Home Financing 101: Budgeting & Planning for Your Custom Build in Waco
If you want to build a custom home in Waco, Texas, one of the first things you need to do is plan how you’re going to finance your new home.
Jim Bland Construction, a custom home builder in Waco, has over 50 years of helping clients design and build custom homes.
And one of the first questions we always get is, “How much will this cost?”
This is a normal question, and to help you determine your custom home budget, we have put together this guide to budgeting and planning for your custom home build.
Let’s take a detailed look at the components of a custom home, financing options, and hidden costs to watch out for when budgeting.
Breaking Down the Cost of Building a Custom Home
In central Texas, including Waco, the average cost to build a custom home ranges from $180 to $300 per square foot, depending on several factors, such as design, size, and materials.
However, this estimate typically excludes land acquisition costs and site preparation. This is where you’ll need to consider the key cost components of building a home in Waco.
Key Cost Components
Here’s a typical breakdown of the key cost components of building a custom home.
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Land Acquisition: Prices vary on location and acreage. The average cost per acre in Waco is around $7,300 to $20,000 for unfinished land.
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Site Preparation: Costs can range from $10,000 to $100,000, depending on the property’s condition and required work. When looking for lots, a flat space is your best bet to cut these costs.
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Permits & Fees: Expect to pay between $5,000 and $15,000 for necessary permits and associated fees.
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Design Services: Architectural and design fees typically fall between $15,00 and $50,000. Jim Bland Construction can help with this aspect of the process.
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Construction: The primary building costs, influenced by materials and labor.
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Landscaping & Utilities: Additional expenses for landscaping and connecting utilities can add $10,000 to $50,000.
During the land acquisition part of building a custom home, there are subdivision lots that already have utility hookups available, though the land might be more expensive.
However, it’s a good idea to compare these costs before making a final decision to ensure you’re getting the best price.
Custom Home Financing Options & Rebates
There are several ways to finance a custom home. Let’s take a look at some of the most readily available options.
Construction Loans
These short-term loans cover the building phase and typically require a down payment of 20% to 25%. Interest rates are often higher than standard mortgages, and funds are disbursed as construction progresses.
Construction-to-Permanent Loans
This option combines the construction loan and the permanent mortgage into a single loan, simplifying the process and potentially reducing closing costs.
Land/Lot Loans
If you’ve found the perfect plot but aren’t ready to build, land loans can finance the purchase, allowing you to secure the location for future construction.
Rebates
Whenever possible, take advantage of rebates during the new home construction process. In Texas, homeowners can access rebates for new home construction through programs such as:
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Home Energy Performance-Based, Whole House (HOMES)
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Home Electrification and Application Rebate (HEAR)
There are also federal tax credits for energy-efficient homes, including:
Where to Splurge vs. Where to Save
You may be wondering where you can splurge on features for your custom home and where you should save money.
Let’s look at some areas where you can spend more money and where you should save.
Areas to Consider Spending More Money
Some areas to consider include:
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Energy Efficiency: High-quality insulation, windows, and HVAC systems can reduce long-term utility costs.
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Kitchen & Bathroom: These spaces often provide the highest return on investment and daily enjoyment.
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Structural Integrity: Investing in a solid foundation and quality framing ensures longevity.
Areas to Consider Economizing
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Finishes & Fixtures: Opt for mid-range options that offer durability and aesthetics8 without premium prices.
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Floor Plans: Simpler designs with fewer corners and angles can reduce construction complexity and costs.
Hidden Costs to Watch For
There can end up being some hidden costs during custom home building that you don’t anticipate.
Permits & Fees
In Waco, permit fees can vary based on the project’s scope. For example, residential structures are charged $0.25 per square foot, with additional fees for plan reviews and specific installations.
Site Development
Clearing land, grading, and addressing drainage can add unforeseen expenses.
Utility Connections
Extending water, sewer, electricity, and gas lines to your property can be costly, especially in rural areas.
Change Orders
Modifying plans during construction can lead to increased costs and delays.
Landscaping
Designing and implementing outdoor spaces can add $15,000 to $50,000 to your budget.
Jim Bland Construction’s Custom Home Price Estimator
To get a better idea of how much your dream home will cost, Jim Bland Construction introduced a free Price Estimator tool. Using this tool only requires three easy steps, and it will allow you to customize your home to determine the features and size for your budget. Once you have an idea of how much your home may cost, you can contact us to help you refine your vision.
Our Price Estimator tool can also be used to estimate the cost of remodels, additions, and even home services memberships. This tool will help us gather important information about your needs so we can provide the best services to you, our client.
Make Your Dream Home a Reality With Jim Bland Construction
Through careful, detailed budgeting and transparent communication, Jim Bland Construction can help you achieve your goal of having a custom-built home in Waco, Texas. Our teams ensure that your custom home is made with quality craftsmanship and excellent customer service throughout the process.
Put your trust in Jim Bland Construction for your new custom home! Call us today at 254-772-6508 for more information, or send us a request online.