How Much Cash Do I Need to Build a Custom Home?

Use these general guidelines to help understand how much cash you’ll need if you plan to build a custom home in Colorado Springs or Castle Rock! Remember, these are general ‘rule of thumb’ guidelines. We’ve also written a post on How To Budget For a Custom Home. For actual figures, please consult with a lender. Here is a list of our preferred lenders.

Land Purchase

10%–25% of the land purchase price

Construction Loan

10%-20% of Appraised Value of Home

The lender will order a pre-construction appraisal to determine the projected value of the home once completed. Your loan amount and cash requirements will be determined by the appraisal value and the lenders Loan to Value policies. Typically, cash contributed at time of the land purchase will be applied toward the cash required for the construction loan.

Preconstruction Design Costs

Architect plans, soil testing, engineering, builder deposit, designer fees,

Assume $8 per Sq. Ft. Example: 4,500 Sq. Ft. home = $36,000   Typically, these pre-paid costs will be applied toward the cash required for the construction loan.

Construction Loan Payments

Interest payments during construction

Assume 6% interest only payments for 7-9 months during construction. Remember that initially the loan balance and payements will be small but they will grow as the project progresses.

Post-Construction Expenses

Landscaping, furniture, blinds, decor \\optional\\

These are discretionary and can be included in your loan if you plan ahead for them. If not, plan to pay cash for these items.