Maybe you’ve been looking for a home for quite some time, and nothing on the market is meeting your needs. You might also be at a point where you don’t want to settle, and you want your dream forever home. In these situations, you might decide to build rather than buy an existing home, but how much does it really cost?

The cost of building a custom house depends a lot on individual factors. For example, it varies depending on where you live, the materials you use, and your square footage.

A custom-built home is also different from a production build. In a production build, you’re choosing certain customization options within a subdivision. While your home is in some ways custom, you’re limited to selecting from what the builder or developer offers.

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Cost by Region

According to the U.S. Census Bureau’s Survey of the Median Price per Square Foot for new homes in 2017, in the Northeast, the average cost was $161. In the West, the average cost per square foot was $139 and in the South it was $100. For the Midwest, the average cost was $106. That means if you want a deal, you’re hopefully building in the South or perhaps the Midwest. The Northeast is the most expensive region to build a home.

Even within a certain region, the costs can vary depending on the county or city where you’re building.

How the Individual Costs Break Down

So, as you’re building a home, you’re quite literally starting from the ground up.

After you buy land, you’ll begin with what’s called site work. Site work includes inspections, plans, and preparing land for construction. This usually costs around $16,000, depending on the extent of the work. This can also include money you’ll have to pay to the local government like the impact fee, which pays for roads and parks in your community.

The cost of a foundation is usually around $25,000. The foundation will include excavation to ensure your land is completely level before construction is started. A home’s foundation costs will also include concrete and lumber. If your home is going to have a basement, count on foundation costs being more.

From there, you pay for framing, which is tens of thousands of dollars, and then you’ll pay a similar cost for exterior finishes. Exterior finishes include the walls and support structures, as well as things like windows and doors.

Count on spending around $35,000 for your systems like your HVAC and plumbing.

Then, you can start counting the costs for your home’s interior. This will probably be where most of your budget goes, and there’s a lot of variance depending on the type of finishes you want. Interior finishes include everything from your countertops and cabinets to your trim.

Is it Cheaper to Buy or Build?

Whether or not it’s cheaper to buy or build isn’t something that can necessarily be answered. It all depends. For example, the average sale price of a home in 2017 was around $291,000, which is quite a bit lower than the average building price of $428,000.

That doesn’t mean you can’t build a cheaper house than that $428,000 figure. It’s all up to where you live and the type of materials you use.

If you do decide to build a house, unless you’re paying cash as you go, you’ll need a construction loan. A construction loan is usually converted or refinanced into a mortgage loan once the house is completed.

You go through a similar application process for a construction loan as you do a mortgage, but rather than getting the money in a lump sum, your builder gets a series of draws. Your builder requests a draw when they’re moving onto the next phase of work. An inspector comes out, checks the progress for the lender, and then disburses the draw.