In this post, I’m pointing out seven (pretty hefty) unexpected expenses when building a house because I want you to make sure you include these ‘hidden costs’ in your budget so you don’t have any surprises pop up later.

I don’t want this list to scare you, but rather I want you to be aware of costs that you might not have thought about when it comes to leaving some wiggle room in your home build budget.

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It’s really important to be realistic about ALL the costs you’ll incur throughout the building (and moving-in) process.

As you know, you’ll have construction costs and architect fees (if applicable) … but there many other expenses you need to factor in as well.

7 UNEXPECTED EXPENSES WHEN BUILDING A HOME

EXPENSE #1: LAND + LAND PREP

Obviously, you’ll need to purchase land to build your home on … whether this be via your builder or buying a plot of land on your own (FYI: my husband and I did the latter). Either way … you’re purchasing land. 

Not only do you need to buy the land, but you also need to account for any excavating and clearing costs (e.g. we bought a wooded lot and had to pay roughly $3000 to remove trees). 

Just be sure to include room in your budget for the cost of your desired land PLUS any land preparation costs that apply to your lot … debris removal, tree removal, grading, leveling lot, bringing in fill dirt, deconstructing existing buildings, etc.

EXPENSE #2: BUILDER FEES

Another thing you need to consider when building a house is the amount that you’ll owe for builder fees.

It’s key that you are VERY CLEAR on how YOUR builder will charge you BEFORE you sign your home build contract.

There are two ways that builders typically charge: fixed-price and cost-plus. I’ll give a VERY brief explanation of these two options, but each builder has their preferred way of charging clients, so you need to have a conversation with YOUR builder about how they charge for builder fees. 

FIXED-PRICE: Your builder plans out every detail of your home ahead of time and gives you a ‘final’ cost of your home (including the builder fee). Of course, you are responsible for paying for upgrades (e.g. allowance overages) and change orders, BUT your builder is responsible for mistakes and his/her profit margin decreases with mistakes (and with material/labor price increases).

COST-PLUS: You pay the actual cost of construction PLUS a fee (typically a percentage of the cost) to the builder. YOU are responsible for mistakes and material/labor price increases. The builder’s fee goes up with mistakes and material increases because YOU are paying more for your house.

Get more detailed info in ‘How Custom Builders Charge’.

EXPENSE #3: MOVING COSTS

Depending on how far you’re moving, moving costs can really add up. If you hire a moving company to move you, expect to pay thousands of dollars. Eek!

Of course, pricing is dependent on where you live and the time of year that you move. For example, we moved in January in the Midwest (a.k.a. it was FREEZING outside) so the moving cost was exponentially lower than the peak moving time of the warm summer months.

You can lower your moving costs by: (1) moving in an off month (if this works with your home build completion schedule), (2) packing boxes yourself, and (3) moving as many things as possible on your own.

EXPENSE #4: CLOSING COSTS

Closing costs are a tricky thing to discuss because everyone’s situation is different. 

The important thing is to talk to YOUR lender and YOUR builder to understand YOUR closing costs and what you can expect to pay.

If you’re rolling your construction loan into your final mortgage, then your closing costs will be lower than if you plan to get a whole new mortgage for your completed home. So again … consider YOUR situation and talk to YOUR lender and builder for info specific to your closing costs.

Here is a list of potential closing costs that *might* apply to you: escrow, appraisal, home inspection, attorney fees, city transfer tax, county transfer tax, the title from builder to buyer, title from buyer to buyer’s lender, recording fees, prepaid HOA fee, prepaid property tax, homeowner’s insurance, etc.

EXPENSE #5: WINDOW COVERINGS

One of the biggest expenses that people don’t always think about when building a home is the cost of window coverings.

Make sure to include room in your budget for window coverings. Even the most basic (inexpensive) window coverings can ADD UP (to an insane amount) when you are dealing with an entire home of windows! Be prepared to spend several thousand dollars on blinds or shades (YIKES).   

If your budget is tight, simply start with the most important (i.e. the most used) rooms first … your bedrooms, bathrooms, and your family room. You can purchase window coverings for other (less used) rooms in stages.

EXPENSE #6: LANDSCAPING

Your yard will be a blank slate when you move in and it isn’t cheap to fill that blank slate :). 

Many HOAs require that you sod and/or seed your property as soon as your house is completed. Plus, you’ll (eventually) want to add trees and plants to create a beautiful curb appeal.

The good news is that you can do your landscaping in stages. You can budget this out over several years and, if you’re a DIYer,  you can do most (if not all) of the work yourself to save money.

Tip: I recommend sodding your entire yard if this works with your budget. When we built our home, we sodded our front and side yards but planted grass seed in our backyard to save money. While the money savings was nice, it took three years (and three seed-planting tries) before our yard finally looked plush. 

EXPENSE #7: FURNITURE + DECOR

Furniture can really add up if you want to start over with all furniture or if you now have extra rooms that you didn’t have in your previous home (i.e. you have NO current furniture to fill these rooms).

The good news is that, like window coverings and landscaping, you can buy furniture in stages. Focus on the most important pieces first and then replace other furniture over time. 

If you want some guidance on the furniture piece of the puzzle, I walk you through the process of choosing what to buy NOW and what to purchase later in ‘HOW TO FURNISH YOUR NEW HOME (WHEN BUILDING)’.

NEXT STEPS

In this episode, we covered seven (pretty hefty) unexpected expenses that you need to keep in mind when building a house. 

These unexpected costs include:

1. Land + Land Prep Costs
2. Builder Fees
3. Moving Expenses
4. Closing Costs
5. Window Coverings
6. Landscaping
7. Furniture + Decor 

It’s important to keep ALL of these in mind as you create your REALISTIC home build budget with the help of your lender and your builder. 

If you enjoyed this episode and want more home-build guidance, download my  *FREE* Custom Home Build Prep Guide that will help you prepare to build your dream home with less stress, more confidence in decision-making, and a strategic plan to help you stick close to budget :).