How to Budget for Your Custom Home in 2023
As a design-build architect, I get a lot of questions: How much will my custom home cost? How often do I pay an architect during my custom home design-build process? How can I match my vision with my budget? The list goes on—and I’m always happy to be as transparent as I possibly can!
Clients rarely come to the table knowing how much we charge, how we collect payment, and what the entire process looks like throughout the design and build of their custom home. So, if you’re looking to explore the option of building a custom home a little more seriously this year, let’s take a closer look to help you get there!
How much does it cost to design and build a custom home?
So, how do you decide if this custom home process is a go or a no-go? This is a very fair question! After all, how are you supposed to acquire an estimate of a custom home that hasn’t been dreamt up yet? How do you even know what your budget is going to be? There are three milestones during the design we take into account. Here’s how we lead our clients through this decision based on their budget:
Our First Meeting: Our clients tell us their initial idea for the budget, and we give them a realistic estimate based on their wants and needs, including materials, style, details, size, placement, etc. This price will be based on cost per square foot (more on that later!)
Preliminary Design: Your preliminary design is 30% of the architectural process, which makes it a great time to decide if your custom home is a go or a no go—it’s basically designing the entire building. In this phase, you’ll know the design, materials, windows, square footage, where the site is going to be, how it's going to sit on that site, and development costs.
Construction Documents: The third level and final option to decide whether your custom home is a go or no go is to have complete construction documents. With complete construction documents, you’ll have all materials and the entire structure identified. It should include actual pricing, drawings, all the structure, all of the infrastructure, and all of the materials—not only the preliminary drawings from your designer.
Lastly, once your construction documents are in, don’t be afraid to step back and do some revisions. This is something Springhouse does all the time, even when we get to this third level!
How often do I pay an architect during my custom home design-build process?
In general, you, the client, will pay monthly for work that’s already been completed every single month, as well as an initial 10% deposit. This lasts throughout the entire process. During construction administration, it's a fixed fee, paid monthly. Keep in mind that we only bill for work we’ve done and what you’ve approved. So, if you decide to take a break, or need to sit on the project for a month to think things over, you won’t get billed for that time.
You can pay with a check, but we prefer you do an ACH transfer. Due to fees, we do not accept credit cards, unless we have determined that ahead of time—we can certainly talk about this if it’s something you want to look into! Here’s a quick step-by-step guide on when you’ll pay:
Step One: Once your initial consultation process is complete, we’ll send you a proposal, which will outline all of the different phases the project will endure, as well as the cost of each phase—beginning with preliminary design all the way through the move-in date. This is when we’ll take a deposit, which is usually around five or ten percent of the total fee. At the end of the entire process, we’ll apply your initial ten percent deposit to your very last payment.
Step Two: Once you’ve paid the deposit, we’ll present your preliminary design two to three weeks later—this is usually a first floor plan and a front elevation to see if we’re heading in the right direction. If we’re not heading in the right direction and you aren’t satisfied, we’ll hold on the invoice until we’re all on the same page. If everything is looking good, we usually bill you an invoice for 30%, due right away.
Step Three: The following month, we’ll continue making revisions, elevations, and creating the basement plan. Then, we’ll sit down and discuss billing. At this point, we’re most likely 75% of the way through preliminary design. The following two months after that, we’ll finish up preliminary design and move into design development—once that’s completed, you’ll receive a bill for the remaining 25% of preliminary design and ten percent of design development.
Step Four: As an architect, when we work with you during construction, it’s called “Contract Administration,” where we answer questions and act as your advocate throughout the entire build process. We typically charge a standard rate—a fixed amount every month during the build. For example, let’s say it’s going to be a ten-month build. We would divide our overall standard Contract Administration fee by ten and bill you once per month.
Many times, people will ask if the architect’s fee is included in the construction budget. 95% of the time, the answer is no. The architect's fee is outside of that. So, when we talk about price per square foot, architect fees are typically not included. Ours would be an additional fee to that cost-per-square-foot number. Speaking of which…
Why is my custom home priced per square foot?
When it comes to your custom home budget, almost everyone in the industry prices by square foot. The square foot price is an average of the total cost to build the house, divided by the number of square feet in the house. But there are a lot of variables that need to be defined. Let’s take a closer look...
Not every square foot is the same.
Square footage is an average of every square foot in the house, all the way from the basement through the roof. Not only do you need to know how many floors you have, you also need to consider the design of the home. Why? Because not every square foot is calculated the same as the other...
For example, one square foot you take in the living room might include joist, subfloor, hardwood floor, air, drywall ceiling and roofline attic space. That’s a lot different square footage than in the master bathroom where you have joist, subfloor, high-end tile, cabinets, plumbing fixtures, sink, mirror, specialty light fixtures, etc.
Square footage also depends on what you're averaging, because different people calculate square footage numbers differently. For example, at Springhouse, we calculate square footage from the outside of the wall (because the wall is not free!). That being said, we don’t include garages, porches or patios, even if they're covered. However, we do include a basic finished basement space.
Square footage pricing depends on the design of the home.
Let’s take another example. A 2,000 square foot ranch house on a slab is going to be a major price difference than a ranch house with a half-finished basement. A half-finished basement is much less expensive to finish, because you probably won’t have a full kitchen or master bathroom down there, which are the most expensive square feet to account for. All of these factors average together, making the ranch with a partially finished basement a lot less expensive, square-footage-wise, than the ranch on a slab.
Not to mention, the smaller the house, the higher the square footage price. Confusing, right? Well, you still have the kitchen and master bath, which are the two most expensive rooms—you're just compressing all of the open-air square footage. Although this means a higher square-footage price, that doesn’t necessarily mean a higher construction price, of course.
Beware of low square footage cost.
Never trust someone quoting you less than $100 per square foot. The reason they’re able to quote this low number is because they're probably counting every square foot, including porches, garages, and an unfinished basement. They’re also counting on using something like sheet vinyl, or the cheapest cabinets you can get. It’s very important to be concerned about construction quality and the longevity of the building—so, be careful of those really low numbers.
What if I can’t afford the custom home of my dreams?
Here at Springhouse Architects, we know how exciting it is to visualize your perfect house. But let’s face it: building a custom home can be a daunting, complex process. Where do you even begin? More importantly, how do you start the custom home process when you can't afford what you love? Every single day, we’re bombarded with beautiful images of homes on Facebook, Pinterest and Instagram—and once you latch onto one, it’s hard to let it go.
I always recommend scaling back. At Springhouse, we’ll work together to identify what you specifically like about your dream house. When you get down to the nitty-gritty, our team can almost always design a beautiful custom house without breaking the bank.
If you happen to fall in love with a home you cannot afford, don’t give up! Try to reimagine the pieces of the house you love in a different structure and context. Pay an architect to simplify the home into something you can afford. We make sure to listen to your wants and needs, taking what you can afford into account. Because, ultimately, whatever your life goals are, you need to be comfortable with your budget. That being said, bring your dreams and your inspiration with you! Don't discount aspects of the home just because they're out of your price range. We can use this inspiration to understand what you truly love, and then deliver.
Have any questions?
Although we covered a lot in this post, you may still have some other questions about budgeting for your custom home. Whether you’re involved in the custom home process now, or even just considering it, join our free Facebook group—we’ll help you answer any questions you might have! Also, feel free to invite anyone that you think would benefit from this collaborative. You’ll not only get advice from me, but from other people who have been through this, too.
Start the process.
When it comes to designing and building a custom home, nothing beats having a trusted, experienced team of architects on your side. Let’s set up a call to meet, discuss your goals, answer your questions, and settle your fears. We can’t wait to meet you!