April

How Much House Can I Afford?

The most common question I’m asked as a general contractor is “how much can you build me a custom house for?” This is a very difficult question to answer without a complete set of plans and specific information about specifications. Even buying a new car can vary greatly do to the vast array of options and upgrades. This makes it difficult for the consumer to know how much house they can afford. I occasionally have people come to me very excited about building their new home, fresh from the architect with plans for a beautiful new home only to find out they can’t afford to build them.

Although architects and draftsman posses the skills to design a home they often lack the ability to predict what the house will cost to build. In their defense the market has gone crazy recently after years of predictable and stable material pricing. Material inflation has spiraled out of control the last few years, in some cases doubling in just 2 years with some materials. This makes it hard to estimate costs with even a seasoned builder.

So where does that leave the person wanting to build a custom home? There is no perfect answer short of having the project bid out but here are some suggestions that may help.

*QUALIFY- Contact a mortgage company, complete an application, and pay for a credit report. This will tell you how much money you can qualify to borrow. See our links page for mortgage companies and brokers.

*RESEARCH- Do some research to find out what you want in your home. Determine the type of flooring, countertops, appliances, home automation, doors, cabinets, and even the style of home you want.

*LAND- When purchasing your land carefully evaluate the site. A hillside lot or one with a big wash running through it can require a lot of expensive site prep, also read through the HOA’s design guidelines, some of these requirements can significantly add to the cost of building.

*STYLE- Some home styles cost more to build than others. A rectangular ranch style house is much cheaper to build than a home that is cut up with the outside wall that changes directions often and includes radius walls, tall ceilings, intricate detailing, wrought iron, stone veneer, courtyards, etc.

*MATERIALS- Can you live with average custom materials or must it be top of the line? Most homes have aluminum frame low-e windows which are a 1/3 cheaper than most wood case windows with names like Pella or Anderson. This applies to just about every element of your home, prioritize what’s important to you and if you can afford it.

*OPTIONS- Some options can be cut and done later if the project comes in higher than initially estimated. These options might include a pool, Jacuzzi, fence, landscaping, window coverings, additional concrete, or finishes to a theater. Be careful though, if you list in your budget to the bank money for a pool, the bank will expect to see a pool, sometimes this money can be put under a generic contingency fund to be used as needed, this gives you more flexibility in it’s use.

*BUILDERS- Once you’ve done your research talk with a few reputable builders about what your house might cost. Don’t expect an exact quote but rather a range. Interview a few architects or draftsmen and ask about their skill in predicting what the project might cost or their ability to keep you within your budget. Don’t try to build at the end of your means, leave some financial reserve in case of cost overruns or upgrades as you build.

Predicting how much a custom home will cost to build can be tricky. Just 5 years ago many custom homes could be built for $80 to $90 dollars a livable square foot. Currently we’re seeing prices range anywhere from $130 to $180 dollars a livable square foot and that’s guaranteed to continue going up.

* The information contained in this “tips” section is to be used as a general guide only. When making decisions about your project a professional should be consulted using the specific information that is unique to your project.