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Budget | Custom Home Building Cost Guide

Budget – Custom Home Building Cost Guide

Today, I want to review budgeting for a custom home. I’m going to review the purpose of budgeting and when you need to complete your budget. Then I want to review the steps to develop your budget. To do so, you must know how much you can spend on your project. The “All-in” amount includes the Land, Site Development Costs, Permits and Fees, Plans and Design, and Build Costs.

Step One: Determine the Land Costs

Determine the land cost and list that amount. Whether you own the lot or still need to make a purchase, write out that value. For example, let’s say your total budget is $1 Million, hitting that number starts with your land cost.

Step Two: Evaluate Site Costs

Evaluate the actual site costs to improve that land. To make the property buildable, you must identify and calculate what costs are needed to prepare the land for a new home. These costs include items such as connecting to sewer & city water, digging a well, or installing a septic system.

Step Three: Permits and Fees in San Diego County

Permits and fees differ depending on the jurisdiction in which the land resides within San Diego County. Sewer and city water connection fees differ from the permit fees to dig and install a well and septic. Each municipality will calculate their permits fees differently. These permit fees are necessary to complete the site costs on the property. Adding steps one through three together will give you the first budget number. Once you have those, the actual site costs and cost of the land added together, you will know how to begin step four.

Step Four: Plans and Design

Let’s say the total number for the first three steps is $300,000. If we stick to our $1 million budget example, that leaves us $700,000 to build the home, pay building permits and fees, and solidify the plans and design.

The home structure itself can be simple or complex, thus affecting the price to build. For example, a home shaped like a single story or stacking two story box with a simple gable roof keeps the construction costs down. Complex building costs may include adding many walls that cut the home up and don’t easily stack on top of one another when building a two story. A complex roof system also increases build costs as well as adding decks, roof decks, and covered patios. We can control our build costs by designing a simple structure as opposed to a complex structure. 

Step Five: Build Costs

Several factors impact the construction of a home including the structural costs mentioned above. The other large cost is the finishes. Controlling the finishes in the home will help control the budget. Home finishes include drywall texturing, paint, flooring, cabinets, and many other items both on the interior and exterior. The price-point per square foot differs drastically based on these finishes and selections. To work within a $700,000 budget, you must understand the ratio between your finishes and your project size. For the home to meet your square footage needs, you must design the cost to consider either:

  • A larger square footage home with a reduced level of finishes
  • A smaller home with an increased level of finishes.

Benefits of Working with a Design Build Contractor

The build costs can differ quite a bit with the costs for plans and design. Adding a design build contractor adds great value to your design team. Architects and draftsmen are excellent at drawing and designing, however, design build contractors have a good pulse on current costs and market trends. They can provide valuable insight into what must go into the plans and design to avoid any sticker shock come bid time. Sometimes bids on a set of plans designed by an architect or draftsman can come in anywhere between $50,000 to $200,000 over budget. The contractor on this team will bring experience to guide you within the lines of your budget during the design phase. Once you get the budget established everything else falls together from there. 

More Information

If you’d like more information on the cost to build a custom home, our popular custom home floor plans, or even if you would like information on how to buy land, we have many guides including a “How to Buy Land” guide on our website with lots of information in it. You can download those resources on our website. Thank you again for your time today and have an excellent rest of your day.

If you would like more information on buying or selling land visit our website at realpropertytv.com.



1. Request a Project Consultation Online or by Phone

2. We Will Meet With You at Your Home or Building Site

3. Establish a Budget for the Project & Start Drawing Plans

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