How Much Does It Cost to Build a House? (Average Cost and Price Per Square Foot)

The process of getting a loan for land is similar to getting a loan for a house:

• You’ll work with the bank for the loan.

• A loan officer will walk you through the process.

• You’ll need good credit to secure the loan.

• There will be an appraisal of the land.

• You’ll need to put a down payment on the property.

Believe it or not, getting a loan for land is more difficult than getting a loan for a house. Fewer lenders specialize in land loans—you’ll need better credit, and you’ll likely need a larger down payment (upwards of 35% down for raw land).

A home construction loan is a short-term, higher-interest loan that will give you the funds you need to build a residential property. (A construction loan term is typically one year.) How does the new construction process work?

1. The borrower applies for a construction loan from the bank. (To get it, the borrower must supply financials, plans, and project timelines.)

2. If the bank approves the loan, the borrower starts drawing funds for each phase of the project. (Throughout construction, an appraiser or inspector assesses the build to authorize the next stage of funds.)

3. Once the build is complete, the borrower usually converts the construction loan to a permanent mortgage.

A land loan and construction loan sound complex and pretty involved. Wondering if a home equity loan might be easier?

If you already own a house (that you’re going to sell after building the new home), and have a bunch of equity—you could pull money from that equity to start the new build process. It’s a pretty good idea.

With a HELOC, you can pull up to 90% of the value from your home—and the closing costs are often cheaper than if you went through the construction loan process. The only issue you may run into is if you have enough equity in your current home to buy the land and construct your new home. If you do—this is certainly an option worth exploring.

And if you don't—consider funding only the land with a HELOC. (It’ll save you the hassle of getting a land loan, and could save you some cash.) Get all the details and implications from your local bank before acting on this idea.

Want to save $50,000? Put your builder hat on, and project manage the home build yourself. That’s right—maybe you can get your house built without a contractor.

It’s a risky move, since the contractor coordinates everything and problem-solves all the issues that may arise—but, if you have some experience in construction and project management (and have some extra time on your hands), this could turn into huge savings.

It won’t be easy—but earning a quick $50,000 never is! (Want a project build estimator? You can use this one from my recent remodel estimate.)

The average cost to build a 2,000-square-foot house is $404,000. Maybe that’s way out of your budget. (And honestly, it may be way more size than you need—especially if it’s just you and your spouse.)

Instead—how much does it cost to build a 1,200 sq ft house? It’s a significant price difference. Like that, your build cost goes from $404,000 to $242,400. Get creative—ask yourself those tough questions:

• Do you really need three bedrooms?

• What if you got rid of the den? Would you really miss it?

• That master suite—maybe it can be just a standard bedroom instead.

Maybe you don’t want to limit your space permanently, but you might postpone it if necessary. (And perhaps even finish it yourself down the road—double savings. Cha-ching!).

Perhaps you could get the basement studded in—but don’t have it drywalled, mudded, or painted. You could do the same thing with one of those bonus rooms or even the garage. If the builders don’t need to do all the work, they’ll give you a break on the overall build price.

If you design your own house, you’ll have additional costs with the architect and the builder. (With special requests, build times take longer—which means more money out of your pocket.)

If you want to save money, meet with the builder first—see what designs they’re familiar with. This approach will probably save you money.

If you’re serious about saving money on your new home, cut back on the luxurious materials. Look into the materials list for building a house, review the most expensive components—and dial it back a notch.

Do you need marble countertops throughout the house? (And those top-of-the-line appliances—are they going to improve your life that much?) Look at it this way—if you’re on a budget, would you rather have more square feet or a shinier refrigerator? (I’d take the space for me—but it’s obviously up to you!)

The cost per square foot to build an A-frame house is between $400 and $600. Compared to a standard new construction cost of $202 per square foot, there are no savings here. Here’s where the savings come in, though—

Since the A-frame is a straightforward structure, you could do much of the work yourself. Reduce the labor to nearly nothing—and your per-square-foot cost plummets to between $100 and $200.

If you could get the cost down to $100 per sq ft, a 2,000-square-foot home is no longer $404,000—it’s $200,000. (That’s a huge difference!)

The cost to build a 2,400 square foot pole barn house with all the finishes is typically $300,000. That’s significantly cheaper than the traditional home—which would cost $484,800. Why is it so much cheaper?

The biggest price difference is in the foundation. Pole barns require just a concrete slab (with all the living space on one level)—standard homes have a foundation with full basements that need to be constructed.

The national average cost of a tiny home is $45,000—much cheaper than a standard home that will cost more than $400,000. The home itself is much smaller, though—so what’s the cost per square foot?

The average size of a tiny home is 225 feet, which means the cost to build a tiny house is roughly the same as a traditional home—$200 per square foot. But, if you want to save money (and don’t mind living in a much smaller footprint), this would save you a bunch of cash.

The average cost of a shipping container home is $35,000. (The container itself costs only $2,000. Add the land, foundation, all the amenities—and you’re roughly at $35,000.) And in case you’re asking yourself, “What’s the square footage of a shipping container?”

Shipping containers are 40 feet by 8 feet—which equates to 320 square feet. This means the cost per square foot of a container house is $109. (Very reasonable. But just like the tiny home—is this just too small for your desired lifestyle?)

Modular homes cost between $80 and $160 per square foot. For a 2,000-square-foot home, the average build cost is $240,000—much less than the standard home build of $400,000. Why is a manufactured home so much cheaper to build?

There are two main reasons— First, the prefab home is built by the same manufacturer, and in one controlled location—there’s much less downtime and more efficiencies with this process.

Second, modular homes come with standardized designs—with just a few build options that are repeated again and again by the manufacturer, costs are naturally less. (The modular home estimates likely do not include the cost of land. Even with this factor, though, the modular home is still much cheaper than the standard build.)

Owners ofSparkRental.com had this to add, “Today’s manufactured homes exceed the quality of stick-built homes in many ways, including energy efficiency and cost efficiency, without sacrificing build quality. Quite the opposite—modular homes often exceed the build quality of stick-built homes since every component is standardized and doesn’t require custom work by often underskilled laborers.”