Budgeting for Home Construction: How Much Does It Cost to Build a House in Texas?

Building a home in Texas is an exciting journey, but it requires careful planning and budgeting. From purchasing the land to hiring contractors and choosing the building materials, your expenses can add up quickly.

Understanding how different factors can contribute to the overall cost of construction can help you make informed decisions without breaking the bank. Keep reading to learn more about the cost of building a house in Texas, how you can set a realistic budget, and the common pitfalls to avoid on your home construction journey.

What’s the Average Cost of Building a House in Texas?

The average price to build a new house in Texas is generally around $325,000, but it’s important to note that the price you will pay depends on the size and location of the building, as well as the materials used. On average, construction costs for a standard home in Texas range from $140 to $220 per square foot. However, this figure is just a starting point. On the other hand, the cost per square foot of a custom home ranges between $250 and $300. The price is significantly higher for more custom builds and luxurious homes with high-end finishes. The actual price will depend on the type of home you’re building, its design, and the quality of finishes you choose.

Setting a Budget for Home Construction in Texas

Before you set a home construction budget, you need to consider what factors can significantly affect your project. With the fluctuating cost of building materials, having a clear budget can help you stay on track financially.

Here’s an overview of the steps you can follow to make sure you get the best out of your home construction journey:

1. Determine What You Can Afford

Before discussing costs, you need to assess your financial situation. The scale of your home construction should match the type of funding you have available. Beyond traditional loans, you can also consider alternate funding sources like seller financing and personal savings.

2. Include Land Costs

The next step is to factor in the cost of the raw land for your new home. The price of the land depends on its size, location, and the utilities available. Also, you should factor in additional costs like land clearing fees and plot improvements like road access and drainage systems.

3. Account for Permits and Fees

When constructing a home in Texas, you may need to get some permits and approvals. Some of these permits include septic permits (where applicable), building permits, and utility connection fees. Plus, many municipalities charge impact fees to support local infrastructure. So, before you commence your project, you should find out what permits affect your building process and factor these costs into your budget.

4. Research Construction Costs

The costs of building a house in Texas vary widely depending on the region. Your total cost can be affected by labor availability, local demand, and material prices. For a more accurate budget, you can contact local contractors to get detailed quotes, review local real estate market trends for any fluctuations, or consult a professional land developer for more information about the area.

5. Consider Site Preparation

Preparing the land for construction is often an overlooked cost, but it’s a significant part of building. Depending on the state of the land, you may need to level uneven terrain, clear vegetation, or add fill to ensure a stable foundation. This building phase can also include excavation, grading, and installing utilities, which will add to your budget.

6. Choose Your Materials Wisely

Material costs are another huge factor to consider when creating your construction budget. From roofing to flooring, each choice you make impacts your total budget. Higher-quality materials tend to cost more but might also provide better long-term value. When you conduct your research for building materials, also consider alternatives that can fit within your design needs and financial capability.

7. Factor in Labor Costs

Labor is one of the largest expenses in home construction. The rate for construction workers in Texas depends on the building’s location and labor demand volume. Contractors typically charge a percentage of the total construction costs to manage the project. However, subcontractors like electricians, plumbers, and framers may charge separately for their services.

8. Include Interior and Exterior Finishes

The interior and exterior finishes you choose will define the overall look of your home. That’s why this stage also takes up a large portion of your budget. Interior finishes (like cabinetry, flooring, countertops, and paint) and exterior finishes (like driveways, landscaping, and fences) need to be included in your overall budget estimate.

9. Plan for Contingencies

Creating a contingency fund of 10%-15% of your total construction budget can help you manage unforeseen circumstances that might happen in the future. With construction projects, you’ll likely face unexpected costs like material price increases or unforeseen delays. A contingency fund allows you to address these challenges without affecting your entire project.

10. Review Your Budget Regularly

Throughout the construction process, it’s important you stay involved with your contractors and suppliers. Regularly review your spending to ensure that you’re on track. If you encounter any unanticipated costs, you can revisit your budget and adjust it accordingly.

Ways to Save Money on Your Home Construction Project

You don’t have to break the bank to build your dream home. There are different ways you can reduce costs without compromising on quality. Some of these methods include:

Work with a Property Developer: Partnering with an experienced property developer can help you save money. They can help you streamline the construction process thanks to their access to trusted contractors, discounted materials, and supplier relationships, all of which can help you lower your costs and avoid mistakes.

Plan Ahead: You can create a clear, detailed plan and try to stick to it. Avoid making mid-project changes as much as possible because they can result in extra expenses and costly delays.

Choose Cost-Effective Materials: You can opt for affordable yet durable materials. A property developer can suggest alternatives that match the quality you need while cutting down your overall cost.

Source Materials in Bulk: You can buy materials in larger quantities to take advantage of bulk discounts. Your property developer can help you source great deals and connect you with trusted suppliers.

Getting Financing for Home Construction: Owner Financing

If you’re looking for a way to access flexible land financing for your home construction project in Texas, owner financing is a great alternative to consider. This payment method allows you to bypass traditional lenders and secure funding for land purchases directly from the seller. Here, the seller acts as the lender, and you agree on a down payment, flexible interest rate, and repayment plan.

This financing option can be very helpful if you have difficulty qualifying for a conventional mortgage because of bad or no credit. What makes owner financing attractive is that it usually gets lower closing costs, faster approvals, and fewer bureaucratic hurdles.

Find the Perfect Plot for Your Dream Home With SRC Land

Budgeting is one of the most important steps in building a house in Texas. You’ll need to understand the costs involved in building to have a clear view of your total budget. Proper planning also helps you navigate the construction process to avoid unexpected financial blocks and give you a smooth building experience.

At SRC Land, we support you every step of the way, from selecting the right property to understanding your building costs. Our dedicated team will help you make your construction journey seamless. Contact us to help you make informed planning decisions and make your dream home a reality.