Remember, if you do not already own an acceptable lot to build on,the loan amount must cover not only construction, but also the cost of purchasing and possibly developing that lot. Finding out what you can afford is important. SEE OUR PAGE ON LOT SELECTION.

Construction Budget

As a safety measure, budget only 90% of the total loan amount for the project costs. This will give you a cushion to cover cost overruns.

For example: If your lender says you may finance $300,000.00, use $270,000.00 as your budget limit for land and construction. If you then pay $50,000.00 for your lot, you will then have a construction budget available of $220,000.00. Knowing this, you can then check with the local building department, local building contractors and/or subcontractors to see what building costs are and what you can afford to build.

Run these numbers against the comps in the neighborhood where you plan to buy your lot and see if it makes sense to build there. You may find that isn't the right place for your project.

This planning process is critical for your success. You never want to partially complete your home and run short on funds. If everything up till now passes muster, it's time to forge ahead. If not, don't push it. Be patient and continue with your research until you find the lot, plan and financing that make building your own home worthwhile.