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HOW TO BUILD A CUSTOM HOME: THE PROCESS FROM START TO FINISH

How to Build a Custom Home: The Process From Start to Finish

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Whether it’s your first home, you’re relocating somewhere new, or you want to create something unique, building your own home is an exciting process. But you’re likely wondering how to build a custom home and the process from start to finish. 

Well, we’re here to walk you through it.

Building a custom home takes time, careful planning, and dedicated involvement. Because of this, it’s not the right option for everyone. 

In this guide, we go through the process from start to finish and show you exactly what you can expect when building your custom home. Everything you need to know is right here, helping you prepare and get the best outcome when building your custom home.

How to Build a Custom Home in 9 Steps

Building a custom home is a dream for many people. After all, it’s a chance to create your ideal home in the perfect location, fully customized to meet your lifestyle. 

But building a custom home is, of course, more complex and time-consuming than purchasing something on the market. It can also cost you more than just buying an existing home. Consider these statistics: 

Average Cost to Build a Single Family Custom Home 2023

This data demonstrates the time and cost of building a custom home. Additionally, you need to be flexible with both parameters, as building something custom is not always straightforward. 

We say all this to prepare you before jumping in. Your dream home will take time, money, and effort, but with careful planning and the right professionals by your side, it will be completely worth it! 

So, if you’re ready to get started, here is our nine-step process for how to build a custom home.

Step 1: Defining Your Needs

Before hiring an architect or picking out your furnishings, it’s best to define your needs. 

This preparatory phase is important so that you know exactly what you want and need. This helps determine the appropriate roadmap for building your custom home. 

By breaking your list into your wants and needs, you will know what’s most important to you in case budgeting or other issues arise. 

Location

While people move for many reasons, including job relocation or family obligations, the location of your custom home is often the most important factor to consider.

Not only does it dictate your lifestyle and your community, but it will also impact prices, permits, and other factors related to building a custom home. 

Some things to consider: 

  • Distance and commute to your workplace.
  • Access to amenities like gyms, stores, community centers, parks, and more.
  • Land availability, including the size and specifications you are looking for.
  • Special rules, regulations, or permits based on the location.

Budget

The next major consideration is your budget, largely based on the location you choose to build in. 

USA Median Home Price Per Square Foot By City 2023

Here are some costs to factor in:

  • Lot or land parcel: This is the sales price of the land you purchase. In 2020, the National Association of Home Builders reported that the average lot price was $53,000—a record high. The most significant price factors are location and size.
  • Building costs per square foot: This varies based on different factors, including location and type of home you’re building. The average cost per square foot for new construction homes in 2022 was $251*–including the cost of land.  
  • Monthly payments: Beyond the land and build costs, you can expect other monthly expenses such as interest rates, insurance, HOA, taxes, and other costs associated with the home.
  • Custom Features: This is your custom home, your dream home! So make sure to factor in any other features you may want, such as; a shop, pool, sport court, home gym, barn, built-in shed, home office, wine cellars, RV garage, etc. All these will have additional costs to consider when creating your budget.
  • Leave Some Budget Space: During the build process, you may discover extra upgrades or add-ons you want to include. A little extra room in your budget also prepares you for potential labor and material cost fluctuations during a long building process.

*Quick note–Many websites are using the average construction price for the builder, $153 sq. ft., as a placeholder for building costs. But this is misleading, as this is the average cost to the construction company, not to you as the prospective homeowner. 

Secure Financing

Securing financing before you start the custom home build process is essential. Most people cannot afford to pay for their dream home upfront and must take out a loan. 

Typically, there are three types of transactions when building a custom home: land purchase, construction loan, and mortgage.

The bank likely finances these transactions separately–although sometimes there are packages available.

Land Loans

Land loans are the most complex option because there is currently no structure on the property. This makes it harder to value, which presents a greater risk to lenders. 

For this reason, some people prefer to pay cash for their land and focus on getting a construction loan and mortgage instead. In the end, land and construction costs likely roll into the final mortgage, so keep that in mind. 

Construction Loans

A construction loan is a short-term loan where you typically only pay interest and only during the build. Then, there is an option to refinance the construction loan into a permanent mortgage at the end of construction. Some other things to note about construction loans: 

  • Most construction loans require a 20% down payment.
  • There are closing costs associated with construction loans, typically around 2-5%. 
  • Eligibility for a construction loan typically requires having a qualified builder (i.e., a licensed general contractor) involved in the project.
Permanent Mortgage

You may start with a land loan, a short-term construction loan, or a construction loan permanent, but when it is all said and done, the goal is to end up with a permanent mortgage under terms that are right for you. 

From the start, ensure you understand the financing, the terms, and what could change during the building process–because building can take quite a long time. You do not want to get to the end just to find out you can no longer finance your brand-new home.

Process For Getting A Home Construction Loan 2023

Timeframe

As you start planning exactly how to build your custom home, remember it’s best not to rush the process. You need to plan well in advance and allow yourself plenty of time to see the project through.

The typical timeframe from the first meeting to a finished custom home is 12-18 months. This breaks down into:

  • Planning stage: Anywhere between 1-6 months, depending on how organized you are and how quickly you can make decisions. This is where your team will plan the entire home design, features, and everything else you want in the home. 
  • Building stage: Anywhere between 8-12 months, depending on labor and material availability, seasonality, permits, inspections, and changes you make during the process. This will involve milestones and walkthroughs where you will have a chance to see how the home is coming along and potentially make any changes you may have missed during the planning stage.

Determine Your Style

One of the most important steps when preparing to build a custom home is determining your style. Doing this beforehand will save you time and worry when making the final decisions for your home.

It will also help you find the right building team because you will have a style in mind and know if the builder you are considering can deliver. 

When you begin working with them, you also want to make sure the interior designer truly understands your style. 

Most builders and designers have hundreds, if not thousands, of material options to choose from, for just about every selection you will make for your home. When you come prepared with ideas, your designer can help guide you to the options more likely to fit your style and keep you from feeling overwhelmed or falling prey to decision fatigue and just giving in. 

If you aren’t sure what you want, there are many great options to help you identify and solidify a strong vision of your perfect home.

  • Start by making lists, or visual collections, of what colors, textures, general materials, and final designs you like.
  • Use Instagram, Pinterest, magazines, Zillow, and galleries on home builder or realtor sites to help clarify and expand on your vision.
  • Tour homes of builders in your area, even if you don’t plan to build there, to get a sense of different styles and how they look in the real world.
  • Talk to friends and family about what they like, and let them help you find ideas you may not have considered.

Remember, your style and design choices will make the most impact on:

  • Kitchen
  • Bathrooms
  • Accents and Special Features
  • Exterior Designs

Step 2: Building Your Team

Build a Custom Home Team
Photo by Unsplash

It takes a team to build a high-quality custom home. And putting together that team of people is a crucial step that will significantly impact the outcome of the final build. 

The people you work with will also be a factor in determining how stressful or enjoyable the build process will be for you. 

The team you select should first be experts in their fields. You also want to make sure they work well with you and each other.  

Taking your time speaking with and vetting potential team members is important to ensure you feel comfortable starting this process with them.

Builder - Custom Home Build Process

Builder

First, you need to find a custom home builder who—most importantly—builds in the area you are looking to live in. This ensures they understand the area and what it takes to build there. 

You want someone with the qualifications and reputation to do an outstanding job on your custom home. 

Determining this comes down to researching each potential builder and completing some due diligence. Here’s how to do it: 

  • Browse the builder’s website and understand who they are, their style, expertise, and if their level of quality and customization fits the final product you are looking for.
  • Check references and reviews, either on Google or other platforms or by talking with people in the area who have worked with, or know someone who has worked with, them.
  • Walk through current home builds to understand the builder’s style, process, and ability. This is easy, and builders will often be more than willing to let you schedule tours, or you can go during open house hours. 
  • Look at the builder’s standard features list and get an idea of their quality level on a typical build. This refers to the list of specifications that come with a home before making any alterations—it’s the baseline of what you will receive from this builder. More quality options in the standard features may save you money on upgrades.
  • Check the builder’s warranty, what it covers, and for how long—a must-have for building a custom home.
  • Check the builder’s energy efficiency standards in their building process.

Having multiple conversations with builders, and asking the right questions, is critical to the custom home build process. This lets you establish rapport and find who you work and communicate well with. 

Speaking directly with the builder—and not just the initial salesperson—will give you a strong sense of how they communicate, problem-solve, and generally operate in their work.

When speaking with prospective builders, ask if they have an in-house architect and interior designer, as this can expedite the process. If they don’t have in-house options, ask for recommendations. 

Lastly, discuss how the builder deals with upgrades during the building process. Knowing this helps you make timely and wise decisions that won’t slow you down.

Architect - Custom Home Build Process

Architect

As mentioned earlier, many builders will have an in-house architect or can recommend someone to you. This is the ideal scenario because it will streamline processes and save time. 

If you must find an architect, make sure they can create the type of home you want. Additionally, you want to understand their budget and project timeline. 

Similar to working with a builder, you can vet potential architects by looking at their prior work, reading reviews, or talking to former clients. 

Again, it’s important to communicate directly with your architect and understand how they work and communicate. The process of building a custom home can be long, with many changes. For this reason, you want to work with someone who is agreeable and helpful through the process. 

Interior Designer - Custom Home Build Process

Interior Designer

Many builders can also recommend an interior designer or work with one in-house. Contrary to popular belief, your interior designer doesn’t come in right at the end of the process but will be with you throughout the project. 

The interior designer will be with you from start to finish to ensure the home you are getting will look the way you want it to, inside and out.

Here are some things to look for in potential interior designers: 

  • Style: Does it match what you’re looking for? 
  • Cost: Does it align with your budget? 
  • Project scope: Are they familiar with the type of home you’re building? 

You must see a visual representation of their plan for the home so you know exactly what you’re getting. 

Like all of your team members, take time to vet potential designers and select someone easy to work with, communicative, and flexible. 

Ultimately, you want your builder, architect, and interior designer to work well together, so it’s ideal to discover if there are any prior working relationships. Make sure they fit your needs and will work well together to bring your vision to life.

Step 3: Reserving Your Lot

Reserving Your Lot - How to Build a Custom Home: The Process from Start to Finish
Photo by Unsplash

At this step in the custom home build process, you should know the general neighborhood, if not the exact location, that you’re planning to build in. 

There are many ways to explore available lots in your area. First, you can connect with your builder to learn more about what’s available from them directly.

Also, you can hire a real estate agent, giving you access to more listings and a broader selection. 

You can also research real estate listing sites like Zillow or realtor.com, or land-specific sites such as land.com, landwatch.com, or landcentury.com

Before finalizing your choice, take the time to complete a few checks and ensure no drainage, electric, easement, or other issues that can cause problems later. 

Here are some other things you want to consider: 

  • General location
  • Size of the lot
  • Sloping
  • Natural features (waterfronts, trees, etc.)
  • Distance to neighbors
  • Zoning and city limitations
  • Land development status
  • Utility availability
  • School districts
  • Local access (shopping, dining, parks, gyms, entertainment, etc.) 
  • Direction the plot faces
  • Neighborhood home values

Understanding the Area

You may also want to inquire with the city and review its comprehensive land use plan. They update this document every few years. This provides the community with an overview of the plans intended for the area. 

For example, suppose you want to build somewhere more rural. In that case, you may see a 10-year plan to develop the area you are considering—and find that the city plans on eliminating the open fields or beautiful views that made your surroundings ideal. 

Another due diligence step is to have a formal land survey. This is the legal process to review your land to establish the exact boundaries of your lot and other metrics. This will typically be done when applying for a mortgage, subdividing a lot, or installing utilities. 

Once you’re happy with the location, finalize it by reserving the lot with your builder, purchasing it from the seller, and signing the paperwork. 

At this point, you also receive more information on the build project and the payment structure. 

You’ll then pay a non-refundable deposit—the “earnest money”—securing your location and starting the build process–a deposit will get the process started and also rolls into the final cost of your custom build.

Step 4: Building a Blueprint

Blueprint for Building a Custom Home
Photo by Unsplash

The next step after securing your lot is to sit down with an architect and build the blueprint. This is when it all starts becoming real! 

Here are some guiding questions to start thinking about what you need, and want, from your custom home: 

  • Do I want to modify an existing floor plan? Or do I want to create a unique floor plan? (You can browse floor plan examples on sites like Houseplans or Dream Home Source.)
  • How big will the house be? What size land am I working with? 
  • Do I want an open floor plan or more closed-off rooms? 
  • What style do I want to incorporate into the building? 
  • How many stories should it be? Is there a view? How can we optimize space? 
  • How many bedrooms and bathrooms do I need? 
  • What other rooms do I need? Examples include a home office, formal dining room, mudroom, entryway, laundry room, or workout space.

Your architect creates a plan of the layout, structures, and other features, then sends them to the city for approval. You may be hands-off or work closely with the architect during the process. 

The Blueprints

The blueprint includes the following details: 

  • Floor plan: The overall layout of the home, including spacing, room sizes, entryways, kitchen, bathrooms, etc. 
  • Elevation: This is the home’s exterior, what it looks like from the outside at all angles.
  • Structural features: This includes the placement of kitchen features, fireplaces, lighting, ceiling heights, window locations, sinks, plumbing, and anything else built into the home structurally.
  • Special features: Anything else built into the home that’s unique. Special features may include lockers in a mudroom, drinking fountains, laundry chutes, internal vacuum systems, sport court areas, a home gym, an indoor pool, or heated floors.

After some back-and-forth with your architect, they will present you with the final plans for your signature. Take this time to ask questions and understand everything before the architect submits them to the city for approval. 

While it’s possible to make changes once the city approves the blueprint and your design is finalized, it may be challenging and costly. For this reason, it’s important to be thorough when designing your blueprint and working through any questions and concerns before finalization. 

Step 5: Breaking Ground

With plans finalized, you’re ready to break ground! 

But not so fast—the city must approve your plans and grant your builder a permit before you start. 

Your builder will understand the intricacies of working with the city to get the appropriate permits. However, if you’re interested in learning more about building permits, search for your municipality’s website, and find the building permits section for the city where you want to build. 

Once the city issues permits, your builder breaks ground and begins. They construct the home based on the approved plan, as well as the budget, timeline, etc., that you previously agreed on. 

The custom home building process takes months, so staying engaged is important (more on this in step seven). 

Step 6: Getting into the Details

Details of a Custom Home Build Project
Photo by Mark McCammon

We’re getting to the fun part now! As your builder progresses on the structure of your custom home, you will start making important decisions about the details of the home. 

Interior details include: 

  • Windows
  • Finishes
  • Fixtures (i.e., lighting, faucets)
  • Textures and colors
  • Appliances
  • Railings
  • Cabinetry
  • Countertops
  • Trims and finishes
  • Carpentry features

Exterior details include: 

  • Stonework
  • Siding styles
  • Paint colors
  • Landscaping
  • Garage door
  • Exterior lighting
  • Exterior doors

This is a non-exhaustive list, but gives you an idea of where to start. 

This is where you will begin working closely with your interior designer. They will collaborate with you to choose options that look good, fit your budget, and flow together with the design of the house. 

There are a lot of details to consider when building a custom home. It can get overwhelming and cause frustration and miscommunication between all parties involved. 

This is why getting clear on your budget and vision before starting the project is so important—it will dictate many of these decisions well in advance. 

This makes the custom home build process much more manageable. There may be changes you want to make. But if you pre-plan most of your decisions, you can spend time perfecting your home instead of still being stuck in the preparation phase. 

Step 7: The Construction Process: Staying Involved

Photo by Pixabay

There are several phases throughout the process of building a custom home. They occur over many months and are designed to keep you involved and up-to-date. 

Walkthrough Phases

The last thing you want is a home with avoidable errors or mistakes. This is why the walkthrough phase is so important.

During this phase, you will review and approve each element of your custom home. This is so that you and the builder are on the same page and can discuss anything wrong or not how you expected. 

There are typically four stages during the build where you will have a walkthrough and approval process: 

  1. Rough: This is when the framing is complete, and you’ll see the main structure of your custom home come to life.
  2. Electrical: When your home is ready for wiring, you can see where the lighting, outlets, and switches will be throughout the house and make sure everything is where you want it..
  3. Carpentry: This happens before shelves, accent walls, built-in features, and moldings and trips are completed, allowing you to add, change, and approve every feature.
  4. Details and finishes: This includes all the last pieces, such as countertops, flooring, paint, tile, lighting, and cabinetry. At this point, it is done, though not cleaned and decorated. Here you can get a great sense of what it looks like and ensure you’re happy with it. 

Don’t skip over this process! Take a deep breath, and get into the details. Don’t be afraid to take your time, look thoroughly through the home, ask hard questions, and point out anything you think could be a mistake.  

Small mistakes become big mistakes later, so be vocal. Remember, you are the one that has to live in the home, not the builder. 

Home Inspections 

In addition to your walkthroughs, you’ll have several home inspections by government professionals. Your builder will oversee these and ensure that every stage of your home meets the required standards and passes every necessary inspection. 

During these inspections, everything will be checked to ensure the work is done right and up to code, including: 

  • Framing
  • Electrical
  • Plumbing
  • HVAC

These necessary inspections ensure the a quality build up meeting regulatory standards.

Step 8: Final Inspection and Closing

Final Inspection on Building a Custom Home
Photo by Mart Production

You’ll get very granular and detailed in the fifth and final walkthrough phase. You want to check small details for everything, including: 

  • Paint spots and coverage
  • Dents and damage
  • Doors and cabinets (ensuring they close properly)
  • Rough or jagged edges
  • Electric outlets are all working
  • Appliances
  • Anything and everything else

You want your home to be move-in ready at this point, so take your time reviewing everything carefully. 

We recommend bringing someone else with you for a second set of eyes. Be thorough and take note of any problem you see. 

Bring up any potential issues with your builder before closing the project. You may want to refer to your original blueprints and any notes or contracts you have to review your agreements and if everything is correct. 

Once you’re happy with all the details, you’ll sit down with your lender and get the keys to your brand-new home!

Step 9: Moving In

Moving Into Your Custom Build Home
Photo by Cottonbro Studio

You made it! You’ve got the keys to your new house and are ready to make it yours. There are just a few final details to consider when building a custom home:  

  • Use your builder home warranty: Get an inspection around the one-year mark and use the warranty to fix any issues. 
  • Change your locks and codes: Get new, unique keys issued for your house and change any entry codes so that only you and the other household members know them. 
  • Warranty paperwork: Fill out anything related to the warranty for your kitchen appliances, washer/dryer, or other large appliances. 
  • List of vendors: Check that you have a list of all the vendors who provided services on the home, including appliance installation, electrical, garage, HVAC, landscaping, etc. This will make it easier to contact them if anything goes wrong.
  • HOA information: Check your HOA (Homeowner’s Association) information, including terms and associated fees. 

Once you’ve checked these things off, it’s time to unpack, host a housewarming party, and settle into your new home. 

Enjoy the Build Process

Building a custom home is not a quick process, but that doesn’t mean it has to be overly complex. These nine steps on how to build a custom home explain everything you need to start. 

We recommend taking your time with research and thinking through each step. This will ensure you make the best decisions for your family, budget, lifestyle, and needs. 

Building your home is an exciting process! We hope this guide helped bring you closer to building a custom home you will be happy with for a lifetime.