Curious about how much it costs to build a custom home? Let’s find out!
Building a custom home involves a multitude of expenses throughout the process. This includes fees associated with architectural design, land acquisition, materials, labor, permits, and more.
Understanding these costs is essential for financial planning and budget allocation. Therefore, in this article, we will discuss all the different home construction costs in detail.
What Costs are Required When Building a Custom Home?
Building your custom home takes a significant financial commitment. According to a report, you would need at least $900,000 for a 2000 sq. ft. home in the lower mainland BC. not including the land.
To effectively manage the budget, it is imperative to know the different costs that you need to account for.
Here’s an overview of what you can expect:
Land Prices
The first major cost in building a custom home is acquiring the land. Land prices can vary significantly based on location, size, and the availability of utilities.
In urban areas, land tends to be more expensive due to higher demand and limited availability. Conversely, rural or suburban areas might offer more affordable options.
The cost may be influenced by the land’s topography and soil condition, which can affect construction feasibility and costs. Additionally, the potential future developments in the area are also a factor that determines the price.
Architect’s Fee
If you have a specific vision for your dream home, you will be looking to hire a skilled architect to plan a functional and affordable infrastructure.
Hence, you need to set aside the architect’s fee as well.
Architects typically charge either a percentage of the total construction cost, a fixed fee, or a dollar value per sqft price. Their rate structure can also vary depending on the complexity and scope of the project.
On average, architectural fees can range from $5 to $12 per square foot to design a home. This price range will depend if the designer is a home designer or an actual architect.
Permit Costs
When you’re building a house, you need to obtain the necessary permits to avoid legal troubles.
For example, building permits are required to ensure that the construction complies with local building codes and safety regulations. Additional permits, such as for electrical work, plumbing, and others specific to the area should also not be overlooked.
Permit costs can vary widely depending on the location and the scope of the project.
It is important to remember that failing to obtain the proper permits can result in fines and delays, which is why it’s crucial to factor these costs into your budget early in the planning process.
Contractor Fee
Apart from being an architect, you also need to hire a general contractor and a team of builders to oversee and manage the entire project.
A reputable contractor can provide valuable expertise, ensuring that the construction process runs smoothly and stays on schedule.
At Versa Homes, we are a little different, we believe that you should understand the cost of your project at the beginning and it should not go over unless you change the scope of work and you are notified of the price prior to doing so. How we achieve this is by providing you a fixed price and we guarantee that it wont go over if you don’t change the scope of work.
To get a fixed price takes some work from the contractor and client to finalize the complete design, architectural, engineering and interior design. Most clients and builders want to get going fast without all the details, so they miss this crucial step and put themselves in a bad spot and are always over budget.
Interior Designing Costs
The interior design of your custom home is another substantial expense you need to prepare for.
This includes drafting all detail of the interior layout and elevations, selecting and purchasing finishes such as flooring, cabinetry, countertops, lighting, and fixtures.
Interior designers typically charge an hourly rate or a flat fee. The cost of materials can vary greatly depending on the quality and brand chosen.
Custom features and high-end finishes will increase the overall cost, but they can also add significant value and personal satisfaction to your home.
Outside Designing Costs
The costs of designing and developing the exterior spaces of your home should not be ignored. These include landscaping, driveways, pavements, fencing, and other outdoor features.
The cost will depend on the size of the property and the complexity of the design.
Remember that investing in well-planned outdoor spaces can enhance the home’s curb appeal and provide functional outdoor living areas, increasing the overall value of the property.
How to Finance a Custom Home?
Financing a custom home can be difficult. Here are some tips that may come in handy when arranging the funds:
Construction Loans
These are short-term loans specifically designed for building a home. They cover the cost of construction and are typically converted into a mortgage once the home is completed. You only pay the interest on the money you use so it makes it a bit more affordable during construction.
Approval for a construction loan often requires a detailed construction plan and budget.
Traditional Mortgage
After the home is built, you can refinance the construction loan into a traditional mortgage.
This long-term loan helps you pay off the construction costs over an extended period, typically 15 to 30 years, with fixed or adjustable interest rates.
Savings
Using personal savings is a straightforward way to finance your custom home.
However, while this option avoids the interest costs associated with loans, it also requires significant upfront capital.
Resale of Previous Home
Selling your current home can provide substantial funds for your new custom home. However, it is important to coordinate the sale with the construction timeline is crucial to ensure smooth financial and living arrangements.
Build Your Custom Home!
Building a custom home is a significant investment that offers a unique opportunity to create a living space tailored to your preferences and needs.
Get a quote from Versa Homes today, and take the first step towards building your dream home.
Frequently Asked Question
Are custom-built homes cheaper?
Custom-built homes are generally more expensive than pre-built or production homes due to their personalized design, higher-quality materials, and unique features.
However, the cost can vary based on location, size, and specifications.
What is the most cost-effective way to build a custom home?
Here’s how you can build a custom home cost-effectively:
- Carefully plan and budget from the get-go
- Choose a modest design
- Go for a less-expensive location
- Prioritize quality but also try finding building materials at a lower price
- Hire a reputable contractor
Curious about the cost of building your dream home?
Use the Versa Homes quick budget tool to get an estimate and take the first step toward your new home today!
