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Home Buying

How Much Does It Cost to Build a House?

Building your own home. For plenty of folks, that’s a great idea. After all, home is where most of life’s biggest memories take place—who wouldn’t want to live in a brand-new house built just for them?

Of course, new things always come with a higher 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 house is just a little over $485,000.1 That estimate is based on a nearly 2,600-square-foot, single-family house, and the data comes from a 2020 study by the National Association of Home Builders.

Now, the cost for you to build a house will depend on factors like size, location, labor, materials and current real estate trends. That makes it difficult to nail down a perfectly accurate, one-size-fits-all answer. Let’s take a closer look at what costs might look like for you based on some of those factors.

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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.2 Here’s how that plays out for different home sizes:

Square Feet

Cost to Build











You can see now why tiny homes are so popular! But before you jump on that bandwagon, think realistically about how much space you need. You don’t want to cram your family into a house that’s way too small, and you also don’t want to waste money on space you don’t need.

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:


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 costs—like groceries, transportation and health care—will also depend on which state you call home.

Find expert agents to help you buy your home.

That’s why we’ve created two handy resources: a cost of living calculator and a list of the 13 states with the lowest cost of living.

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, we’ve got you covered on that front too.

In this section, we’ll go over the major components of building a home and take a look at how much it costs to get each job done, on average. All of the numbers come from the same 2020 NAHB data we looked at earlier, and each category includes a $1,000 buffer because let’s face it—not everything will go according to plan when you build a home, and you’ll want some extra cash on hand.

Keep in mind that each of the following numbers are based on the average price for that step of the process, so the numbers may wind up looking a little different for you. Ultimately, your budget is what will dictate how much you spend on each of these areas (more on the budget a little later).

General Building Expenses: $98,000

The first set of expenses you’ll want to think about are the more general ones related to the business side of building a home. You’ll have to pay your builder several different costs for their work, such as overhead, marketing costs and profit (because they probably aren’t doing this as a favor). Those costs add up quickly, and they can easily total six figures.

Finished Lot: $90,000

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 lines, electric lines and a sewage system. Buying one costs $90,000 on average.

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.

Site Work: $18,000

Site work is an umbrella term that includes several elements of the home-building process, the first of which is creating your building plans. An architect or draftsperson can create your building plans, which spell out all your new home’s details—from the size and layout to the electrical wiring and design.

After you draw up your plans, you’ll need to pay for the permits and inspections that you’re legally required to have before your builder can start the actual construction. You’ll also have to pay some pesky fees, including around $5,000 to obtain a building permit, and $4,000 for water and sewer inspections.

And don’t forget about Uncle Sam, because he wants his share too. The government will charge you another nearly $4,000 for something called an impact fee, which pays for public services like roads, parks and water treatment in your new community.

Foundation: $35,000

After site work is completed, your builder will lay the foundation for your home, which usually includes lumber and concrete. Homes with basements typically cost more than ones without because there’s more space to cover. Your house could also need retaining walls installed to keep surrounding soil from crumbling and falling onto your foundation.

Home Framing: $52,000

Brace yourself. No, literally! The frame of your house will be one of the highest costs in your house-building budget—beaten only by the land itself and interior costs. This is when your house will start to take shape. Building the skeleton of a house (including the roof) takes a ton of lumber, which can drive up the cost to $41,000 or more.

If trusses—the fancy name for a series of triangular structures designed to support the roof—aren’t included in the cost to build the frame, they might add another $6,000 to the budget.

Once the "bones" are in place, you’ll need to pay around $3,000 for sheathing—a flat layer of boards that cover and protect the frame and trusses. Think of it as the skin that covers the bones of your house. If you add metal or steel materials, your framing expenses will bump up the cost by another $2,000.

Exterior Finishes: $42,000

The exterior wall is an expensive line item because it covers the perimeter of your house, and that requires a lot of material—$19,000 worth, on average.

Exterior finishes also include installing any openings in your house like doorways, windows and the garage. You can count on those costs being somewhere in the neighborhood of $12,000. Finishes on the roof will tack on another $10,000. 

Interior Finishes: $75,000

Get out your wallet! Besides the cost of the finished lot, the interior is usually the most expensive part of the cost to build a house. There are a lot of expenses to cover, so let’s break it down in a chart.

Cabinets and countertops




Doors, trims and mirrors


Drywall installation








Plumbing fixtures








Major Systems Installation: $44,000

Installing major systems in your house will cost about as much as the exterior finishes. Major systems include plumbing, HVAC and electricity. Unfortunately, trimming the budget isn’t really an option here (unless you’re okay with not having indoor toilets).

Keep in mind that these costs don’t refer to the actual fixtures that hook into plumbing and electrical systems—like sinks, toilets and lights. That stuff is grouped into the cost for interior finishes.

Final Steps: $20,000

You’re almost there! The final steps to building a house will bring you to outdoor items like landscaping and the driveway. They also include surrounding structures like a porch, patio or deck. And don’t forget about the final cleanup, which can cost around $3,000.

Miscellaneous: $11,000

Finally, the average person spends $11,000 on items that don’t fit into any of the other nine categories during the home-building process. So, be sure you have about that much set aside for anything else you may need, or in case something unplanned pops up along the way.

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.

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 Bob the Builder and his talking construction equipment get involved, 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 liaison by helping you communicate with your builder and architect from when the build starts to when you move in.

The best place to find a high-quality agent is our Endorsed Local Providers (ELP) 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 must create 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 an elaborate theory.

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

Create a blueprint.

A detailed blueprint or building plan is a must. Like we 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. (By the way, going with a draftsman instead of an architect is a great way to save a lot of money.) That way, they won’t go overboard and plan for things you can’t afford just because they think it looks cool on paper.

Once you make your decisions, you need to stick with them. One or two change orders during the building process are no big deal, but anything more than that could bust your budget and cause your schedule to have some big-time delays. 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, before a single shovel touches the dirt, exactly when the trim carpenter will show up. You need to know when the painters are coming. When the roofers will be there. When the bushes are going in. Get the idea?

When you take the time to craft 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 may pop up won’t affect you.

Another perk to having a detailed schedule is being able to check up on it periodically 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.

Ready to Build a House?

Once your house is built, you get to do the fun part—moving into it! Since the time it takes to build a house is less than a year, it’s definitely not too early to start thinking about your moving plans. Moving can be overwhelming if you don’t have an easy way to get your stuff from point A to point B, and that’s why you need to get PODS Moving & Storage on your side.

PODS will drop off one of their moving and storage containers at your current address and let you fill it up on your own time. Then, when you give them the thumbs up, they’ll pick it back up and deliver it right to your brand-new house. It’s super convenient, and it’ll keep you from having to cram your 10-year-old rock star’s drum set into your Tahoe at the last minute.

Get a quote from PODS today!

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Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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