Before You Build - A Simple Guide To Building Your Dream Home

Have you been dreaming of a new home, but building seems complex, out of reach, and overwhelming? You are certainly not alone. Believe it or not it’s simpler and possibly more affordable than you think… let’s get you started.

Below, we have provided a simple guide to follow when you decide building a new home might be for you!

1 | Understand your budget

First, you will need to take time to understand your current bills as well as what prospective bills will be for your new home (NOT what your maximum borrowing is!).

The costs below should be a conservative estimate for the monthly costs you will need to carry once you are in the space.  There are other costs, outlined in the next sections, you will need to be aware as part of the initial out-of-pocket expenses.

Questions to ask yourself –

  • What is a realistic monthly amount you can afford for your new mortgage?
  • What are your estimated utilities going to be each month?
  • What are the monthly HOA fees?
  • What are the estimated yearly property taxes?
  • Any other miscellaneous fees? Land lease? Flood Insurance?

Looking for a more detailed budget breakdown and step by step guide?  Check out our “Personal Budget Tracker” download available on our website.

Second, you will need to understand the borrowing process and how it relates to your project. Please understand there is a difference between a construction loan and a mortgage. While we are not a financial institution (and you need to consult them!) you ultimately need to understand that a construction loan is short-term (usually 12 months), and a mortgage is long-term (up to 30 years). Each bank is different, but there are options to go from “construction-to-permanent” meaning your construction loan will shift into a mortgage at the end of your project.

2 | Understand THE SPACE YOU NEED

While many others tell you the next step is to select a lot, we would argue that you cannot select a lot accurately until you know what you are putting on it. You will need to understand the size of your home and any other features (detached garage, pool, large patio, deck, etc.) that greatly affect the lot selection and the amount of space you are going to cover.

Now, if you are building a home very similar to your neighbors, then this step is easy. Confirm that what you want is close to the other examples in the neighborhood, with similar layouts.  If you are not sure what you want yet, if you are building a custom home or developing a parcel of land that stands independently from anything else, we STRONGLY recommend you dive deeper into the home you’re looking for!

What do you need in a home? What do you want in a home?  Very simple questions that can unfortunately cause you stress and may undoubtedly give you a headache!  It’s best to go ahead and get this out of the way, especially if there are multiple decision makers in your household.  You do not want to be halfway through construction or financing to realize the home you’re creating is not correct.

Looking for a more detailed breakdown and step by step guide on how to figure out the space you need?  Check out our “Wants Vs. Needs Guide” download available on our website.

3 | choose your lot

It’s critical in these initial stages to have a professional review location, understand the soil, utilities, municipality and review the laws and restrictions of the lot, BEFORE you put a deposit down.

It is important to get all the information possible and to also consult your attorney and design professional. Spending a few thousand dollars in the beginning to complete your due diligence is much more cost effective than just buying the property, realizing you can’t build on it, and trying to resell it (while also being required by law to disclose why you can’t build on it.).

Some questions to ask – 

  • Will this lot accommodate my dream home with room to spare?  Factoring in setbacks and impervious coverage?
  • Is the property under the terms of a Homeowners Association (HOA)? How does the HOA, if there is one, impact the development of the land?
  • What are the zoning rules and long-term plans for the area?  Is this lot in a flood plain?
  • Is the land covered in trees that will need to be cleared?  What is that cost?
  • Has the soil been tested for the percolation rate (aka “perc test”) if public sewer is not available?

If you are building a home like others in a development, many of these questions will easily be answered for you, though it is ALWAYS critical to double check. Sometimes there are utility or stormwater easements that a new owner is not aware of, or that the Homeowner’s Association (HOA) is installing a walking path for your neighborhood through the rear of your yard, where your neighbors would be walking right by your new pool regularly! Yikes.


Develop your floor plans on the site you selected and understand how each space connects to the outside and to each other. Also plan out other exterior elements, like a pool or detached garage, even if you are not going to build it immediately. You need to know how each element will work with each other and, again, if the lot can support it!

Be sure to keep that Wants Vs. Needs Guide next to you to ensure you are always on the right track and do not lose sight of your dreams and goals along the way! Many people are so excited to build and move into their new homes, which is understandable! Please just make sure that you have done all the preparation and analysis.

We always use this analogy: “You can build the most beautiful looking home, but it is not worth anything if the foundations are bad.” While this is literally true, it also applies when you move into your home and start to USE it. Does it function well for you? Your family? Can you add that pool next year that you want? Can you add that garage? There’s so much more to a design than a pretty picture – this is your home. Your life. You deserve to have everything you’ve worked for through months of design and construction and bills!

Looking for a more detailed project breakdown and step by step guide for your home and lot? Check out our “Before You Build In-Depth Guide” download available on our website.

Jessie Ellis

Jessie Ellis

Wife, friend and dog mom with 18+ years of education and 12+ years as a commercial design professional. Always inquisitive, creative and empathetic; trying to live each day with intention.

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