When you’re ready to get a new home, one of the first questions you need to answer is whether you’d like to buy an existing home or build a brand new one. The answer is going to depend on your priorities – how soon do you hope to move in? Is living in a certain area extremely important to you, or are you more focused on tailoring your home exactly to your liking? We’ll give you some insights on the pros and cons of each so you can more easily make your decision.
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Benefits of Building a Home
- Customize it the way you like. If you buy an existing home, you may have to compromise on some of the things on your wish list, like the size of the kitchen or the number of bathrooms. If you build a home, you can specify just what you want from the get-go, rather than remodeling later.
- No competing with other buyers. Buying a home often means trying to beat out other buyers by making an enticing offer to the seller – but building avoids this hassle.
- ‘Brand new’ means no repairs needed upfront. Building allows you to start fresh with new plumbing, HVAC and roofing, rather than making repairs or upgrades to an older home.
Benefits of Buying a Home
- More locational options. In some cases, it may be easier to find an existing home located in a neighborhood you hope to live in rather than find a lot to build on.
- Enjoy a shorter (and simpler) timeline. Buying an existing home generally means you can move in more quickly than if you’re waiting for construction to complete on a new home. It also means you’re saddled with fewer decisions to make.
- Leverage the market to get a good price. Depending on your local housing market, you can negotiate a lower price for the home. For example, if it’s been on the market for longer than average, you may be able to push down the price.
Comparing Costs
Be aware that the cost to buy or build a home will vary significantly depending on where the home is located. Buying or building a home in a more popular market like San Francisco or Seattle will generally be more expensive than settling down in a smaller market.
Some sources estimate it costs an average of $323,026 to build a new home, or approximately $150 per square foot, though cost can vary widely depending on location and building materials.1 Meanwhile, the Census Bureau estimates that the median cost of buying a new home is $402,600 as of November 2024.2
Building a Home: Cost Considerations
Here are some major costs you’ll have to account for when considering building a home:
- Permitting (will vary by local jurisdiction)
- Buying land and then prepping it for construction
- Architectural plans
- Labor
- Framing and foundation
- Plumbing, electrical wiring and HVAC
- Roofing
- Windows
- Interior finishing
- Inspection costs
For all of these components, the cost will vary depending on material quality and square footage. Spend some time considering your priorities, and where you’d like to invest in quality materials versus where you’re comfortable saving money. Be sure to factor in the climate in your area, as well as how energy-efficient you’d like your home to be.
When it comes to hiring professionals, such as the construction manager, engineer, architect and other specialists, be sure to verify qualifications and get solid recommendations. The cheapest professionals may not always be the most reliable.
How can I fund my home’s construction?
If you decide to build your home, you might qualify for a construction loan, which is paid out in installments as segments of the project are finished. Once construction on the home is completed, the loan works like a typical mortgage.
Want more info? Reach out to one of our mortgage experts.
Buying a Home: Cost Considerations
When you buy an existing home, generally your largest expense will be the down payment on the house. You might qualify for a mortgage program which allows you to put very little money down (3%, for example), or you may pay anywhere from 10 to 20% of the home’s listed price.
Outside of the down payment, your main costs will be closing costs, including the appraisal fee, origination fee, credit check fee and various others.
Depending on the age of the home, you may have to pay for repairs or renovations to the home to keep it in good working order and up to code.
Considering buying a home but not sure what you can afford? Check out our mortgage calculators.
References:
1 How Much Does It Cost to Build a House? [2025 Data] | Angi
