How to Build a New House Debt Free

Doing the project in phases spreads out the cost if you don't have it all up front.

Doing the project in phases spreads out the cost if you don't have it all up front.

Building a home without a mortgage seems like an unrealistic dream to most people, but with patience and a detailed saving plan, it is possible. It takes time to accumulate the money necessary to build a home without any debt, and you might need to build in phases as the money comes in. Building your home without a mortgage is a process and won't provide instant gratification, but it can improve the quality of your life. After you complete the work on your new home, you can use the money you would have spent on the mortgage payment for whatever you want.

Set Your Goal

Debt-free building requires you to gather money as you go, but the task may seem impossible if you don't have a goal to measure your progress against. Calculate the amount of money you have available toward the new home. Estimate how much you need to complete the project based on the home's size and features. Make adjustments where you can to save money. Stay away from unnecessary high-end finishes and extras, focusing more on your needs than your wants.

Cut Your Housing Expenses

Reduce your current housing expenses as much as possible. Sell your home and rent a small property, move to a studio apartment or move in with your parents if they'll let you. While it might be a sacrifice now, cutting your housing expenses frees up more money toward your new home so you can get into it faster. As soon as you can, purchase the land for your new home and consider living on it in a small trailer while building your new home. This completely eliminates the need to pay any rent.

If you plan to have a guest home or separate in-law suite on the property, consider building it first. Because of the smaller size, it will cost less and you can live in it while you finish building the main home. Focus more on the layout and size of the home when you build. You can add extra touches or upgrade the furnishings down the road to keep the initial building costs low.

Actually, Cut Everything

Analyze your budget and look for ways to cut your other expenses too. Cut out all nonessentials, such as cable, gym memberships and dining at restaurants, to give you more money toward the home-building project. If you and your partner both work, try living on one income and saving the other. You'll need to tighten your belt quite a bit, but you'll squirrel away a ton of house money very quickly if you can do it. Sell items you no longer need or want and put the money towards building your new home. Selling items also helps if you are downgrading to a smaller home to save on housing expenses.

Take It Slow

Build the house in phases as you save up the necessary money. For example, you might excavate for the basement one month and pour the foundation the next. Breaking construction into smaller chunks lets you complete work as you have the money. This might extend the length of the project, but it is an option if you don't have all the necessary money up front.

Get Hands-On

Finish as much of the home as possible on your own. Install your own flooring, paint the walls yourself and install your own cabinets. The more work you can handle yourself, the lower your total building cost. Manage the building process as the general contractor yourself to save money, too. Taking over the coordinating of the electricians, plumbers and other subcontractors will cost you time and energy, but it will also save you lots of money.

Tips

  • If you plan to have a guest home or separate in-law suite on the property, consider building it first. Because of the smaller size, it will cost less and you can live in it until the main home is built.
  • Focus more on the layout and size of the home when you build. You can add extra touches or upgrade the furnishings down the road to keep the initial building costs low.
 

About the Author

Based in the Midwest, Shelley Frost has been writing parenting and education articles since 2007. Her experience comes from teaching, tutoring and managing educational after school programs. Frost worked in insurance and software testing before becoming a writer. She holds a Bachelor of Arts in elementary education with a reading endorsement.

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