Building vs Buying A Home: Essential Things To Consider


When you’re considering whether to build or buy an existing home, there are a lot of factors to take into account.

A few of these include your budget, construction costs at the moment, the current real estate market, the number of people living in your household, and when you want to move into your new home.

One question often arises is whether it’s better to purchase an existing home or build a house.

There is no one right answer for everyone; however, here are some things that can help guide you in making this decision.

The cost of building a home vs. buying

home research

When deciding whether or not you should build a home, one of the first things to consider is the cost of building a home vs. buying.

The price tag of building a customized house is significantly higher than purchasing an existing house.

This can make it difficult for some people, especially first-time home buyers who might not be able to afford both renting and building at the same time.

However, there are also many benefits of building your own home that make it worth considering!

If you have a lot of money saved up, then building may be a more attractive option. On the other hand, buying might be better for you if you need help financing your home purchase and want to save money in the long run by avoiding interest payments on loans.

It’s important that you do plenty of research before making this decision so that you will be well-informed — here are some things to consider:

  • Are there homes for Sale that fit what I’m looking for?
  • Is lumber particularly expensive or affordable at the moment?
  • Is there a new construction home that I can purchase instead of building my own?
  • Do I have a particular reason for building instead of buying?

These questions should all be answered before even looking for contractors or homes for sale.

How much does building a new home cost?

The average cost of building a new home in the U.S. is $284,000, according to the National Association of Home Builders (NAHB). One thing to keep in mind is that the average price of lumber is constantly fluctuating.

building a home

That said, this figure can vary greatly depending on many factors: the size of your home; where it’s located; the quality of materials; energy-efficient appliances, comfort, and more.

For example, if you choose to build a brand new home with a ton of square footage, high-end finishes such as Calacatta marble countertops, and top-of-the-line appliances, then expect those costs to be higher than someone who opts for more modest options.

The same goes for location—if your home is built on a lot overlooking a golf course, then chances are its property value will increase over time.

On the other hand, if it’s located next door to an industrial site, its value may decrease due to noise pollution or other nuisances associated with living near factories.

Building your home on your own land

If you’re building a custom home on your own land, you can save money by not paying for the cost of purchasing a lot, as well as avoiding the added costs associated with getting permits and inspections on your property.

You’ll also avoid paying administrative fees to an agent or broker, which can be hundreds if not thousands of dollars depending on where you live.

Building the house yourself allows for complete control over its design and size—making it easier to build something that fits your needs, budget, and style.

You also have the freedom to choose if you want to build a sustainable home or an off-the-grid cabin but keep in mind this may be more maintenance.

What is the cost of a lot?

lot of land

The cost of the lot you build on will vary greatly depending on the variables above.

Hopefully, you have cash for the purchase price because a land loan typically comes with an extremely high-interest rate.

land loan interest rates today

If you purchase land in an established neighborhood, you’ll likely pay more than if you are building on one of the few remaining vacant lots in town.

The size of your lot will also affect its price tag. It’s common to purchase several small lots and combine them into one large plot for property development purposes, so it’s important to know how much space you need before choosing a site.

The condition of a parcel can also affect its value; whereas a large piece of land with no existing utilities or septic system might be cheap, smaller pieces with underground utilities may be significantly more expensive.

Finally, since many lots have become highly desirable due to their location near lakes or rivers or other natural resources such as rock formations or mineral deposits (such as gold), they tend to appreciate over time—and often cost more than some homes!

How to build a house on a budget

One of the most important things to consider before beginning to build your home is how much money you have and what your budget is. Building a house can be an expensive process, so it’s important to take this into account and plan accordingly.

When considering how much you want to spend on building your home and if building or buying makes more sense for your situation, it’s important that you make some lists.

First, make a list of all the things that are required when building a house (e.g., drywall supplies).

Next, look online at various prices for major appliances on this list so that you can come up with an average cost for each item in order to get an idea about what kind of costs these will run.

Finally, add up all of those costs together in order to see where they land within or above/below your budgeted amount!

How long does it take to build?

For most homes, the build time is around six months. However, it could take longer if you’re building a custom home or if other factors delay construction.

You can also save money by choosing a pre-built modular home instead of one built onsite (i.e., stick-built).

A pre-built modular home is constructed offsite at an assembly plant and then delivered to your lot in pieces—in fact, some companies offer a turnkey service, so all you have to do is move it into place yourself!

The value of modular construction

  • You can build a modular home to your specifications.

  • Modular homes are built in a factory and transported on wheels to the building site, so you don’t have to worry about construction delays or inclement weather.

  • Modular homes are built with materials of higher quality than those used in most stick-built houses, which means they’re more durable and energy efficient.

Building something smaller

smaller home

There are many benefits to building a smaller home. You can use the money saved on your mortgage to build a bigger house after you’ve been living in the small one for a while and need more space.

If you build it yourself, there is no real estate agent or property manager taking commission out of your pocket, which adds to savings too!

You can also put down roots where there aren’t yet by building a smaller home on land that isn’t developed yet but could be in the future.

Cost of a fixer-upper instead of building

If you’re considering buying a fixer-Upper home instead of building a house, it’s important to know what you’re getting into. You’ll have to put in a lot of time and money—and if you don’t know what you’re doing, you could end up with a much more expensive project than you bargained for.

That said, there are some great reasons to consider buying an older home and making it your own:

  • You can save money by buying an older home that needs updating—it’ll be cheaper than starting from scratch.
  • You can customize your space according to your needs and tastes, rather than having to conform to the builder’s vision.
  • It can be satisfying to turn an old home into something beautiful and functional again!

How is your credit?

Purchasing a home with bad credit is a lot easier than building a home with bad credit

If you’re thinking about building a home, you’ll need to have a lot more than just a good credit score. You’ll need a lot, the necessary permits, the materials, the contractors, and more. If you’ve got bad credit and don’t have all of these things lined up then buying a move-in ready home will be a lot less stressful.

It’s much easier to buy a house with bad credit, and in fact, there are various ways to do so. The key is ensuring that you have the right loan program in place and that you’re working with a reputable lender who can guide you through this process.

  • You’ll need to get pre-approved for a mortgage before looking at houses: This will help weed out homes that aren’t within your price range.

  • Consider getting an FHA loan instead of conventional financing. FHA loans will allow for down payment amounts lower than those required by most conventional lenders—and they typically come with lower interest rates.

Building a home vs. buying: maintenance costs

When you’re building a home from scratch, it’s important to know what kind of maintenance costs you can expect. After all, no one wants to spend more money than they have on things like plumbing and electrical work. If you’re in the process of building a custom-designed dream home—or if you’re considering hiring an architect for your project—it may help to consult with someone who has experience working on new construction projects before signing any contracts.

The type of contractor that works best for one person might not be right for another person’s needs or budget. Therefore, it’s important that every homeowner knows how much their renovation project will cost before beginning construction. This way you won’t get caught off guard by unexpected fees and find yourself living out of your storage unit 😬. 

Here are some tips that’ll help cut down on last-minute costs:

  • Know Your Budget & Stick To It: If possible, make sure there is enough room within your monthly budget so that any unexpected expenses don’t derail what would otherwise be considered “Normal” monthly expenses such as groceries & entertainment.

  • Hire A Good Contractor Early In The Process And Get References From Someone They’ve Worked With Before: This way, there won’t be any surprises when it comes time for payment later down the road!

Modifications, upgrades, and add-ons

porch home addition

So what are the best ways to get the most out of your home? Many customizations can be made to any home, from upgrades and add-ons to more involved modifications. Some examples include:

  • Adding a deck. A deck is a great way to expand your living space and create an outdoor room for entertaining. If you have an open-concept floor plan, adding a deck in the backyard will help complete it.

  • Upgrading the kitchen or bathroom. These rooms tend to be focused on more than just functionality—the aesthetics matter as well because they are two of the first rooms people see when entering your home. Kitch remodels can work wonders ✨. You may also want to consider upgrading other areas like adding surround sound speakers throughout your entire house so you can listen to music in every room without having multiple devices around everywhere!

Customization options

One of the main benefits of building a home is the customization options.

You can choose your home’s layout, color, style, and size. If you want a two-story house instead of a single-story house, then you can have it. If you want a certain number of bedrooms or bathrooms, go ahead and get what you want. There are so many options available to make sure that your home is exactly how you want it!


Another important thing to consider when deciding between building vs. buying is what the average cost per sqft is in your area. The average cost of building a new home is around $350 per square foot, which means it can range from $150,000-$1 million, depending on the size of your home and its location. If you’re looking for something smaller than that price range, then modular construction might be the best option for you!

Kurby Team

The Kurby Content Team is a diverse group of seasoned real estate experts dedicated to providing insightful, reliable information for homebuyers, real estate investors, and real estate agents. With backgrounds ranging from real estate brokerage, property investment, and residential home buying, our team combines decades of experience with a passion for demystifying the real estate world. We at Kurby are committed to helping you make informed, successful real estate decisions. Whether you're a first-time homebuyer, a seasoned investor, or a real estate professional, count on the Kurby Content Team to deliver the most relevant, actionable real estate content you need.

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