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January 22, 2019

House Building Budget: Financial Steps to Building a House

When you finally make the decision to build a new home, it’s important to plan ahead and budget for it financially. You’ll want to make sure you have enough money saved so you can afford the location, home plan, materials, and upgrades that you desire. Use this house-building budget guide to learn how much you’ll need to save and the steps you’ll need to take to save it.

Average Cost of Building a House in PA

According to Home Advisor, the current national average cost to build a house is $289,874 (or $150 per square foot in a 2,000-square-foot home). The typical range is anywhere from $148,574 to $431,913.

Building a house with a home builder or developer is a popular option due to the amount of customization available. Communities built by home builders usually offer many amenities and are placed in ideal locations. Plus, they allow you to save up to 15 percent on home building costs compared to fully-customized homes.

Creating a House Building Budget in PA

As you begin to configure your budget, consider the following factors. They will help you determine how much money you’ll need to save.

The Logistics

Before creating a house building budget, it’s recommended that you:

  • Have no outstanding debt.
  • Have enough savings in your emergency fund to cover six months' worth of expenses.
  • Plan on paying for your new home in cash.

If you don’t plan on paying for your new home in cash, you’ll want to opt for a 15- or 30-year mortgage and down payment of at least 10 percent of your home. Your monthly payments shouldn’t be more than 25 percent of your take-home pay.

Your Wants, Needs, & No-Ways

As you begin thinking about what your newly built home will look like, map out what you can’t live without, what you wish it included, and what you definitely don’t want. This will help you prioritize choices when creating your house building budget. Consider some of these questions to get you started:

  • Do you want to build a house in a development or community?
  • Do you need a flat yard or are hills acceptable?
  • How much room do you need around your home?
  • What should your home floor plan look like?
  • What kind of outside living spaces do you want?
  • How big should the garage be?
  • How many bedrooms and bathrooms do you need?
  • Are there any specific materials or features you’d like to incorporate?

When creating your budget, try to focus on the structural necessities (size, stories, etc.) of your home design first. Whatever is left in your budget can be put toward design features and upgrades like a gourmet kitchen with an island or a peaceful sunroom addition.

Home Location

The cost of building a home includes the land it sits on. You’ll want to consider how big of a yard you’d prefer and where you’d like your home to be. Depending on the area and amenities surrounding it, lot prices can be steep.

The great news is that Berks Homes allows you to build on your own land! Have a specific place in mind that suits your budget? We can make it happen!

Construction Costs

One of the main components of your budget will be comprised of construction costs. You’ll need to plan to save for:

  • Foundation — Excavating, adding retaining walls, etc.
  • Framing — The framework that holds up your roof.
  • Interior and Exterior Finish — Anything from insulation and drywall to windows and doors.
  • System Installations — Your heating, cooling, plumbing, and electric.

By working with a home builder like Berks Homes, you can ensure you’re getting the best deal on the construction when you are building a house in PA! From labor to material costs, we provide you with options that meet your budget and needs.

You’ll also want to consider any material options or structure upgrades, as they can add to the price of the base home model you choose from. Our Selection Gallery is full of materials such as hardwood flooring, tile, and carpet options. As you pick out the items you’d like in your home, our Gallery Specialists will assist in helping keep your selections within your budget.

Don’t Forget About PITI

PITI (principal, interest, taxes, and insurance) is especially important when drafting a home building budget. Many first-time homebuyers don’t think about some of the costs aside from building the home itself. You’ll want to make room for PITI in your budget, especially if you plan on getting a construction loan.

The Finishing Touches

Once your home is built, you’ll need to move in and start decorating! Was your previous home much smaller? If so, you may have added furniture and fixture expenses to pay for. If you know what additional rooms you’ll need to furnish and decorate, you can begin to plan ahead for any sofas, chairs, mattresses, bed frames, and tables you’ll need to purchase.

Tips for Budgeting for a New Home

Create a Budget in Advance

If you know you’ll be looking to build a home within the next couple of years, take the time to create a budget early on. This will provide you with more time to save and search for additional sources of income to help supplement your new home fund.

Overestimate Your Costs

By overestimating the cost of building a home, you can help to ensure you have enough money saved with plenty of room for any hiccups or unforeseen costs along the way. Once you have a rough idea of how much your home will cost, add in a couple thousand more for good measure.

Stay Informed

Take a look at our home-building timeline to see how long it will take to build your new home. This will help you effectively plan ahead and account for potential delays due to things such as environmental conditions.

Ready to build your new home? Contact one of our home-building professionals today!

Kelly & Megan
Questions?Ask Kelly