How to Break Down Your New Home Build Budget

Finding a pre-existing home is usually the top choice for homebuyers, but if you decide you want to build a brand new home, there are several budgetary items to consider. From buying the land to selecting materials, to finishings and furnishings, how much does building a home actually cost? Every state and city are different, but I’m going to show you a real life example of how to break down your new home build budget — with our current one in South Carolina!  

What you see isn’t always what you get

Home builders try to lure you into their neighborhoods by advertising “Homes Starting At,” followed by a price that seems really attractive. That price is typically for the least expensive floor plan the developer is selling in that neighborhood, and may only include the home, not the land it sits on. There may be other floor plans that offer more bedrooms, bathrooms and other extras, which means the price will be higher for those floor plans. The base price of the home we picked was $436,900, but this was just for the structure; not the land or any other upgrades.

Location, location, location!

After you decide which house floor plan you like, you’ll then have to pick where you want your home to be located in the lots available. These lots are the plots of land that have been divided up in the neighborhood, and they may vary in size, shape, and location. Something to keep in mind for your new home build budget is the “must-haves” regarding location.

new home build budget

We were drawn to our new neighborhood for a few reasons: the lots were bigger, there was more space between the houses, and it’s just outside where we currently live, which meant the homes were more affordable. The lots that were available ranged in price from $90,000 to the lot we picked at $150,000. Our lot was at the top of the price list because at .68 acres it was larger than many others, it was at the end of a cul-de-sac, and it backed up to the large lake, making it a more desirable location.

Putting down a deposit

After we selected our floor plan and land lot, we put down an earnest deposit of $5,000. This money was both an assurance that we were serious about this contract, and that the builder wouldn’t sell this lot to anyone else. At the end of the sale, the earnest money will be applied to the cash we’d need to bring on closing day. Keep in mind: while the earnest deposit locks you in, there are situations where you could be released from the sale and your money returned. Make sure you read the paperwork you sign!

(READ MORE: Why We Built a New Home, and What We Learned Along the Way)

Designing your home

You’ve picked your floor plan, lot, signed your paperwork, and paid your deposit; next stop on your new home build budget is the design center, where you’ll personalize your soon-to-be new home. Each home builder has a list of items already included as standard options. This could include everything from the number of bedrooms, flooring types, light fixtures, doors, windows, etc. But, this is the point in the process when you can add more bedrooms, bathrooms or bump outs, change the kitchen cabinets, add outlets, choose the trim, select doors and plumbing fixtures; anything and everything to make your house a home.

The extra design choices add up fast, and you may have to look at your new home build budget and decide what’s a must-have now versus something you can change later.

My advice? First, walk through any available models to get a feel for how things look first hand. Then, prioritize any structural items you’d want changed over something more cosmetic (ex: adding a bathroom versus upgraded countertops). Those more cosmetic items may add value to your home, but they’re easier to save up for as a future project; it’s much more of a hassle to change a home’s structure once it’s built. Once we added in all of our must-haves for our home, our total in the design center came to $91,000. 

Comparing pre-existing to the cost of building

When we compared what it would cost to buy a pre-existing for the same price, we could not find a pre-existing home that came close to everything we would be getting with our new home build budget. After all, we handpicked nearly every aspect of this home, including (and most importantly) the location. We would still be close enough to enjoy the beach and downtown Charleston, but have much more open space, proximity to water, and a home that wouldn’t need any updating. With the interest rates so low and the equity we have selling our current home, taking this leap made the most sense for our family. 

Have more questions about building a new home? is your one-stop resource for building, and budgeting for, a new home. From tips and advice, to checklists and step-by-step processes, the “How to Build” section is the perfect starting point for your new home build.