Building Your Dream House: A Comprehensive Guide

Living in the dream house is a goal that many people aspire to achieve!

 We all want to live in the dream house where we can create memories and make it our sanctuary. But turning our dream into a reality can be overwhelming, with countless decisions to make, from the design and layout to the building materials and finishes. In this blog post, we'll guide you through 11 steps to building your dream house, sharing tips and insights that will help make the process smoother and more enjoyable. Whether building from scratch or renovating an existing property, this guide will help you create your dream house.

What is the cost of building a custom dream house?

According to homeadvisor.com, the average cost to build a home in the U.S. is $294,879, with a typical range between $110,945 and $479,565. Instead, PODS suggests that the cost of constructing a custom home should be considered a range determined by size and quality. Typically, home building costs $100 to $200 per square foot, while luxury homes can cost anywhere from $200 to $500 per square foot. However, it is essential to note that these estimates do not include the expense of buying land, which varies by location.

What are the advantages of building a custom dream house over buying a pre-owned one?

Building a custom home allows you to customize size, layout, and design. Additionally, you can install energy-efficient components that will reduce your utility bills over time. This is especially relevant with growing concerns about sustainability. Furthermore, it allows you to control the home's overall aesthetic and appearance. This is perfect for those with a specific vision who want to ensure their dream house looks exactly how they imagined it.

Step One: Establish your vision.

Before you can break ground on building your dream home, it's essential to establish your vision. Imagine that you already live in your dream home - what features do you enjoy there? What kind of home is it? What style and design elements appealing in your dream house? What are the 'must-haves,' and what compromises will you make? Start by creating a vision board that showcases your design ideas and preferences. Pinterest is an excellent tool for exploring different design options and creating a board that expresses your style and vision. This will be a reference when meeting with architects, designers, and builders.

Step Two: Set achievable expectations. 

Constructing your ideal home is complex and time-consuming, and you may encounter hurdles or modifications. Therefore, it's important to remain adaptable and acknowledge practical limitations and possibilities. Additionally, it's crucial to keep track of the project information, such as schedules, finances, and design concepts.

It is understandable to become emotionally invested in constructing your dream home and striving for perfection, especially considering the significant financial investment.

Constructing a new house can be challenging. You will encounter unexpected difficulties, and being inflexible will not be beneficial. It's essential to acknowledge this fact before proceeding with the project to maintain a positive attitude. You must manage your expectations and remain adaptable. Whenever you face difficult situations, keep reminding yourself of your ultimate goal. The stress caused by mistakes and setbacks will be insignificant once you finally get the keys to your dream home.

Step Three: Research.

Research your area's building materials, supplies, and labor costs. This will help you determine how much you can realistically spend on each part of the project. Now, create a detailed list for all the expenses associated with your dream house: architectural design fees, construction materials and labor, permits and inspections, furniture and decorating items, landscaping services—everything! Be sure to include hidden costs like utility hookups or HOA fees. Comprehensive research will help you plan accordingly and set aside enough funds to cover unexpected expenses.

Step Four: Create a thoughtful budget to build your dream house.

Once you done with your research, it's time to create a thoughtful budget. Determine how much you want to spend on the project and break down the expenses according to priority. This will help you identify where to allocate more resources and set reasonable limits. Include unexpected costs, such as hidden structural problems or extra repairs. A well-planned budget can help you avoid unpleasant surprises.

Previously, we discussed the cost of constructing a dream home. This data can assist you in creating a realistic budget that is within your means.

To estimate the cost of your house, follow these two steps: first, determine the square footage of your home; second, decide whether it will consist of average, mid-range, or luxury materials and features. Based on these factors, you can estimate the cost per square foot.

Approximately 75% of your budget will be allocated to materials and labor. At the same time, the remaining portion will cover other miscellaneous expenses such as fees, taxes, furniture, and landscaping. 

Step Five: Find a lender to finance your "dream house" project.

If you want to purchase an existing house, you can obtain a standard mortgage, but you will need a construction loan to construct your ideal home.

A construction loan can cover the costs of building your home and buying the land it will be on. Your lender will usually offer two choices. One is to convert the construction loan into a regular mortgage after construction. The other is to repay the entire construction loan once the house is finished. Most people choose the first option since it is cheaper.

To obtain a construction loan, it is usually necessary to provide a down payment amounting to 20 percent of the loan value. However, if you are eligible for an FHA-backed loan, you may be able to put down as little as 3.5 percent. In addition, those who qualify for a VA or USDA loan can avoid putting any money down.

Step Six: Find and buy land.

The land is essential for the construction of your dream house. Before you start shopping, narrow down your choices by considering some factors: what kind of neighborhood do you want to live in? Are there any regulations or restrictions that could affect the construction process? Are there any environmental hazards to beware of?

Once you've identified a few potential lots, it's time to start researching them. Visit each one and take pictures or videos for future reference. Next, do an environmental assessment of the land to ensure it is suitable for constructing your house. Also, consider if the lot is large enough to accommodate your home and any other structures you plan to build.

Once you have a few potential sites, look into zoning regulations and local laws that may affect your house construction. Finally, get an appraisal of the land to ensure you pay a fair price.

You can use the equity you have in your land as a down payment for a construction loan as long as you already own the land.

For example, if you own a $50,000 piece of land and plan to build a $250,000 house on it, the total value of the property would be $300,000. In this case, the land you own is the down payment, which is slightly more than 16% of the final home value.

Step Seven: Find a qualified builder and design team to help you build your dream house. 

Once bank approved your loan, it's time to find a reliable and experienced design and construction team. Ask for referrals from friends or family members who have built their dream home recently. Once you have identified potential candidates, contact them to discuss the project in detail and check. You must make a team of experienced professionals to help you bring your vision to life. Depending on how extensive your project is, you'll typically work with an architect, builder, and interior designer. An architect will help you plan your space, while the interior designer will help to execute the finishes. The builder undertakes the construction process, working within your budget, timeline, and predetermined designs. A good builder will understand the importance of clearly understanding the scope of work and delivering on all promised aspects. It is essential to do thorough research; this includes meeting with multiple builders, asking for references and testimonials, and gathering as much information as possible. Consider factors such as experience in the field, customer service, communication skills, cost estimates, and payment terms before deciding.

Step Eight: Create a chronological list of events for your dream house.

The timeline of a dream home build can vary, depending on the complexity and scale of the project. Before construction begins, you'll need to create a timeline leading up to the completion of your house. 

The timeline should include a project plan that outlines the steps chronologically with critical milestones and dates. This will help keep you organized and ensure everything is noticed during the building process. It will also help keep track of deadlines for permits, inspections, and other tasks.

Step Nine: Get involved in the construction process.

It's time to get to business once your team and timeline are set. As the homeowner, you should be involved in every step of the process. You can help by attending meetings with your builder and design team, checking in regularly on progress, providing feedback on materials and finishes, and more. Being actively involved in the construction process will help ensure that the end product is what you envision. 

Participating in the construction process ensures that your dream house will be built according to your specifications and desires. This also allows you to quickly and efficiently make any desired modifications and ensure that all features you want in your house are included. By following this approach, you can ensure that your builder takes responsibility for their work. If their team or sub-contractors make any errors, they should cover the cost of fixing them.

Step Ten: Prepare for closing.

Once your dream home is complete, it's time to prepare for closing. Make sure all permits are obtained and inspections approved before signing any paperwork. If you have any outstanding payments or fees, ensure they are handled before the closing date. This step is significant if you plan to finance your dream house since unfinished loans can be a severe setback. Ensure all the paperwork is in order and you understand it before signing. It would be best if you also worked with your real estate attorney to review any contracts or documents that need to be signed.

Step Eleven: Moving into the dream house.

Once you have all the necessary permits and inspections complete, it's time to start moving. Ensure your movers are experienced in handling large items such as furniture and appliances. Labeling boxes according to their contents is also essential for easier unpacking at your new house. 

While in an ideal scenario, you would smoothly move from your current home to your newly built one without interruptions, this is rare. Even if you have a target date to sell your home, it doesn't necessarily mean you'll immediately receive an offer. You might have to move out beforehand to accept a reasonable offer. Similarly, your move-in date might be postponed multiple times due to construction delays. As a result, you may need temporary housing to bridge the time gap. A flexible solution can be beneficial, such as selecting a moving and storage container company that does not charge penalties for changing your schedule. This will help alleviate unnecessary stress.

After the construction and walk-throughs have been finished, you can move into your dream home. This is a beautiful moment to celebrate in your life. You have worked hard and dedicated months towards this goal. Now, you can live in the house of your dreams for years to come!

Q&A

Is it cheaper to build or buy a house?

It depends on the situation. For example, building a custom dream home from scratch or renovating an existing property will most likely be more expensive than purchasing a pre-owned house. However, the cost of building can also depend on factors such as size and quality. Additionally, buying land and constructing your own home may be cheaper than buying an existing property. Ultimately, it is best to compare the cost of building and purchasing your dream house to determine which option is more affordable. 

Are there any tax benefits for building a custom home?

Yes, in some cases, you may be eligible for tax benefits when constructing a custom home. For example, if you are a first-time homebuyer, you may qualify for tax credits or deductions. Additionally, some states offer incentives such as sales tax exemptions when purchasing building materials. It is best to consult with a qualified tax professional to determine your eligibility for potential benefits. 

What are the most important things to consider when building a custom dream house?

When constructing your dream house, it's essential to be mindful of several factors. This includes creating a thoughtful budget that reflects your priorities and resources, finding and purchasing land, selecting a reliable design and construction team, establishing achievable expectations, and obtaining permits.

Additionally, it's essential to stay organized and keep track of the project information, such as deadlines and finances. Once you have considered all these factors, you can start confidently building your dream house! 

What is the average cost of building a custom home?

The average cost to build a home in the U.S. is $294,879, typically between $110,945 and $479,565. However, these estimates do not include the expense of buying land, which varies by location. PODS suggests that the cost of constructing a custom home should be considered as a range determined by the size

What should I consider when building a custom dream house?

Consider the size, layout, design, energy efficiency, budget, and timeline when constructing your custom dream home. Additionally, it is essential to research zoning regulations and local laws that may affect the construction process. You must also find and buy land, secure financing, and establish a reliable team to help bring your vision to life. Finally, consider any potential tax benefits that may be available. 

Summary

Building a dream house is exciting but requires dedication and careful planning. Building a house can take almost a year to complete, and in addition, it can be expensive. To build your dream home, you should follow several steps you can take to make the process smoother and more enjoyable. These include researching construction costs, creating a budget, finding suitable land, assembling a reliable team, and preparing for closing. While it can be a lot of work, the result is often worth it. Use this guide to turn your vision into a reality.

Good luck with constructing your dream home!