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What is the most cost effective way to build a house?

When it comes to building a house, there are many factors to consider in order to keep costs low while still building a quality home. The most cost effective way to build a house often involves making smart design choices, using inexpensive but durable materials, and leveraging sweat equity to save on labor costs. With careful planning and research, you can build an affordable home without sacrificing comfort or aesthetics.

Key Factors That Impact Cost

The main factors that influence the overall cost to build a house include:

  • House size and layout
  • Quality of materials
  • Custom versus stock designs
  • Degree of finish work
  • Geographic location
  • Labor costs

By making intentional decisions in each of these areas, you can reduce your total construction costs substantially.

House Size and Layout

One of the biggest cost factors is the total square footage of the home. Larger homes simply require more materials and labor to construct. Limiting the footprint of the house and opting for a story-and-a-half or ranch style home rather than a sprawling two-story can reduce materials costs up to 30%. An efficient layout that reduces hallways and entryways in favor of more usable living space will also save on construction costs.

Quality of Materials

Opting for inexpensive siding, flooring, cabinets, and fixtures slashes thousands off the total price compared to premium building materials. Vinyl siding is one economical option that still provides durability and low maintenance. Laminate flooring has come a long way in replicating the look of real hardwoods for a fraction of the price. Stock cabinetry and light fixtures are other easy spots to downsize that won’t sacrifice livability.

Custom vs. Stock Designs

Choosing a stock house plan rather than a fully custom designed home saves significantly on architect fees. Stock plans range from $500-$2,000 while custom plans average around $1,500 per 100 square feet. For a 2,000 square foot home, that’s a savings of $20,000 to $30,000 on the design phase alone. Builders also tend to have lower overall construction costs when working with tried and true stock designs.

Degree of Finish Work

Leaving some elements unfinished such as flooring, cabinets, trim work, and landscaping drops costs as well. You can still make the home livable by finishing the bathrooms, kitchen, and installing carpeting in the bedrooms. Then you have the option to complete other rooms later as time and money allow.

Geographic Location

Construction costs vary widely based on where the home is built. Permits, labor rates, material transportation, and property costs differ across regions. Typically rural areas are much more affordable to build in than urban cities. Construction in a lower cost of living location can reduce overall build expenses by 15-20%.

Labor Costs

One of the biggest line items in any new home build is paying for qualified construction contractors. Acting as your own general contractor and doing some of the work yourself or with family and friends saves substantially on labor. Sweat equity accounts for up to 20% savings for hands-on homeowners. Even subcontracting specialty work like electrical, plumbing, and HVAC can still amount to big savings over paying a general contractor to manage everything.

Low Cost Foundation Options

The foundation is a major structural element that impacts durability and cost. Here are some inexpensive foundation options:

  • Slab on grade: This foundation is a simple concrete slab poured on the ground. It offers the most affordable foundation for areas not prone to freeze/thaw cycles.
  • Crawl space: Crawl space foundations are built by pouring footings below ground and framed walls above ground. The space under the home remains unexcavated. This is a particularly economical option for sloped lots.
  • Basement: If local soil conditions permit, a full basement foundation can be surprisingly affordable. The excavation work can be done with a backhoe and local codes may not require more than basic reinforcement.

Low Cost Framing Techniques

The framing of a home makes up a sizable portion of materials and labor costs. Here are some inexpensive framing methods:

  • Use pre-engineered roof trusses rather than stick framing a roof.
  • Opt for engineered wood I-beams and LVLs rather than solid wood beams in areas like headers and floor joists.
  • Space wall studs up to 24 inches on center rather than the typical 16 inches.
  • Construct exterior walls with 2×4 studs spaced 24 inches on center rather than 2x6s at 16 inches.

Affordable Siding Options

Siding is one of the biggest aesthetic and functional components of a home’s exterior. Here are some budget-friendly siding materials:

  • Vinyl siding: Very inexpensive, durable, and low maintenance. Probably the most cost effective siding overall.
  • Fiber cement: Mimics a wood look at a lower cost than real boards and better durability than wood.
  • Oriented strand board (OSB): Structural panels are inexpensive and can be installed in sheets and painted. A short-term option for budget builds.
  • Wood composite: Made of wood fibers and plastic resins. Composites like LP SmartSide offer Wood-like aesthetics for less than half the cost.

Affordable Roofing Materials

The roof is a major component that impacts durability and energy efficiency. Here are inexpensive roofing materials to consider:

  • Asphalt composition shingles: These fiberglass and asphalt shingles are the most commonly used thanks to their low cost and long life (20-30 years).
  • Wood shingles/shakes: Cedar shingles offer natural beauty for half the price of other wood roofing options. They last from 20-30 years.
  • Metal roofing: Steel and aluminum roofs can be 2-3 times cheaper than other materials. Coated steel roofs last 40+ years.
  • Roll roofing: This tar and gravel or mineral surface membrane is applied in sheets. Roll roofing costs just $350-$700 for enough material for a simple rectangular roof.

Low Cost Insulation Options

Properly insulating a home increases comfort and energy efficiency. Here are some budget-friendly insulation options:

  • Fiberglass batts: Fiberglass insulation costs just $0.15-0.35 per square foot. With an R-value of R-15, it provides good insulating performance for the cost.
  • Cellulose: Made from recycled paper products, cellulose blown-in insulation costs around $0.30-0.45 per square foot installed. It has an R-value of R-21.
  • EPS foam boards: Rigid insulation panels made of expanded polystyrene (EPS) foam cost as little as $0.25-0.45 per square foot. They have an R-value of R-4 per 1″ thickness.

Inexpensive Windows and Doors

Windows and exterior doors are essential components that impact energy efficiency, security, and aesthetics. Here are budget options:

  • Vinyl windows: Vinyl framed windows with double paned glass provide excellent insulation. Basic sliders and single-hungs cost $150-$250 each installed.
  • Fiberglass doors: Pre-hung fiberglass entry doors offer good durability and insulation for $250-$400 installed.
  • Steel doors: Steel exterior doors are very affordable at around $100-$250 each but have poorer insulation than fiberglass.
  • Used windows/doors: Habitat for Humanity and architectural salvage shops sell quality used windows and doors very cheaply.

Low Cost Heating and Cooling

Here are some budget-friendly options for heating and cooling a home:

  • Window A/C units: Window air conditioning units give zone cooling for a few hundred dollars. No ductwork needed.
  • Ductless mini-split systems: Ductless heat pumps provide heating and cooling without running ductwork. Each unit costs $1,000-$1,500 installed.
  • Propane wall furnace: A propane wall furnace offers supplemental heating for $500-$1,000. Can be a temporary option until central heat is added.
  • Electric baseboard heaters: Electric resistance heaters start around $25 per linear foot, including DIY installation. They can heat one room or supplement a larger system.

Low Cost Flooring Options

Flooring covers a major portion of any home’s square footage. Here are some of the most affordable flooring choices:

  • Laminate: Durable laminate imitates wood or tile for $1-5 per square foot installed. It can be DIY-friendly.
  • Vinyl: Luxury vinyl planks have a stone or wood look for $2-4 per square foot. Vinyl sheet flooring costs just $0.50-2 per square foot.
  • Carpet: Inexpensive carpet options including berber and basic plush carpeting cost $0.50-$2 per square foot installed.
  • Sheet vinyl: At just $0.50-$2 per square foot installed, sheet vinyl is highly affordable and waterproof.

Low Cost Kitchen and Bath Cabinets

Kitchen and bath cabinets are a big part of a home’s storage, functionality, and design. Economical options include:

  • Stock cabinets: Opt for in-stock cabinet sizes rather than custom sizing. Stock oak or thermofoil cabinets cost $50-$150 per linear foot.
  • Particle board cabinets: Particle board construction keeps costs down but isn’t as durable. Budget around $75-$200 per linear foot.
  • Laminate countertops: Laminate countertops resemble stone for 10% of the cost at around $20-$45 per linear foot including installation.
  • Butcher block: Butcher block offers a warm look for just $30-$60 per linear foot as a DIY kit.

Low Cost Lighting Options

Here are inexpensive options for lighting a home:

  • Recessed can fixtures: Basic recessed lighting costs just $5-$20 per light when bought in bulk and self-installed.
  • Surface mount fixtures: Surface mounted lights don’t require special housings. Inexpensive 4″ LED wafer lights cost under $15 each.
  • Track lighting: Flexible track lighting starts around $20 per linear foot. Individual fixtures cost $5-$30 each.
  • Table/floor lamps: For rooms like bedrooms, table and floor lamps eliminate the need for overhead light at all. Basic table lamps start at $10-$20 each from discount retailers.

Low Cost Plumbing Options

Plumbing is a major system that can have high material and labor costs. Here are money-saving plumbing tips:

  • Use PEX for supply lines instead of copper when permitted. PEX costs 90% less than copper.
  • Buy basic white fixtures instead of designer options. White toilets, showers, and vanities cost 50% less than designer materials.
  • Consider tankless water heaters which heat water on demand instead of storing hot water. They cost less upfront and save energy.
  • Buy a basic residential grade kitchen sink instead of an expensive designer material like fireclay or cast iron.

Low Cost Electrical Options

Electrical work is required to have proper function, safety, and compliance with building codes. However, there are ways to save on electrical costs:

  • Use basic builder’s grade light switches, receptacles, and cover plates rather than expensive designer options.
  • Install residential toggle breakers rather than full size commercial breakers which often aren’t required for homes.
  • Optimize the floor plan to reduce wiring distances from the electrical panel.
  • Consider direct-wire lighting instead of can lights and housings where permitted.


Building a budget home often requires careful consideration at every stage of construction. However, you don’t have to sacrifice quality or comfort by opting for cheaper construction methods and materials. Focus on keeping the footprint small, optimizing the layout, minimizing finishes, leveraging sweat equity, and choosing affordable but durable options. With the right decisions and compromises, you can successfully build an attractive, comfortable home at the lowest price possible.