Cutting Costs When Building a House

Cutting Costs When Building a House
Written by Irina Vasilescu

Next to your car, your house is one of the biggest investments that you will have in a lifetime. Prior to the housing bubble, banks were more than willing to lend money to would-be homeowners who would like to build extravagant, huge houses because financing was readily available.

But after the economic meltdown a few years ago, it has become more difficult to put together the funds to build a house from the ground up. If you are thinking about having a house renovation or if you need to have a house built from scratch, what are your money-saving options? Read on to find out.

Step 1: Managing the Expenses

Whether you are planning for a major renovation, thinking about extending your house or building a house from the ground up, the number one thing to do is to manage your expenses.

Without a proper financial plan, the costs involved in building a house can easily balloon. You don’t want to spend your first few years at the new house deep in debt, so it does pay to plan exactly how you are going to finance the project.

Fortunately, there are many ways for you to save serious money when having a new house built. There are a few tips that you need to keep in mind for this.

First, never get trapped into paying two mortgages. If you are having a new house built at a different location, sell your old house prior to applying for a mortgage for the new home. By completely getting rid of your financial obligations for the old house, you can start your finances afresh with the new home that you are having built.

But where will you live while the new house is in the construction stage? Instead of maintaining the mortgage on your old home, look for a place to rent first, sell all your stuff as well as the old house, and move into the new home once it is finished.

Even if you are a big household, you can manage at a smaller rental place for a few months. After all, the house that you will be moving to can signal a fresh start for you – without getting you into that obligation of paying a couple of mortgages.

Second, calculate how much money you will need to build a new house. Let’s say that you already have the proceeds from the sale of your old house. Take an objective look at your finances to see how much money you initially have.

Calculate how much funds are needed to build a new house from the ground up. If you must apply for financing, how much can you afford to pay as down payment for the loan?

If you have plenty of time to spare prior to the actual building of the house, open a savings account. The proceeds of this should go towards all the expenses related to having your new house built.

While you are waiting for that new home transition, review your household budget and make sure that you know which aspects of your daily lives you can save on. The funds that you can collate this way can go towards the construction of your house.

If you must move into a smaller rental home, get a second job or sell an extra car, do it so that you can have sufficient funds to finance your new home construction project.

Step 2: Cutting Costs When Building a House

Next, what are the specific ways that you can save money when having a new house built? Take a look at the following list:

Look for a suitable house location

Why are you buying a new house in the first place? If your move is job-related, which neigborhood near your place of work is most suitable for you or your family?

If you want to save on land buying costs, ask your real estate agent if there is a ‘problem lot’ that you can buy for a lower price. It could be a hillside property, a narrow strip of land, or a fill-in property. Since these are not considered as hot a property as other parcels of land, they might be available for a lower selling price.

What’s good about such properties is that if you have a good architect, he or she can maximize the space and turn the house into something that’s uniquely your own.

However, make sure that you would not have to spend on site preparation charges. This includes hauling in-fill dirt to even up the lot, clearing trees, blasting down natural rock formations, etc. Choose a parcel of lot which is the best that your budget can afford. Otherwise, you may have to spend on site preparation charges.

Hire a professional certified contractor

Once you have decided which parcel of land to buy for your new house, hire an architect or a certified general contractor. This is especially true if you have zero knowledge about how to have a house built from the ground up. These general contractors have contacts within the building industry so they would know which team of experts to hire for the construction of your house.

Buy your own building materials

If you want to save a huge amount on house building costs, why not buy your own material? Visit the hardware store so that you can check out which items are on sale.

Demolition sites are also a treasure trove of materials – ranging from barnwood to antique doors. These are the things which will add character to the structure of your house.

Know where to scrimp, and where to splurge

One of the biggest mistakes made by new homeowners is not knowing where to scrimp and where to splurge. If you are having a house built from the ground up, there are aspects of building which may cost more initially, but will pay off in terms of savings in the long run.

Let’s take metal roofing as an example. Wooden sticks as the foundation of the house’s roof may be inexpensive at first, but how long will they actually last? How much would it cost for you to have the wood treated and replaced in the future? By replacing this with more expensive, yet more durable metal roofing frames, you can rest assured that the material will last you for a good number of years.

The same thing holds true for energy-saving appliances and even alternative energy sources. Depending on your new home’s location, you can combine solar or wind energy with power from the grid to give you plenty of utility bills savings over the years.

How about prefab?

Unlike a few decades back when prefabricated homes looked tacky and built out of the box, prefab homes these days are beautiful, well-built and even energy-efficient. There are companies which offer high-end prefabricated materials that you can use. Just make sure that your contractor knows how to work with such materials, and that the area where you live allows such homes to be built based on the local building codes.

If there are tasks which require a DIY solution, do it yourself and save on labor costs

Once your house starts shaping up, there should be plenty of finishing touches that you can do yourself. Instead of having to pay workers for the extra labor, you can sweat it out and claim that you had a hand in having the house built. Some of the tasks which require a DIY solution include installing Venetian blinds, curtain rods, painting, etc.

Take full advantage of the discounts that you can find online

If you are already in the process of shopping for fixtures for the home, this is where your online research skills should come in handy. Look for stores which offer wholesale prices, especially when shopping for lighting fixtures, toilets, paint and all the other materials needed to finish the house. Never buy items online without searching for a coupon, promo or discount code.

If you know someone who is in the real estate or construction business, use your connections to take advantage of discounts. You can also take advantage of tax credits, most of which are available for home buyers and builders. There are first time home buyer’s tax credits that you can take advantage of, especially if your goal is to make your new home more energy efficient.

Other tips on how to save money when building a house

You can also plan which furniture pieces you need in advance, so that you can buy them at discounted prices. When buying major appliances, look for the scratch and dent section where you can get the same quality big ticket items at discounted prices. Just make sure that the scratch or dent does not mar the performance of the appliance in any way. Take advantage of your credit card rewards points or other club membership perks.

By having a plan and knowing where to source your materials, you can save some serious money when having a new house built.

About the author

Irina Vasilescu

Irina Vasilescu is our crafty designer. She joined the team three years ago and is also involved in the writing process.


  • I think that if you are planning to build a house, you will want the best of the best so I do not think that you can save much in building a house .

  • If you really want to build a house you may want to skip the part of saving, I mean in the sense because it’s a house, you’re going to live in it, why would you go for cheaper materials right?

    But based on my experience, it’s always better for you to do the shopping of materials because if you let the contractor do it he might do something for his own bidding. But I think the labor cost is what really racks up the expenses here. Thanks for the tips!

  • Ask for favors! You can never go wrong if you know someone who is experienced – even if you just ask them advice, and not actual labor, it can go a long way!

    • On my personal account I can say that that is a great idea. When I was, well not building my house more on renovations and decorating, I asked for some advice from my friend who happens to be an interior designer and what did you know she completely overhauled my house free of charge, of course I paid for the expenses but her consultation and help is absolutely free which I think would cost a lot of money.

  • Saving money when building a house isn’t really the best idea. If you’re going to build rather than buy, you’d want the best materials that you could get because why skimp on that? You’ve got better resale value and structural integrity if you build with proper materials.

    Labor costs are the biggest issue. If you can find someone who’ll do it cheaper than elsewhere and is good at it, choose them instead. It is worth the shopping around to find the write contractor/s.

    • Couldn’t agree more. It’s cheaper to just buy a house because you don’t have to worry about all the costs or labor and estimations. Also you have to deal with the contractors and architects which is quite a pain if you don’t want to immerse yourself with the details.

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