What Are Some “Hidden” Costs When Building a New Custom Home?

Published January 26, 2024

Bringing your custom dream home to life is a complex process, and many costs can arise, both expected and unexpected. Below is a list of potential hidden costs to be aware of.

Land Preparation and Unforeseen Site Work

Before construction on your new home can begin, your land must be cleared of trees and bushes, the soil must be tested to ensure it can support a home, and any gas, water, or electric lines must be discovered and relocated. Your contractor will ensure there will be proper water drainage away from your home, and any digging for a basement or filling in depressions will need to be done.

Permit and Impact Fees

While you might expect to pay for building permits to construct your new home, the cost can vary widely based on your municipality or region. Some neighborhoods might also charge for school, park, or road impact fees.

Design and Architectural Changes

Changing your mind during the design phase can lead to redraw fees. Engineering adjustments might be needed, which also cost money.

Higher-Quality Materials or Finishes

Upgrades from standard offerings can quickly increase the budget. Opt for more affordable options during your new home build so the costs don’t add up.

Utility Connection

Connecting to water, sewer, electricity, gas, or even cable and internet can sometimes carry hefty fees.

Temporary Accommodations

If you need to live elsewhere while your new home is being built, that’s an additional cost you’ll need to consider.


You are creating more than a custom-built home – you are creating a luxurious outdoor living space as well. Beyond just grass, think about trees, shrubs, patios, fences, and irrigation systems that will bring your yard together.

Additional Interior Finishes

Things like window treatments, closet organizers, or upgraded fixtures in your custom home can add up.

Cost Overruns

Almost any construction project can encounter unforeseen complications which can lead to increased costs. It’s best to keep this in mind and plan to save for unexpected costs.

Interest and Loan Fees

If the construction of your unique home takes longer than anticipated, interest on construction loans can pile up.

Driveways and External Structures

Garages, carports, sheds, extended driveways, or parking spots might not be included in initial quotes.

Homeowner’s Insurance

Depending on where you’re building your custom home, you might need additional coverage for floods, earthquakes, etc.

Utilities During Construction

The construction crew might need water and electricity during the build, and you’ll typically foot that bill.

Contingency Fund

It’s always wise to set aside extra funds (often 10-20% of the project’s total cost) to cover unforeseen expenses.

Specialty Contractors

For unique design elements or systems, you might need specialized contractors outside of what your builder typically uses.

When planning to build a custom home, it’s important to communicate regularly with your builder and other professionals involved to keep a clear understanding of all costs. Regularly revisiting and updating the budget can help prevent surprises and keep your project on track.

At LaFollette Custom Homes, we work with you closely during each step of our custom home building process as we bring your vision of your new dream home to life. Our Custom Home Consultant will prepare a preliminary estimate to give you a ballpark idea of the cost to build your home, and you will be able to experience your home via a virtual reality walk-through before construction begins. Contact us today to request a consultation.



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