How nice it would be to have limitless funds, while building a house.     Throughout building our house, we had to revise our budget several times.    The first step is determine what is the maximum you are willing to spend to build a house.    This will help you determine what type of house you can afford.    If you come up with $250,000, then you will want to set your budget about $215,000.  I would recommend at least have a 10 – 15% cushion.  If the unexpected happens, you will have some breathing room.    With careful planning and being realistic your chances  of going way over budget will decrease.

The unexpected that you might encounter while building a house:

  • You might end up hiring out certain jobs, that you initially had planned to do.  There were several jobs that I had planned to do myself, such as installing the hardwood.  As we got into the build, I realize I did not have the time to do it.    
  • Material prices can increase.    Lumber is a commodity, so the price of it can fluctuate.   A major natural disaster can cause lumber prices to increase.  When we were building our house,  Oil was at a all time high, thus causing shingles to be at a all time high.   
  • Upgrades.  “For a $1000″ more we can upgrade to what we really like.”  I must admit we fail into this trap several times.  It can be very tempting, when you know the only thing that separates you from what you like to what you love is only a  few hundred dollars.    If you have ten upgrades at a $1000, then it can increase your budget by $10,000.