How much to build a 1200 sq ft house

Budgeting, Blog

How much will it cost to build a house on my land? I get this question all the time, and it's a great question to ask… the problem is, there's no easy answer. There are just too many variables and too many unknowns. So how do you even set a budget, assuming you want to have a new home built on your land?

Start with a Ballpark Price

Let's go over the variables and think through the unknowns, which will help you come up with a ballpark budget.

There are three main elements to the cost to build a house on your land:

  • The cost of building the house itself;
  • The cost of the land;
  • The cost to prepare the land for the house.

The first two are pretty straightforward, so we'll cover those first. The third item is the most complicated and contains the most unknowns, so we'll address it in a separate article.

You can get a pretty good idea of what the house itself will cost by doing some shopping. Look at new homes that are within your budget. Get a feel for the range of sizes and amenities that are available for the amount you can invest.


KEY POINT: Smaller homes with more amenities will have a much higher price per square foot than a larger house with the same or fewer amenities.


What About Price Per Square Foot?

I can't emphasize this point enough. Sometimes we get fixated on price per square foot, because that's how builder and real estate agents market, as if every square foot is the same. Trust me, it isn't.

My dad says, "throw the Hope diamond in the bathtub and tell me if that changes the price per square foot". 

Let me give you 2 examples, both completed in 2016, one on each end of the spectrum:

- 1,200 square feet, for $125,000. $104 per square foot.

- 3,670 square feet, for $312,000. $85 per square foot.

Pretty big difference. When you build a small house, you don't have as many square feet to spread the cost over. You still have the cost of the kitchen and bathrooms, the expensive rooms, but you don't have as much "cheap" space, like living rooms and bedrooms.

More here on cost per square foot to build.

It's tempting to think that building a custom home will get you the smaller square foot price no matter the size of house you build, but the rules of economy won't be suspended for you.

Keep a realistic expectation of what you can afford. Read some articles on how to budget for your new home.

Deducting the Cost of the Land

Remember to deduct the cost of the land from the price of the new homes you're looking at. You can usually find out what a builder paid for a specific lot by researching the county property records. Most counties have a website you can easily search online to find the cost of the land, which you can then deduct from the price of the home.

While shopping new homes will give you a general idea of cost, keep in mind that many builders don't build outside their own communities. Some say they do, but it's really secondary to their main business.

Depending on the location of your new home, there might be an additional cost for contractors to travel outside their normal areas or to a remote location. That can add to the build cost.

The cost of the land is whatever you paid for it. If you haven't bought the land yet, it's the net cost you'll pay once you've negotiated the price and closed, including whatever taxes and fees are involved in the transaction.

Buying land is a topic in itself that you can research more extensively online.

Budget for the Cost of Preparing the Land

In our next article, we'll address the most complicated part of this equation: the cost to prepare the land for the house.

Learn More About the Investment of Building on Your Land

For a more in-depth look at the whole process of finding, evaluating, negotiating, and buying land where you can build your home, download our free guide, 5 Steps to Buying Land for your Forever Home.

How much to build a 1200 sq ft house

2 minute read

The cost to build a house depends on the size of your home, but it's generally more expensive than buying a home

Updated

2022-01-26T23:25:15Z

It's usually more expensive to build a house than to buy one. simonkr/Getty Images

  • The cost to build a house, per square foot
  • Breaking down the expenses of building a house
  • Building a house based on your budget
  • Frequently asked questions about building a house

How much to build a 1200 sq ft house

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  • According to HomeAdvisor, you could spend $100 to $200 per square foot when building a house.
  • Framing is probably the most expensive part, and you'll pay more as you add stories and rooms.
  • Building a home is usually more expensive than buying one, but not always.
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Building a home has a ton of potential perks. You can live in a house with the layout and design you want, and you don't have to shop for a place or duke it out in a bidding war.

Building a home comes with costs you wouldn't have to think about when buying a home, though. Building is often more expensive than buying, and while you may decide it's worth the cost, it's good to be prepared. Here's what you can expect to spend:

According to HomeAdvisor, the average cost of building a new home is $100 to $200 per square foot. 

Numbers provided by HomeAdvisor.

However, if you want to build a luxury or customized house, you can expect costs to jump up to $500 or more per square foot. That means an 800-square-foot home could cost $400,000 or more, and a 5,000-square-foot home would cost around $2.5 million.

Breaking down the expenses of building a house

Alright, you've seen the numbers. Now let's look at what you'll spend on individual aspects of building your home.

Numbers provided by HomeAdvisor.

You'll notice some of these expenses vary drastically. That's because costs can depend on factors such as where you live and which materials you're using for your home.

You may also spend money on clearing land to build your home on a plot, repairing an existing foundation, or structuring your home so it's built on stilts.

Building a house based on your budget

Remember, the actual cost of building a home will be based on several factors, including where you live and whether you're hiring a production builder or customized builder. You'll also save money if you build the home yourself rather than hire someone, but you'll need a license and a special type of construction loan.

You may be able to afford to build a home for $100,000 if your house is 1,000 square feet or smaller. You should be able to fit two bedrooms and one bathroom in a 1,000-square-foot home.

It's possible to build a home that's 2,000-square-feet or smaller for $200,000. You could probably build three or four bedrooms and two bathrooms in this space.

You might be able to build a 3,000-square-foot home for as little as $300,000, but that's leaning toward the conservative side. In a 3,000-square-foot house, you can fit four or five bedrooms and three bathrooms.

Frequently asked questions about building a house

It's usually cheaper to buy a house than to build one. There are some exceptions — for example, you can probably build a tiny house for less than what you'd spend buying one.

Costs depend on several factors. For example, you could spend less building a relatively small, modest home in a low-cost area than building a larger, luxury home in Los Angeles or New York.

Framing will likely be the most costly part of building your home. It will depend on which materials you use, the square footage of your home, and how many stories and rooms there are. According to HomeAdvisor, framing can cost up to $50,000.

If you can't afford to build a home entirely in cash, you'll need a construction loan. You'll probably need a 20% down payment for this loan.

You can choose a construction-only loan, or a construction-to-permanent loan that rolls your construction loan into a regular mortgage once the building process is complete. If you plan to build the home yourself rather than hire a contractor, you'll need an owner-builder construction loan.

Building a house can be expensive, but that doesn't necessarily mean you shouldn't take that leap. Just be sure you're comfortable with the costs before you start the process.

Laura Grace Tarpley, CEPF

Personal Finance Reviews Editor

Laura Grace Tarpley (she/her) is a personal finance reviews editor at Insider. She edits articles about mortgage rates, refinance rates, lenders, bank accounts, wealth building, and borrowing and savings tips for Personal Finance Insider. She was a writer and editor for Insider's "The Road to Home" series, which won a Silver award from the National Associate of Real Estate Editors. She is also a Certified Educator in Personal Finance (CEPF). She has written about personal finance for over six years. Before joining the Insider team, she was a freelance finance writer for companies like SoFi and The Penny Hoarder, as well as an editor at FluentU. You can reach Laura Grace at . Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services »

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