How Much Does It Cost to Build a Custom Home: What to Consider

Ask homeowners what their favorite part of their new home is, and they’ll likely come up with some tiny obscure detail that you probably wouldn’t have noticed until they pointed it out to you: a gorgeous little hidden skylight, crown molding, solar panels.

But that’s the allure of home building and designing your custom home from scratch — you can plan a home that’s completely unique to you. 

You get to decide how much square footage to dedicate to what room, add exactly the kind of countertops that you dreamed of, or have landscaping that could rival the Mad Queen’s garden in Alice In Wonderland. Plus, you’re not in danger of being saddled with an old home that has scary things like mold, asbestos, hidden restoration costs, and more — or the high costs of rental spaces.

Have you been wanting to build a custom home? Whether you’re looking for a tiny home or a palatial one, we'll guide you on how much it costs to build a custom home, what to look out for prior to construction, who can help you build (labor costs!), and even share homes across sizes to inspire you!

How Much Does It Cost to Build a Custom Home in 2022?

If you’ve always contemplated your perfect little dream home but are brought to reality with questions like “how much does it cost to build a custom home,” we’ve got all the answers.

Whether you’re looking for a compact, budget-friendly design like the 550-square-foot Essential Retreat from DEN Outdoors or a more sprawling luxury home like the 1,000-square-foot, two-story A-Frame House, or something larger, here are the average home building costs in the U.S. 

A baseline size for a single-family home is a median of 1,600 sq. ft. When it comes to home construction, because there are so many variables for construction costs (size of land, size of home, type of home, location — rural areas or a town/city, foundation type, building permits, personal upgrades), it’s hard to give a specific amount or an exact answer to how much it costs to build a custom home.

But enough information exists to guide you in your home building journey.

We’ve done the research at DEN using data from Gordian on current national pricing, build costs, and home prices. Our recommendation is to use a national average of $244.50 per square foot for calculations and budgeting. So if you use a general contractor to build a 200-square-foot cabin, you’re looking at $48,900. Again, keep in mind that this is a reference point and prone to change.

A 2022 article on Forbes.com also suggests that you “consider budgeting in a 15% contingency fund to cover unexpected costs or upgrades that crop up during construction.” This will provide a buffer and hopefully a little peace of mind. Forbes also notes that “the average cost to build a house is about $300,000, including the cost of land.”

Apply those calculations to the amount of square feet you would like your luxury home to cover, and you’ll get an idea of how much it costs to build a custom home.

The final amount is contingent on your personal tastes — so if you’re happy with a tiny plot of land, an eco-friendly dream home with solar panels, and a compact, sustainable size, you can stick to a smaller budget.

But if your dream home is a palatial mansion that could rival Jay Gatsby’s, then your home costs naturally will be higher.

Who Can Help You Build Your Custom Home?

While the idea of your own home is enough to give you cartoon-like heart eyes, where do you start? The first step in building your dream home is acquiring the land you need to build on.

Once you’ve found the perfect plot of land, look to companies like DEN to help you do the groundwork (this includes detailed floor plans!). We guide you from the initial planning and ideating stage of the building process, and have pocket-friendly packages to help you design your custom home.

The Complete package includes a project brief, architectural blueprints, structural plans, a handy buying guide for materials and fixtures, and even a helpful (and much-needed) cost breakdown spreadsheet. 

If you’re on the fence and still considering your options, opt for the Starter package. Once you’re ready to seal the deal, the money you spent on a Starter package can be applied towards a Complete package.

Expenses to Keep in Mind Before Starting Construction on Your Custom Home

Here’s the handy checklist that will be your BFF through your home building journey. From what to put on your list before you start building, to interior and exterior finishes you probably haven’t even thought of, here’s what you need to know about how much it costs to build a custom home.

Pre-Construction Costs

One of the most obvious considerations is: Where will you live while you’re building your dream home? This means you need to account for renting a space throughout the period you’re building. (Yup, this should be a part of your budget).

Another important pre-construction cost is the land you’re acquiring to build on, unless you had the fortune of inheriting a plot. If not, then a chunk of your expenses will be on land — the cost naturally depends on the state and type of location.

For example, building a custom home in California is significantly higher than in Oklahoma. Another factor that could add to project costs is if your plot has an unsalvageable property that needs to be demolished, increasing house costs.

House plans or architectural fees are another significant cost, but at DEN we’ll help you draw up the perfect house plans. In fact, with the Complete package you’ll even get a complete list of construction materials, plans stamped by an engineer or architect, and review advanced details like mechanical, plumbing, and electrical systems!

Type of Home

Do you want a space-saving new house in the great outdoors where you live minimally, or a sprawling beach house with fancy plumbing fixtures and the works? Factor this into your budget before you begin.

Paperwork

Once you’ve purchased land, you move on to the fun part (not!) — the paperwork. Think building codes, acquiring building permits, no-objection certificates and/or consent letters from different departments, structural reports, and insurance.

While these might seem like torture to anyone but a classic type-A personality, they’re a crucial part of home design and will contribute to overall cost.

Cost of Materials

Pick building materials that fit in your price range. You could be dreaming of Italian Calacatta marble countertops, but if granite that’s known for its durability fits your budget, then go for the latter. Make a comprehensive list of all the materials you need for interior and exterior construction.

The exterior will include excavation, foundation, framing, roofing, siding, driveway, and landscaping. Interior finishes will include HVAC (heating, ventilation, and air conditioning system), drywall, plumbing, electrical, insulation, doors, windows, flooring, cabinets, fixtures, appliances, driveway, cleanup, and the like.

This is the moment you decide whether you give in to your inner Martha Stewart and get a fabulous two-door refrigerator or go with your interior designer’s suggestion and keep your appliances small and sleek. Now is when you consider the kind of furniture you want, which if you ask us, is perhaps one of the most fun parts of designing a custom home!

Labor Costs

This includes everything from the cost of a real estate agent, contractor and subcontractors, architect, civil engineer, and electrical engineer to a plumber, electrician, interior designer, developer, builder, painter, drywaller, roofer, mason, carpenter, or landscapers. You’re going to be hiring an army — so be ready to pay for one.

Sweat Equity

A pro tip when it comes to home building is sweat equity. This could help cut down on borrowing through a construction loan, as it means taking on certain smaller tasks yourself, like painting the house exterior and interiors, planting trees and plants, laying your own flooring, and the like.

It won't necessarily be like an HGTV show where one day your home is in shambles and the next it’s magically made over, but it will save you money.

Other Costs

Certain smaller expenses also add to the average cost of building: portable toilets for the labor force, organizing dumpster/garbage trucks to get rid of all the trash left from building materials, alterations to the topography of the plot (if required), and cost of final inspections from necessary authorities. If you helped finance home construction with a construction loan, you’ll need to have your lender come and do a final check.

Custom Homes Across Budgets (and Sizes) to Inspire You

From a compact 144-square-foot design that sleeps two, to a gorgeous 1,650-square-foot construction with two floors, here are some DEN designs for amazing custom homes across a variety of budgets.

Tiny House 2.0

For those looking for a standalone home but with a small footprint, this 144-square-foot design is perfect. You can build out in the great outdoors, and the Tiny House 2.0’s floor-to-ceiling windows will make you feel like you’re pretty much out in the woods. It has a Murphy bed, bathroom with shower, and a mini kitchenette, making it perfectly lovely and livable for a couple or a single owner.

Alpine Tiny House

With a kitchenette and lots of storage space, this 300-square-foot home is all about making the most of a compact space — with a fold-down Murphy bed that saves space during the day and opens out to give you a cozy bedroom at night (or whenever you want a nap!)! A wood fireplace adds extra warmth, while floor-to-ceiling windows offer endless views

Modern Cottage

If you’re looking for something more spacious, then the 600 square-foot Modern Cottage is perfect for you. This lofted home plan is designed to be light and airy, and fits up to six people — great for a small family with guests to host. With a queen-size master bedroom, a bathroom with a soaking tub, and wraparound decking, it has all the amenities you need, within a manageable space.

A-Frame 2.2

There’s spacious, and there’s sprawling. The two-story A-Frame 2.2 at 1,650 sq. ft. is the latter. It’s perfect for families with kids who want their little ones to have space to run around inside and outside the house (especially if you build it on a lush green patch of land). It has two bedrooms, two baths, an open-plan kitchen, and all the luxury amenities you could dream of in your custom home. 

Are You Ready to Build Your Custom Home?

No matter the size, building a new home can be a daunting process. Determining how much it will cost to build a custom home is a crucial first step. Using the research out there on average costs can help you get a sense of a budget to plan for. 

If you’re ready to go from pining over the houses on your Pinterest board to investing in your own, DEN's design packages contain everything you need to get started on your dream home journey.