Can I Afford to Build a Panelized Home?

Every prospective home buyer faces questions relating to how much they can afford to spend on a new home. Whether the home is available for resale or it is your dream home that you want to build on your property, the same questions must be answered.

We at Harvest Homes would love to tell you that we can help you with this research, but the truth is that it is a highly personal and unique situation for each buyer. Instead, we’d like to put you in touch with some resources that can help you start the process.

First is the Home Loan Income Qualification Calculator (click on the name to activate the link to the website). This site will not ask for your name, address or phone number with follow-up calls, texts, and emails from unwanted mortgage sellers. It allows you to honestly assess how your income, down payment and loan length will work together. The DTI Mortgage Qualification & Home Affordability Calculator takes a further look at your personal financial position to determine what the lender will say you are qualified to borrow.

Most online calculators are intended for existing homes. For new construction, it is a bit trickier. The Construction Loan Calculator may help. To use this tool, you’ll need to research building lots to learn about what is available and the asking prices. The cost of construction can vary depending on site conditions, design/performance and finishes. New home plans are likely not ready, so look at existing properties for sale in the area (a.k.a., comparable values that appraisers send to lenders who are evaluating your mortgage/construction loan application). The link also has very good information about how construction loans work (keep scrolling down).

To estimate property taxes, utilities and other such homeowner expense, look at real estate sites online such as Zillow. Local realtor sites may be more accurate, but the town hall is the ultimate source in any one area.

Probably the toughest part of estimating a new build is the site costs. This takes some research, but experienced home builders generally have a feel for what they will cost from relationships with the subcontractors and familiarity with the geography in which they work. The site costs include water (well or municipal hook-up), sewer (septic tank/leach field or municipal hook-up), driveway into the excavation site, bringing power into the site, providing storage or distribution of fuel (oil or gas, or even renewables, e.g., solar photovoltaic systems). When looking at site development for a Harvest Homes delivery, we look for the following site improvements so that we can operate efficiently:

  • 30′ radius all turns
  • min. road bed width (>10′)
  • check that power lines are far enough away from the excavation site
  • check overhead (<13′)
  • 30×70 crane operating area close to the backfilled foundation
  • 15×70 staging for 2nd truck

To analyze the feasibility of building a new house then, we start with the expected house payment (including principal, interest, taxes, insurance). Applying an interest rate over the term of the loan (e.g., 15 or 30 years) will provide a loan amount. Add your expected down payment, then subtract the site costs noted above. The result is the total amount for a new custom home.

Divide the total amount of the new custom home by the estimated costs per square foot. This is a very poor ballpark estimate of the size of your new home because not every cost varies with the size of the home. For example, the kitchen cabinetry, appliances, and countertops will be per your taste and desires and won’t change, but this is still factored into the $/SF rate. Also, an attached garage is not part of the “living space”, but it is still part of the overall cost.

With all of that in mind, the Harvest Homes standard designs can be ballparked to cost from $125 to $250 per square foot. The lower rates are the Harvest Homes Basic Specifications, while the higher rates include the several upgrades we offer. Ask your builder or Regional Manager for more information about the specifications so we can help you tailor your new home plans!

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