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Should You Buy or Build a Home?

To build or not to build, that is the question. Whether you buy or build a home, it can be a decision-filled, stressful process to try and stay within your budget. This decision doesn’t need to be complicated if you prioritize these considerations.

Upfront costs


The upfront costs of building a home will almost always be more than buying an existing home. You can expect to budget for custom blueprints first, which can cost you anywhere from $3,000­–$8,000 on average, depending on square footage.

Next, plan to pay for a survey of your land. The majority of suburban areas require a land survey and topographical study to before, during, and after your home is built to determine whether the land is sufficient for building the home. Surveys and studies can cost anywhere from $500–$1,000, depending on the size of your property.

Lastly, expect to encounter fees for permits from your property’s locality. Payment for permits go toward the time and resources your county and township will deploy to inspect the property and home, ensuring everything is up to code. This can cost anywhere from $1,200–$7,000, depending on your municipality’s fees.

All in all, with costs of labor, too, expect to save at least $40,000, as per your research according to your anticipated home size and your locality’s rules and regulations. Plan for unexpected issues with the land, multiple revisions on blueprints, and price hikes at the discretion of your locality.


As of May 2020, the average cost of a home in the US was $284,600, according to the National Association of REALTORS ™. If you pay the average 6 percent of your down payment, at a minimum you’d want to save about $17,000.

The upfront costs associated with buying an existing home go mainly toward the down payment. However, if you are selling a home and buying at the same time, there are more upfront costs to consider.

When applying to a lender, to process your application, you’ll be charged an origination fee that will cost about 0.5–1 percent of your mortgage.

All in all, expect to save about $25,000–$30,000 to buy an existing home.

For either buying or building, you’ll need to consider what needs to be taken care of with your existing home, too. Scheduling an inspection and an appraisal is important. Consider escrow payments, government fees, and taxes. Save about $5,000 or more for this process.

person calculating finances


When it comes to home maintenance, there are different annual budgeting formulas you can follow to save properly. However, these numbers are going to vary greatly on whether or not you’re customizing and creating a new home, or buying an older home with little upgradability.


The perk of having a brand new, custom home is that everything in your home is just that—brand new. If you splurge on higher-end materials, you will reap the benefits of long-term, low costs for home maintenance.


An existing home, especially an older one, can come with higher maintenance costs. There is less wiggle room for you to customize upgrades and you may find the maintenance to be more than anticipated.

One of the formulas people deploy for home maintenance is to take one percent of your home’s value and average that with the number of square feet in the home, then add up ten percent for each extreme risk (weather, condition, age, location, and type). Add the percentage to your prior average.


Home cost=$300,000

10% of the home cost=$3,000

Size=2,000 sq. ft.

Average is then $2,500.

Risk factors= older (10%), flood plain (10%), and extreme winters (10%). So, that’s 30 percent to add to $2,500.

In this scenario, you would save about $3,250 a year for home maintenance.

builder's tool bag

Energy efficiency 

Having an energy-efficient and green home will make your life much simpler when it comes time to pay your utility bills. This is how building and buying a home can differ on this front.


Newer materials mean the latest and greatest in energy-saving technology. You may even be able to install equipment like solar panels much easier than you would with an existing home.


Older, lived-in, and well-loved homes can show their age quickly when it comes time to pay your first utility bill. There are upgrades you can make, but at an added cost to you. A tip is to search for homes with newer appliances and energy systems.

house with sunset


The value of your home is paramount to your financial well-being, not just if you’re planning to sell. Even if this is your anticipated forever home, an increase in your home’s value can do a lot for you.


Most people who build a custom home want to be in a more secluded area, but if you build, you want to be strategic about the characteristics of the area and how that can contribute to your home’s value over time. This can be a tricky formula to figure out.


Existing homes are likely in a community or neighborhood, making resale value statistically much more likely to increase. You can refer to neighbors and other homes nearby when determining the value of your own home.



The main advantages are energy efficiency, maintenance, and customization.

The main drawbacks are upfront costs and a potentially lengthy build time.


The main advantages are a quicker timeline, moving into an established neighborhood, and lower upfront costs.

The main drawbacks are potentially higher maintenance costs, lower energy efficiency, and minimal customization.

So, should you build or buy a home? The answer isn’t so cut and dry. However, the building process is considerably more expensive, so the economic benefits of buying an existing home can be easier financially on you. Especially since most people get excited about moving, a waiting game with the building process can be frustrating. Be sure to talk to a real estate agent about finding the home that will work best for you!

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