headache of doing extra cleaning after they leave).

Cost to Build a House by State

How much it costs to build a house also depends on where you build it. Here’s a look at the average cost to build a 2,000-square-foot home in each state. But heads up! These prices don’t include the cost of the lot and lot prep—which could tack on another $100,000 or more based on your location.


Cost to Build a House

























































New Hampshire


New Jersey


New Mexico


New York


North Carolina


North Dakota










Rhode Island


South Carolina


South Dakota














West Virginia






Housing isn’t the only cost that varies from state to state. Other living expenses—like groceries, transportation and health care—will also depend on which state you call home.

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Here at Ramsey, we created two super helpful resources to help you figure out some of these expenses: a cost of living calculator and a list of the 13 states with the lowest cost of living. Check them out!

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Home-Building Cost Estimator

At this point, you may be asking yourself, What exactly makes up the cost of building a home? Don’t worry, I’ve got you covered on that front too.

In this section, we’ll cover what goes into building a 2,561-square-foot home with a sales price of $644,750, according to the National Association of Home Builders.4  

I know, a $600,000-plus house is big, but this will give you a basic idea of your expected costs. Remember, the numbers you are about to see are based on the average price for that step of the process. That means if you’re building a house in the $400,000 to $500,000 range, the numbers will be different.

Ultimately, your budget is what determines how much you spend on each of these areas (more on the budget a little later).

Non-Construction Costs to Consider

The total construction cost for a 2,561-square-foot house is $392,241—which is not even close to $640,000! What gives? The other $250,000 and change includes the cost of the lot, general expenses, financing costs, sales commissions, and the builder’s profit.

Here’s a breakdown of the non-construction costs you can expect when you build your own home:

Finished Lot: $114,600

A finished lot, as opposed to undeveloped land, includes both the land your house will sit on and all the utility systems you need—like water, electric and sewage lines.

You can buy an undeveloped property for less money, but you’ll still feel a hit to your wallet when you have to install all those utilities later.

Overhead and General Expenses: $33,000

This includes the construction company’s administrative expenses, legal fees and employee expenses, like benefits and insurance. It works out to about 5% of the home’s purchase price.

Financing Costs: $12,200

Unless you’re paying cash for your house, you’ll have to pay closing costs and other financing costs to get a mortgage. This is usually about 2% of the home’s purchase price.

Sales Commission/Profit: $88,400

Even when you build a house, you’ll still have to pay a sales commission to the real estate agent who sold it to you (which comes to about $23,000 in this example). And builders also want to earn a profit—which is usually about 10% of the purchase price of the house.

Construction Costs

So, now let’s look at construction costs and their percentage of the total construction budget.

Site Work: $29,200 (7.4%)

Site work includes projects like building permits and fees, water and sewer inspections, and architecture and engineering. Site work is all the stuff that has to be done before a single nail gets hammered.

First, you need an architect or draftsperson to draw up your building plans. After that, you’ll need to pay for the permits and inspections you’re required to have before your builder can start the actual construction. Building permit fees can top $8,000, and water and sewer inspections are close to $6,000.

Foundations: $43,100 (11%)

That seems like a lot of money to move some dirt around! In addition to excavation, this includes pouring concrete and building retaining walls. Homes with basements typically cost more than ones without basements because there’s more digging and concrete required.

Framing: $80,300 (20.5%)

When I talk about framing, I’m mostly talking about lumber and the guys who nail together the skeleton of the house. It literally takes a truckload (or two or three) of wood to build a house. The framing phase is when your house really starts to look like a house.

Exterior finishes: $46,100 (11.8%)

Anything you see on the outside of the home is included in this line item: doors, windows, roofing, siding, brick, garage doors.

Major systems installation: $70,100 (17.9%)

This one’s kind of pricey! Major systems include plumbing, electrical and HVAC. It takes a team of tradespeople to run all the pipes, wires and ducts that make your house come to life.

Unfortunately, trimming the budget isn’t really an option here (unless you’re okay with not having indoor toilets). These costs don’t refer to the actual fixtures that hook into plumbing and electrical systems—like sinks, toilets and lights. Those things are grouped into the cost for interior finishes.

Interior finishes: $94,300 (24%)

Get out your wallet because this is a big one. But your interior finishes are what really give your home its personality. This includes drywall, trim, painting, lighting, cabinets, countertops, appliances, flooring, and plumbing fixtures. Here’s a breakdown of some of those expenses:

Cabinets and countertops




Doors, trims and mirrors


Drywall installation








Plumbing fixtures










Final steps: $23,100 (5.9%)

The final steps give your home curb appeal. Landscaping is a big part of this. Other costs include outdoor structures (decks, patios, porches) and driveways. Clean up adds another $2,300 to your bill.

Miscellaneous: $6,100 (1.5%)

Unexpected and other little expenses are going to pop up here and there when building a home, and on average, these add up to several thousand dollars! So make sure you have some extra cash set aside.

Average Cost Based on Location

A lot of a home’s price is based on its location. Building a house in a desirable neighborhood could be twice the price of building the same house somewhere out in the sticks.

The cost of living—and that includes the cost of housing—also fluctuates a lot from city to city and state to state.

If you’re looking to relocate to a state with a low cost of living, I’ll give you a tip: Stay away from the East and West coasts. Midwestern and Southern states usually have a lower cost of living.

But let’s not linger on location, because you’re probably just wondering, Rachel, what’s the best way to pay for a home?

Can You Afford the Cost of Building a House?

Now you know the typical cost to build a house, but can you afford it? Here’s how to find out. If the monthly payment on a 15-year fixed-rate mortgage—including homeowners insurance, property taxes and HOA fees—is less than 25% of your monthly take-home pay, you’re good to go! That’s with at least a 5–10% down payment (but 20% is ideal).

If the payment on a 15-year fixed is more than 25% of your take-home pay, you need to say “no thanks,” or bump up your down payment or scale back your house plans. Why? For one, 30-year mortgages flat-out stink because they chain you to payments for an extra decade and a half, and they’ll cost you tens of thousands more in interest. No home is worth that!

And if you have more than a quarter of your take-home pay tied up in a house payment, you won’t have enough left over to put toward other financial goals—like investing for retirement and saving for your kids to go to college. By the way, you also shouldn’t buy or build a house unless you’re debt-free with a full emergency fund of 3–6 months’ worth of your expenses. It’s the only way to be sure you can afford all the expenses that go along with homeownership—not just the mortgage payment.

To feel confident you’re getting a mortgage you can actually pay off fast, talk to our friends at Churchill Mortgage.

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When Is It a Good Idea to Build vs. Buy a House?

If you can afford the extra cost of building a house, you still need to think about the pros and cons of building a house versus buying an existing house before jumping into the deep end.

Some of the pros of building a house are customizing it to your style, less maintenance, and that new house smell. So good! The cons? You have to wait a long time for the house to be finished, you’ll probably get hit with some hidden costs, and the building process can be stressful.

On the other hand, buying an existing house also has its pros. It takes about 30 days to close, you can negotiate the price, and you can be pickier about location. The cons are you’ll have to do some repairs and updates, and the house probably won’t check off everything on your want list.

How to Build Your Own House

So, you’ve crunched the numbers and decided that building a house is the direction you want to go. That’s super exciting! But before a big crew of guys in hard hats show up, you need to know how to build your own house.

No, you won’t have to grab a drill or a hammer and climb up on the roof. There are, though, some steps you’ll need to take if you want the home-building process to go smoothly. Here’s a look at the four most important steps.

Hire a real estate agent.

Building a house is not something you’ll want to do without the help of a real estate agent—that would be a one-way ticket to a lot of mistakes and stress. You need a top-notch buyer’s agent on your side who can represent you throughout the entire home-building process. A good agent will help you find land to buy, and they’ll serve as your advocate by helping you communicate with your builder and architect throughout the whole building and moving process.

The best place to find a high-quality agent is our RamseyTrusted real estate agent program. Our team of RamseyTrusted agents in your area are rock stars who will make building a home seem as easy as making a sandwich. Okay, it may not be that easy, but you will seriously love working with our trusted pros.

Connect with a RamseyTrusted agent today! 

Make a budget.

It’s your job to make money decisions on paper, on purpose, before the shovel hits the dirt. You have to make a budget for your home-building project, just like you would for your family or business.

Start by deciding how much you can afford to spend. (Remember, your monthly house payment should be no more than 25% of your take-home pay.) Then, research all the expenses involved in building a home and figure out how much money you need to plan for each category. Your agent can help you with that.

Once you make your budget, stick to it! That’s the only way it will help you. Otherwise, it will be nothing more than a great idea on paper.

If you do try to build without a budget, you might have to cut corners at the end of the project or take on extra debt to get the job done. Talk about turning your dream home into a nightmare!

Create a blueprint.

A detailed blueprint or building plan is a must. Like I talked about earlier, this is where all of the key decisions about the house itself will be made. How many bedrooms? How many bathrooms? Where will the windows go? All of those questions (and many more) will be answered in your blueprint.

Whether you hire an architect or a draftsman to draw your plans, make sure they’re working together with your builder. (Pro tip: Using a draftsman instead of an architect is cheaper.)

Once you make your decisions, you need to stick with them. Making a couple of changes during the building process is no big deal, but anything more than that could bust your budget and cause some big-time delays in your schedule. Speaking of your schedule . . .

Set a detailed schedule.

A detailed schedule is the key to your home-building project not taking an eternity to complete.

How much detail do I need? A lot. You need to know exactly when the framers are going to start nailing stuff. You need to know when the painters are coming and which rooms get what colors. When and where the bushes are going in. Get the idea?

When you take the time to work with your builder to write up a schedule with that level of detail, it allows you to schedule out all your labor and subcontractors well in advance. That way, any issues with labor shortages that might pop up won’t affect you.

And if you have a detailed schedule, you can check in with your agent and builder to make sure everything’s on track. It wouldn’t be a bad idea to have a standing weekly meeting with your builder to look at your schedule, blueprint and budget. Plus, walking around and seeing your home’s progress is always fun. Just make sure to wear shoes you don’t mind getting muddy!

The Best Way to Build a House

Once you’re finally ready to buy a house, you need to get a top-notch real estate agent on your side.

We make it easy for you to do just that with our RamseyTrusted program. Our RamseyTrusted agents will make sure bulding a house goes smoothly while keeping all your other financial goals in balance.

Find a RamseyTrusted agent in your area.

Next Steps

  • Write down your household’s monthly take-home pay.
  • Use the How Much House Can I Afford calculator to get a home-buying budget.
  • Set that as a goal to save for—when you have it, you can get a construction loan and start building.
Get a Home-Buying Budget

Frequently Asked Questions

Besides the cost, the biggest disadvantage of building a house is the time factor. It can take seven months or longer to have a home built, and you could feel like your life is in limbo during that time.

A house with a simple layout is the cheapest type of house to build. Most of the time, a simple layout means a one-story ranch. (Second stories, vaulted ceilings, walkout lower levels and other customizations make things complicated—and expensive!)

Ranch homes are typically single-story structures with attached garages. They're easy to find construction plans for, so you can find a home that fits your needs and budget.

It’s usually cheaper to buy an existing home than building a new one. If you think about it, new stuff (cars, clothes, etc.) always costs more than used stuff. (But in the real estate world, they prefer the word preowned instead of used.)

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Rachel Cruze

About the author

Rachel Cruze

Rachel Cruze is a #1 New York Times bestselling author, financial expert, host of The Rachel Cruze Show, and co-host of Smart Money Happy Hour. Rachel writes and speaks on personal finance, budgeting, investing and money trends. As a co-host of The Ramsey Show, America’s second-largest talk radio show, Rachel reaches millions of weekly listeners with her personal finance advice. She’s appeared on Good Morning America and Fox News and been featured in TIME, REAL SIMPLE and Women’s Health, among others. Through her shows, books, syndicated columns and speaking events, Rachel shares fun, practical ways to take control of your money and create a life you love. Learn More.

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