Costs to Consider When Building a Custom Home

Many homeowners dream of building their very own custom home. However, they often don’t realize all the costs associated with building a truly custom home versus a manufactured home, spec home, or buying a current house on the market.

Although homeowners know that building a custom home is a great undertaking, they may not be aware of certain costs that a contractor or builder thinks about on a daily basis. This is one of many reasons it’s so important to work with a design and building team that is experienced, transparent, and willing to educate you along the way.

It’s also why we want to expound on the costs you should expect with a custom home. This will be helpful if you haven’t built before or you’re in the decision-making process needing to gather all the information you can.

Primary Costs of Building a Custom Home 

The Site Matters 

To start the custom building process, a homeowner must first select their lot where they want to build– unless they’re building a house boat!

There are many factors that come with your lot that require additional cost. One of those is the topography of the lot. Often times, steep sites will require a lot more excavation than other projects which costs more. Another aspect to consider is the geology of your lot. Extensive rock formations, certain soil types, or other natural elements underneath the surface could increase your building costs to work around. And if you already bought a lot before realizing parts of it were preserved, it could mean jumping through hoops to orient your house the way you want to while still upholding the law.

Codes and Permits

That’s a good segue to another factor that will cost you– the time and fees for codes and permits. We recently polled our customers and friends to see what they thought made up the majority of a building budget. Most people believe it’s material or labor. It’s actually the costs associated with codes and permits. It makes up more than 28% of a building budget.

As the soon-to-be homeowner, it might be hard to see where that money is going. For example, to build a staircase that’s up to code, it primarily requires an understanding of regulations and close attention to detail. It’s as simple as that. But it requires a specific type of contractor and, of course, official inspections.

Codes and permits could be considered the biggest hidden cost of homebuilding. But if you want to enjoy living in your dream home for years to come, your team must do their due diligence.

Remember, there are a lot more codes today than there were 20 years ago. For example, some homeowners are required to have hurricane ties installed on their home for protection from strong winds and flooding if near enough to the ocean. This is similar to preventative measures some houses must have for flood drainage. These things will cost you more upfront but can save you thousands later on.


If you are building on a few acres rather than in a subdivision, there will probably be additional steps to set up your utilities, which means extra time and money.

This should happen early in the project too because contractors need access to water, gas, power, and sewage systems as they progress through the project as quickly as possible.


Our in-house architect, Ben Robbins, shared that the driveway of a custom home is an unexpected, higher cost for some homeowners. Both the length of the driveway and the grade of material could vary the cost.

“When you buy a lot of bigger pieces of land, lots of costs can happen compared to a “neighborhood lot”– driveway costs, asphalt, or concrete can average from $50-100k for utilities from the drive away to the house” -Ben Robbins, Partner and Architect at P.L. Lyons 

Your Selections

When it comes to your selections for your home, there are three main categories: structural, finishes, and systems.

Structural considerations include the quality and size of materials as specified by the engineer to build your desired exterior. Larger and more custom structural materials have a higher price tag.

Materials for building an energy-efficient home currently cost more too, but can save you money in the long run. So it’s these materials are still worth considering even if you’re looking for ways to reduce cost.

Finishes are your visible design selections – the ‘touch, see, feel’ – elements of the home. Custom cabinetry is a great example of a finish that can vary greatly in price. On average, you could spend $20K to over $100K for top-of-the-line cabinets.

There are so many considerations that fall into this category that it can be easy to lose control of your budget with all of the additional add-ons you might desire. When discussing this with Ben Robbins, he said, “I think it’s death by a thousand cuts. It’s usually a multitude of things that add up to putting you over budget.”

Other examples of additional finishes that can increase your budget include:

  • Appliances
  • Surfaces: Flooring, countertops, backsplashes, bath surrounds, exterior walls, roofing, decks, patios, drywall, glass/mirrors
  • Fixtures: Lighting, plumbing, etc. (Rope lighting and tape lighting are expensive to install (labor) and acquire, aside from the decorative aspect.)
  • Millwork: Trim and moldings.
  • Windows- Styles and quantity.

Understanding Custom Home Costs

Overall, there are many types of costs that go into the overall plan for your custom home. This is why it’s so important you use a design and building team that communicates well with you. It’s important to make your plans and selections as well as itemize your budget with as much detail as possible. This is our goal for every family we work with at P.L. Lyons!

Just because there are many decisions to make and the custom features can cost more, it does not mean it isn’t a worthy investment!

Our advice to homeowners embarking on the journey of building is to navigate your choices with the help of an experienced team in the industry. Be specific and resolved about your decisions. They say, it’s the little things. This is true for a cost analysis but also in your overall experience of your home. It’s about the details.

We’ve been doing this for over 30 years ourselves. Our architect Ben is happy to sit down with you to discuss your custom home dream and begin creating a plan with you that meets your budgetary needs. Schedule a free design consultation with us today if you’re interested. You can also learn more about this process here.

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