Building your dream home is not only an exciting milestone; it’s often the culmination of years of planning, saving, strategizing, and envisioning a space that truly encapsulates you. But it also comes with financial pressures and myriad decisions– from selecting the right location to considering future needs – that can feel overwhelming, particularly for growing families. Success is built on smart, strategic budgeting.

This can be an intimidating process, but it’s not a journey you need to take on your own. In this guide, we’ll discuss aligning your goals with your budget.

5 Custom Home Budgeting Tips for the Serious Homeowner

It may not be as fun as choosing your flooring or selecting the right finishing touches – but budgeting for your dream home is the step that leads to all others.

1. Scrutinize the Numbers

The first step is to assess your current financial situation. Our advice: Be ruthless. Savage, even. Numbers can tell many different stories, but if you strip away any “spin,” they will not lie to you. Review your income and expenses as they are currently. Next, calculate your debt-to-income ratio and see how a house fits into the equation.

Typically, your total debt, which includes your mortgage (if you plan to access financing), should be less than 36% of your pre-tax income. Your total monthly housing costs, which includes the mortgage, insurance, and taxes, should be less than 28% of your pre-tax income.

Don’t forget to factor in all potential custom home costs, such as moving, closing, lot preparation (if applicable), maintenance, landscaping, utility set-up, emergency funds, etc., as well as lifestyle costs. For example, if your new location requires more (or less!) travel each day, be sure to do the math.

What are your numbers telling you at this point? Armed with this unbiased information, set a realistic price range.

2. Define Your Dream

When you think of “home,” what comes to mind? Use this vision to determine what is most important to your family. Is it an expansive open plan? A large yard and/or a pool? High-quality schools, services, and amenities in close proximity? Is it lots of greenspace and/or a tight-knit neighborhood? What can’t you live without? These are your must-haves. Your nonnegotiable, if you will.

As you are going through this part of the process, take time to identify your “nice-to-haves.” Prioritize your must-haves and be open to compromise in other areas. (Note: This does not refer to the structural quality of the home!) An example: One of your must-haves is a large kitchen with an adjacent butler’s pantry, and you’re willing to flex by forgoing a full bar or wine cellar. Your must- and nice-to-haves are completely unique to you. Getting to know them, and your dream, with greater clarity is an important step.

3. Plan Now, Relax Later

Growing families are right in the midst of one of the busiest periods of life. Getting through the day without meltdowns feels like enough of a plan! Take the time, however, to consider your future needs so your home can adapt and grow right along with you. This often means integrating smart storage and flexible, functional spaces (e.g. mudrooms, playrooms, game rooms) that can transition as your needs change.

More homeowners are choosing to think about aging in place – years or decades before it may become their reality. G&G owner Joe Garcia says, “The homeowners may be fine now, but they think in a ‘just in case’ mentality, asking, ‘What are some things we can do to prepare?’” This may involve integrating doorways that are wide enough or countertops that are low enough for wheelchair access, grab bars, floors that are flush with doorways, and more. These elements of universal design are beneficial to household members at all ages and stages.

Thinking about these features now helps homes stay accessible and enjoyable into the future, and it’s easier and less expensive to include them from the ground-up rather than trying to retrofit.

4. Build a Buffer

As you prepare to embark on the custom home building journey, build a monetary cushion for unexpected costs. For example, if you’ve forgotten to consider the cost of insurance for moving high-value items or for time off as you relocate, this buffer comes in handy so you don’t have to access other resources (e.g. your savings, retirement account, etc.). After you have moved in, retain this fund and add to it for emergencies.

What’s a good buffer? Think about setting aside the equivalent of 10% – 15% of your project budget.

5. Partner with the Right Builder

This may seem like an odd budgeting tip, but it is, perhaps, the most critical. Finding the right fit impacts your finances in many ways, both direct and indirect. You can rest assured that they are completely transparent and honest when it comes to estimates, bids, and timelines (because, yes, time most certainly is money). You will have a realistic overview of what you can expect, and they will be there with you every step of the way.

An experienced builder will also have a well-honed process in place when it comes to cost estimating, working with subcontractors, securing permits, and scheduling inspections. Again, this will be clearly laid out for you and scheduled as precisely as possible to limit costly gaps.

The finished product, too, yields savings as you can trust the quality and integrity of the build. There is no doubt that creating a custom home is a significant investment; it is worth it to work with a trusted builder who does not cut corners or compromise on long-term value.

G&G intentionally limits the number of homes we build each year, opting instead to work with each homeowner on a personal level. This streamlines your journey, and it also ensures optimal results. Results that you will be proud to call home.

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