How We Budgeted for Land + A Custom Home

Building on land sounds romantic.

Budgeting for it is not.

There were spreadsheets.

Hard conversations.

Trade-offs.

Moments we had to say, “That’s not worth it.”

Here’s what it actually looked like for us.

1. We Started With a Hard Number — Not a Wish List

Before we talked finishes or layouts, we set a maximum number we were comfortable spending.

Not what the bank approved.

Not what felt exciting.

What felt sustainable.

We decided early on that our total budget would stay under 30% of our take-home income, leaving room for savings, life, and unexpected costs.

If you’re starting to plan your build, I built this simple FREE budget tracker to map everything out.

2. Land Was Separate from Than the House

For us, the land wasn’t financed as part of the construction loan. Instead, we leveraged the equity from our previous home towards the land purchase.

This approach gave us clarity and flexibility when it came time to build:

• No surprise overlap with construction payments

• Easier to track what was going toward the home versus the property

Even if your situation is different, separating land from construction — whether via equity, savings, or a separate loan — makes budgeting more manageable.

3. We Created a “Non-Negotiables” List

Instead of upgrading everything, we prioritized what mattered and what didn’t.

For example:

• We skipped adding more square footage — something that would have pushed both costs and maintenance higher.

• We prioritized layout, natural light, and functional spaces.

• We invested in things that would last, like our geothermal heating and cooling system — something we’re so glad we spent on!!

4. We Built in a Contingency Fund

No matter how tight your plan is, things go over.

For us, the flooring ended up about 5–8% over our original budget, but because we had planned a buffer, it didn’t derail anything.

Unexpected costs are inevitable but planning for them is essential. We had factored in a 10-15% contingency plan across the entire build. If your plans + selections are finalized, you've locked in most finishes, and it's a well-managed build, 10-15% is enough to account for small change orders, material price shifts, and minor site surprises. If you're early or have a lot of decisions to make as you go, 15-20% is more appropriate. However doing it this way is where budgets quietly explode.

5. We Said No & Phased What We Could

This is where strategy met discipline.

• Extra square footage? No.

• Fancy tile choices? No.

• Trendy finishes? No.

Every “no” freed up space for a “yes” that mattered, like our geothermal system and vaulted ceiling in our living room space.

And you know what? Not everything had to happen immediately.

We intentionally delayed:

• Landscaping upgrades

• Basement build out

• Certain outdoor elements

Phasing allowed us to stay within budget and enjoy the process.

6. We Didn’t Want to Be House-Poor

This was a guiding principle, and I think a mistake many people make when building. Not because it's their fault, but they get wrapped up in all the decisions and fancy upgrades they end up with a house they can barely afford. It's SO important to track and plan everything prior to starting your build, that way you don't have this happen.

We didn’t want our mortgage to squeeze our life or future plans. By keeping the budget grounded and building intentional square footage, we ensured comfort without sacrificing peace.

7. Step-by-Step if You're JUST Starting This Process

Step 1: Decide your comfort number based on your personal budget.

Step 2: Add 20% cushion to projected payment. (Take your projected mortgage payment and multiply it by 1.2.)

Step 3 (Bonus Tip*): Calculate a home ownership fund separately. Plan for 1-2% of the home's value annually.

Step 4: Test run the *new * mortgage payment for 3 months and save the difference.

Step 5: Only start if it still feels peaceful.

What We Learned

Budgeting for a custom home isn’t just about numbers. It’s discipline, trade-offs, and choosing what matters most. Instead of chasing bigger, we wanted intentional. I wrote a whole blog post about this concept because for me personally, the hype on social media to build these massive, far-fetched houses was hard to ignore. To find out why I stopped chasing bigger, read this blog post here.

Sometimes that means living in 1,200 sq ft longer than you think you should or moving in with your parents (like we did) so you can build wisely later.

And sometimes it means saying no to more square footage, going over budget on something essential, and investing in features that pay off for decades — like geothermal!

We didn’t build the biggest house we qualified for.

We built the house we could sustain, and that’s the only way to build wisely, and without regret. I'm writing this to be your voice of reason when all the fancy finishes come across your table : ) Out of love!!