8 min read Feb 19, 2024

Cheapest Way to Build a House: Types, Materials, and Tips

Edited By

Megha Mulchandani

Edited By

Megha Mulchandani

Editor, Houzeo

Megha M. is a content editor who loves to play with words. Apart from this, she is a theater artist and a public speaker who transforms into various personas on stage.

Find Megha Here

The average construction cost of a new home in the US is around $287,000. This figure may not be affordable for many of the buyers. However, factors like location, materials, etc. can minimize your home-building costs.

If you’re looking to build a house on a budget with favorable factors. This blog will help you find possibly the cheapest way to build a house.

🏡 How to Build a Cheap House

  • Go for a Basic Design: A simple design will keep your costs at minimum. Rectangular and square shaped homes cost less and leave room for decoration.
  • Opt for Affordable Home Styles: Homes such as tiny houses, prefab homes, and more make the perfect choice for an affordable home style.
  • Use Affordable Home Building Materials: Use reclaimed materials, concrete sheets, prefab panels, and others for construction. These materials cost less and reduce the overall cost of building a home.
  • Get Pre approved for Home Building Loans: You can work with a lender to get pre approval for a construction loan. You can also opt for USDA construction loans and VA construction loans.

4 Tips to Build a Cheaper Home

Building your home is exciting but, it can also be expensive. Here are 4 tips that will help you build your home for cheap:

1. Choose a Simple Design

To build a house on a budget, keep the design simple. Typically, building up saves more money than building a stretched-out one-story home. So, you can add stories depending on how much space you need.

Generally, box and rectangular-shaped houses are light on the pocket. But, they might look a little boring and less attractive. You may add lights, shutters, and other decors to make up for the boring exteriors.

Roofing is another substantial aspect to remember while building a house on the cheap. There are multiple roofing options available that can ladder up your costs. The simpler the design the cheaper it will be for you to build a house.

    👉 Opt for Pre-created House Plans: Websites like House Plans offer simple home designs for free. Provide the specifications you wish to have in your house. These typically include number of bedrooms, bathrooms, stories, etc.

2. Skip Hiring a Contractor

On average, a contractor charges $4,000 for their services. This figure ranges from $250-$58,000. You can save this amount if you have construction experience or have a network of skilled labor. You can supervise and manage the building process on your own.

However, you may still need an architect to prepare the floor plans and the blueprint. The cost to hire an architect ranges from $2,500-$350,000. The lower value on the spectrum is usually for small projects and basic design plans.

3. Consult with a Professional Builder

If you’re inexperienced in construction it would be wise to consult with a professional. For instance, if you aren’t able to install important systems, a professional will be able to help you with that.

Professional builders charge between $50-$150 per hour. Hiring a professional builder may be costly but they’ll help you save more by avoiding mistakes.

4. Get the Project Approved in Advance

It takes around 6-12 months to get project permits and costs between $500-$2,000 based on the project’s value. It’s better to obtain the permits for the final design beforehand. Any changes in the construction stage can lead to extra costs as you’ll have to obtain all the permits again.

Cheap and Effective Building Materials for a New House

There are several options for building materials on the market. Find out which caters best to your needs. Here are plausible options for building materials that will help you build your home for cheap:

Prefab Panels: $1,795 per panel

Prefabricated panels are customized wall panels that are manufactured inside a factory and are directly shipped to the construction site. Since these panels are pre-built, they save time.

Also, you need not work on framing and drywalls, which will save you thousands of dollars in construction costs. The average cost of a prefab panel is around $1,795.

Concrete Sheets: $30 per sq. ft.

Concrete sheets are a subtype of prefab panels. The biggest upside to them is they are easy to install. Concrete sheets save time and money in labor costs. Additionally, you skip the on-site activities like framing and pouring.

On average, a concrete sheet sells for $30 per sq. ft. Moreover, concrete is affordable and effective when building a house on a budget due to its unbending properties like:

  • security
  • weatherproof
  • insulation

Reclaimed Wood: $10 per sq. ft.

Reclaimed materials such as wooden doors, wooden floors, decorative items, etc. cost around $10 per sq. ft. These materials add a classic look to your home and make it attractive.

Reclaimed wood is extensively useful. It can be used for making wooden doors, cabinets, countertops, and more. Moreover, it’s eco-friendly and limits the dependency upon newly sourced lumber.

Cob: $81/ton for sand and a bale of straw

You can build a cob on your own by mixing clay, sand, straw, and water. You can build cobs in whatever shape you like and use them as bricks for construction.

On average, Cob costs around $81 for a ton of sand and a large bale of straw.

    👉 Try to find Materials at a Discount: Materials are one of the biggest expenses in a construction project accounting for 50% of the total cost. It can easily be one of the factors that can significantly reduce costs. One way to find cheaper materials is by asking for discounts irrespective of the quantity purchased.

Cheapest Styles of Houses You Can Build

Home building is expensive. However, here are 4 home styles that you can build for cheap:

1. Tiny Homes

Tiny Homes have emerged to be one of the sought-after options among different types of properties. The average cost to build a tiny house ranges from $40,000 – $100,000 and it is less than 500 sq. ft. They are generally square and rectangular in shape with a basic design structure.

The market for tiny homes is expected to grow at a CAGR of 4.88%. The global tiny home market expects a 57% contribution to its growth from North America.

2. Shipping Containers

These houses are made out of shipping containers and cost $16,000 – $45,000. They come in two sizes – 160 sq. ft. and 320 sq. ft. However, these houses are legal only in specific states, that include:

  • Alaska
  • California
  • Colorado
  • New York
  • North Carolina
  • Missouri
  • Minnesota
  • Florida
  • Louisiana
  • Georgia
  • Oregon
  • Pennsylvania
  • Tennessee
  • Washington D.C.
  • Texas

3. Prefabricated Houses

Prefabricated homes are ready-made houses that are built off-site. They are transported and assembled on the site of construction. So, you can accommodate customization while building your own home. Generally, it costs around $90 – $120 per sq. ft. to build a prefab home.

4. Ranch Homes

Ranch homes are easily one of the cheapest houses to build costing around $150 per sq. ft. Usually they are rectangular in shape but they are also available in “T” and “L” shapes. They are single-story build-ups with a simple layout.

Home Building Financing Options

If you don’t have enough cash lying around, this section is for you. Here are some home-building financing options that can get you your dream home:

Home Construction Loan

Listed below are the most notable home construction loans:

  • Construction-to-Permanent Loan: This loan covers both the purchase of land and the home-building costs. The day you move into the house, the loan converts into a conventional mortgage of 15 to 30 years.
  • Construction-only Loan: This loan only covers the cost of home building and not the purchase of land. After the construction is complete, you can cover the loan by either paying cash or taking out a mortgage.

Personal Loan

A personal loan won’t finance your entire home building cost but only a part of it. For example, if you forgot to account for insurance in your budget, a personal loan can come to your rescue.

Home Equity Loan

A home equity loan caters to the needs of existing homeowners who want to finance the construction of a new home. The equity in your existing home defines how much of the cost of the new construction you can finance.

Buying Vs. Building, What’s Better?

Generally, buying an existing home is cheaper than building a new one. But remember, by building your own home you get a brand-new home, customized to your needs.

The average cost of house building in the US is around $287,000. This figure does not include land costs, excavations, permits, and other expenses. Home building prices can reach millions depending on the build type and customizations.

If you’re considering buying a home, the median sale price (as of Q2 2023) is $416,000.

Owner-built homes can take up to 12 months to complete. Even if you hire a contractor, you will spend 9 months building your house.

Bottom Line

The key to building a house on a budget is to keep it simple. This doesn’t mean that you compromise on safety and health. HVAC systems can be expensive but can save energy costs in the future. However, It is crucial to understand how much it would cost to build a house before coming to conclusions.

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Frequently Asked Questions (FAQs)

1. What's the Cheapest State to Build a House in?

Tennessee has one of the cheapest places to live in the US. The lowest cost of building a house in Tennessee is around $167,000.

2. Can I Build a House Under 100K?

Yes, you can build your home under $100,000. You can build a tiny home ranging between $40,000 - $100,000.

3. What's the Easiest House to Build Yourself?

Prefab homes are one of the easiest homes to build. It's so easy to build a prefab home that you can DIY.

4. What's Cheaper, Building Up or Building Out?

In most cases, building up is the cheaper option than building out. Building out involves additional activities like digging and pouring, which can be relatively costly. However, this decision depends upon your requirements.

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