24 Ways to Save Money When Building a House

Building your own house is exciting, overwhelming, and expensive. Before you jump in and build, it’s important to know how to save money to build a house. It’s not as much about sacrificing or not building your dream home – it’s about knowing where you can save money and still get what you want.

Here are the top 24 ways to save money building your dream home.

1. Get bids from several contractors

As exciting as it is to jump in and work with the first contractor you find – don’t. Get bids from as many contractors as you can. Here’s why.

Every contractor will include different services in the fee. Some fees will seem outrageous, but when you look at what’s included, it may not seem as bad. Others will lowball you, but if you don’t read the fine print, you won’t know what’s included (or not included).

It takes time to get several bids – sometimes several months, but it’s worth the wait. Compare contracts line by line so you can see the big picture of what you’ll get and the bottom line cost.

2. Know what builders include in their base price (and any additional costs)

Read the fine print multiple times before you sign a contract. Know what the base price includes and what will cost extra. This helps when you compare contractor prices too. Look at the bottom line rather than the initial cost.

3. Do some of the work yourself

If you’re at all handy, consider doing some of the work yourself. Think about your abilities and where you can do some of the work without paying a contractor. It will cut your costs down considerably even if it’s only installing faucets and light fixtures, or installing your own floor. YouTube is a great resource for DIY projects. 

If you aren’t handy, think about any friends or family members who can do a ‘side job’ and save you the thousands of dollars a contractor would charge.

4. Know what you want

This seems obvious, but what’s in your head may not be what you want. Get out there and visit as many homes as possible. If the contractors you’re considering using have homes they’ve built that you can visit, take advantage.

Seeing homes built the way you want (or don’t want) in person will help you make better decisions. Some layouts seem like a great idea in theory, but when you see them in person, they aren’t as good. Knowing what you want BEFORE you build will save you the hassle (and cost) of starting over or making corrections.

Write a list of ‘must haves’ and ‘wants.’ The ‘must haves’ are things you can’t live without. Find a way to include them in your budget. The ‘wants’ are things you can do without but would love if you could include them. Prioritize the ‘wants’ in order of their meaning to you to make sure your home has what you want included in your budget.

Pinterest.com and houzz.com are two great resources to find design inspirations and create a “wish list”.

5. Pay for the architect

You may think skipping the architect is the best choice since they cost thousands of dollars, but don’t.

Look at the big picture.

If you pay for the architect’s expertise, you’ll get his overview or opinion of the layout you have in mind. He/she may love it and think it will work, or may think it’s way off base and won’t work. Either way, he/she saves you money in the end because you’ll have a concrete plan that should work for what you have in mind and the area you have to work with.

6. Build an open floor plan

The more open your floor plan, the more accessible the house is and the less it will cost. You can add walls or restructure rooms later if you decide you have other needs, but for now, an open floor plan may save you the most money.

Get with your architect to find out the best plan for the home, that is also the most affordable. 

7. Be open with your builder

After choosing a builder, make sure you are open with him/her from the start. Don’t assume they know what you want – always have the conversation.

This is important from the start so you get a proper bid and aren’t hung out to dry with expenses you can’t afford. If you change your mind or don’t like something along the way, talk to your builder immediately. You could stop them from doing more of what you don’t like, costing you more money to fix it down the road.

It’s important to work with a builder you trust and can communicate well with. When you’re looking for contractors, make sure you discuss how they communicate (and how often) to make sure it’s something you’re comfortable with.

8. Buy raw materials

Buying raw materials (unfinished cabinets and doors for example) could save you thousands of dollars. If you’re good at staining or you know someone who is, you could buy the materials for much less and have the outcome you want.

Look at your local hardware stores, like Home Depot and Lowes, but also look at building surplus stores to see what they may have available at a much lower price.

9. Look for sales

As you get closer to the ‘cosmetic’ part of building your home, look for sales. Lighting fixtures, faucets, window treatments, and flooring are just a few things you may find on sale. Don’t focus only in your regional area – look online too. Most stores offer free shipping on larger orders and save you money on the cost of the items.

10. Look for coupon codes

Never buy anything online without looking for a coupon code first. Even saving 10% can be a tremendous savings when you’re spending thousands of dollars. It takes only seconds to look for a coupon code and save money. A few of our favorite places to score deals on home building supplies are Ace Hardware and Lowe’s.

11. Return materials you don’t use

Your contractor will have you buy more materials than you need – this is normal. They do this in case of an emergency. You never know when something may break or they’ll need more materials than originally planned.

But, if you have an excessive amount of materials left, return them. Before you buy, find out the return policy, but most companies allow returns as it’s common practice to buy more than necessary.

12. Budget for emergencies

Don’t make your budget so tight that even one mishap would set you over the edge. Give a 20% cushion for contingency expenses. You may or may not need it, but if you do, you’ll be glad you have the money handy and don’t need to take out a loan or max out a credit card.

Most lenders require the 20% contingency too. If you don’t have it available in cash, they’ll require that there’s enough room in the loan to cover emergency expenses. If you aren’t sure where to start with budgeting, check out Mint or GoodBudget for help. 

13. Know the lot

You may find the least expensive lot and think you’ve found a bargain! It may not be the great deal you think it is though. 

Bring in a professional and have the lot evaluated. If it’s too rocky, or needs extensive work to provide draining, there may be much more work involved than you think, which means it may cost a lot more than you anticipated.

14. Don’t pay for unusable space

An architect may draw up the most amazing plans that you love the look of, but take a more critical eye to the plans. Is all the space usable or are you paying to build spaces you can’t use?

Some areas are necessary, such as utility areas for pipes, mechanical structures, and electrical systems, but there’s a fine line between what you need and what looks good (and costs more).

15. Buy hardware and fixtures from your local hardware store

It’s easy to want only the best when you build your home, but remember, you’re spending hundreds of thousands of dollars to make it happen. For now, consider buying door knobs, cabinet hardware, and even lighting fixtures and your local hardware stores, like Home Depot or Lowes

Save to upgrade the items down the road, but for now, save the money building your home. 

16. Spend the money on things you can’t change later

This may seem counterintuitive since we’re talking about saving money building a house, but investing the money now in the permanent parts of the home will save you money later.

The foundation, insulation, windows, and siding are all great areas to invest in quality and not sacrifice. Save the money in other areas so your home is built well, has a solid structure, and is energy efficient as that will save you more money to maintain it too.

17. Know your loan options

Building your own home means you’ll need money to build and then live in the home. A construction loan isn’t a permanent mortgage and not all lenders offer them. Shop around to find the best deal

Look at the big picture too. What will the loan cost over its lifetime? Is it a single-close loan (one closing) or will you need to refinance the construction loan to get a permanent loan once the home is ready for occupancy? Mortgage loans are only available once you’re able to occupy the property, but refinancing can cost a lot of money, so price out your options early. 

18. Shop around for a loan

Just like you should shop around for a contractor, compare your loan options too. Not all lenders charge the same, especially for construction-to-permanent loans. Know your options and look at the bottom line, not just the interest rate.

LendingTree is a great place to find loans from various lenders – you complete one loan application and get quotes from multiple lenders. 

19. Don’t use a real estate agent

We can’t help but think a real estate agent is necessary to buy or sell a home. While they are a great option, they cost a lot of money too. If you’re selling a home, try selling it by owner first. You’ll save 6% of the sales price in commissions.

Some real estate agents encourage buyers to use them even when building a home so they have a professional negotiating on their behalf. While it’s a nice gesture, it will cost you more because the builder will be less likely to negotiate fees since there’s a real estate commission involved with a real estate agent.

20. Have a backup plan for costs

If you max out your budget but aren’t done building your home, what will you use to pay for it?

Have a backup plan before you build. A 0% APR credit card or low-interest personal loan may be a good option. Only use these options if necessary, but shop for the best rates to avoid excessive interest charges.

21. Recycle materials

Don’t think all scrap materials are garbage. Work with a contractor with an environmentally conscious work ethic and see what you can reuse. You’d be surprised at how many corners you can cut on material prices just by recycling materials.

22. Think about energy efficiency

As you build your house, think of long-term costs. If you spend a little more on materials but have an energy efficient home, you may save thousands of dollars in upkeep, which may cost less than if you saved money on materials but had higher energy bills.

23. Buy your own appliances

Builders often have partnerships with appliance companies, which is convenient, but often more expensive. Instead, buy your own appliances, shopping sales or looking for coupons. You’ll save money and get the features you want.

24. Save on flooring

Wood floors are popular, but not necessary. Today there are many ‘fake wood’ alternatives that are sturdier and more realistic especially for busy families. Look at your laminate and luxury vinyl plank options and see how much money you can save.

Saving Money Building a House FAQs

How much money can you save building your own house?

How much you save building your own house depends on the location, size, and type of home. It’s possible to save thousands of dollars building your own home, though, because you’re in charge of all decisions including the materials used and what you do yourself.

Where are the best places to save when building your own house?

Before you try to save when building your own house, think about what’s most important to you. Write a list and prioritize each item. The items at the top of the list are essential and may not be an area to sacrifice, but as you work down the list, you’ll see areas you can cut corners, shop around, or cut out to save more money.

How much money can you save being your own general contractor?

The general contractor takes up a large portion of homebuilding costs. Many people save as much as 35% when they manage the project themselves, but understand it’s a large undertaking to do this. It requires a lot of time and organization to do it right.

How much money should you save before building a house?

Building a house is a much larger risk for banks, which means they require a larger down payment. Most banks require 30% or more for the down payment and you should also have at least 15% for emergency or contingency costs.

Save Money on your New Construction Home

Building a home is exciting, but don’t let the excitement cause you to overspend. Take your time finding ways to save money on little and big things. If you cut $1,000 here or there, it adds up, leading to the construction of your dream home – just the way you want it.

Kim Pinnelli is a personal finance freelance writer and koopy.com contributor. She lives in the Chicago suburbs, writing from home for the last 13 years. Kim enjoys helping people understand personal finances and writes on topics about saving money, investing, planning for retirement, and ways to increase income. In her free time, Kim enjoys hanging out with her 3 children, reading, crocheting, and spending time outdoors.

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