When most people think about the cost of building a home, they picture stacks of lumber, concrete, and roofing shingles. But here’s the catch: those visible materials are only part of the story. Behind every wall you see, there’s a list of fees, services, and planning expenses that can quietly add 10–30% to your total project budget.
That’s why experienced builders and savvy homeowners break costs into two buckets: hard costs (the subcontractor costs for labor and materials that form your home; and your General Contractor’s (GC) markup on those subcontractor costs. The GC’s markup will typically include their general conditions (supervision, dumpsters, permits, administrative costs, etc.), plus their overhead and profit. These hard costs define your construction budget.
The good news? With our home building cost estimator tool—you are empowered to gain financial control of your construction budget because you control, and get real-time cost feedback of the scope and quality decisions you make in the estimator.
But there are also owner related soft costs (land cost, architectural design or house plan fees, property surveys, security and data services, legal fees, insurance, interim construction financing costs, contingency, and other miscellaneous costs related to the project) that need to be financially allocated. The hard costs above plus these soft costs equal your project budget. Ignoring either one can result in your dream-home’s budget quickly spiraling out of control.
In this guide, we’ll unpack the difference between hard and soft costs, show you what belongs in each category, and give you practical checklists so you can budget with confidence.
Hard Costs vs. Soft Costs: The Basics
Before we dive into the details, let’s define the terms clearly:
- Hard Costs (or “brick-and-mortar costs”)
These are the physical costs of building — everything you can touch and are provided by construction subcontractors. Subcontractor materials, labor, equipment, and the markup (see description above) for the General Contractor fall into this category. Hard costs usually make up the biggest share of your overall project budget (about 70–80%).
- Soft Costs
These are indirect but essential expenses: architectural design, engineering, some permits, inspections, financing, and insurance. They don’t show up in the walls of your house, but without them, your project can’t move forward. Soft costs usually account for about 10–30% of the total budget.
Key Difference: Predictability
Hard costs are usually easier to quantify because they’re tied to physical materials and labor. Soft costs are more variable — financing, design fees, and municipal delays can shift throughout the project.
Key Difference: Lifecycle
Hard costs end when construction is complete. Soft costs can extend beyond move-in (loan interest, insurance, and legal services).
Key Difference: Responsibility
Hard costs are often managed by your builder. Soft costs are typically your responsibility as the homeowner (though some may overlap).
Hard Costs Checklist
Hard costs cover all the labor and materials that bring your home to life. Here’s a breakdown:
1. Land Preparation and Site Work
- Clearing, excavation, or demolishing existing structures.
- Costs vary based on soil conditions, slope, and lot size.
2. Foundation and Structural Frame
- Concrete foundation, basement, and framing (lumber, steel, roof trusses).
- One of the biggest ticket items — framing alone for a 2,000 sq. ft. house can cost tens of thousands of dollars.
3. Exterior Elements
- Walls, siding, roofing, windows, and exterior doors.
- Gutters and insulation are critical but often overlooked in early budgets.
4. Major Systems Installation
- Plumbing, electrical, and HVAC.
- Together, these can run into the tens of thousands depending on home size and location.
5. Interior Construction and Finishes
- Drywall, paint, flooring, cabinetry, and trim.
- Costs swing widely depending on whether you choose basic or custom finishes.
6. Appliances and Special Equipment
- Ovens, fridges, washer/dryer, and optional extras like solar panels.
7. Exterior Amenities
- Driveways, landscaping, decks, and fences.
- Landscaping alone can add anywhere from $5,000 to $50,000+.
Tip: Add a 5–10% cushion to your hard cost budget to cover unexpected issues like soil problems or material price spikes.
Soft Costs Checklist
Soft costs cover planning, permissions, and services that make construction possible. Here’s what to budget for:
1. Land Acquisition
- Buying the lot itself — often overlooked but essential.
- Prices swing dramatically based on location (rural vs. city).
2. Architectural and Design Fees
- Architects, engineers, and drafting services.
- Typically 5–15% of total construction costs for custom homes.
3. Permits and Municipal Fees
- Building permits, zoning approvals, and inspections.
- Can range from hundreds to several thousand dollars.
4. Utility Connection Fees
- Hooking up to water, sewer, electricity, or gas.
- In undeveloped lots, utility installation can cost tens of thousands.
5. Construction Insurance
- Covers your project against damage during the build.
- Check if your contractor’s policy protects you, or if you need your own.
6. Financing Costs
- Loan origination fees, interest during construction, and appraisal costs.
7. Legal and Professional Fees
- Attorney for contracts or land closing.
- Surveyors or consultants if required.
8. Project Management or Consulting
- Oversight fees if you hire someone to monitor your build.
9. Temporary Utilities and Facilities
- Temporary water, electricity, or job-site facilities like porta-potties.
Bringing It Together
Both hard and soft costs work hand in hand: hard costs build your home, while soft costs pave the way to make it happen. Skipping either side leads to incomplete budgeting.
That’s where a cost to build a house plan estimator comes in. With Home-Cost’s software, you get:
- Zip-code-based accuracy for labor and materials.
- Detailed breakdowns (350+ line items).
This ensures you’re planning with real numbers, not guesses — and protects you from the all-too-common 30% budget overruns.
Which Home-Cost Estimator Is Right for You?
At Home-Cost, we’ve designed three versions of our estimator so you can choose the level of detail and functionality that best fits your project:
- INSTANT™ – Perfect if you want a quick snapshot. Get a fast, high-level estimate of your home’s cost in just minutes.
- FULL FUNCTION™ – Ideal for homeowners who want detailed breakdowns. Includes costs for both hard and soft items, customizable by location, square footage, and finishes.
- PRO™ – Built for serious planners and professionals. Gives the most comprehensive reporting, advanced features, and export options to model multiple scenarios with precision.
Whether you’re exploring ideas or finalizing blueprints, these tools help you budget smarter, avoid surprises, and move forward with confidence.
Quick Recap
- Hard Costs: Land prep, foundation, framing, exterior finishes, major systems, interior finishes, appliances, landscaping. (~70–80% of budget)
- Soft Costs: Land purchase, design, permits, utility connections, financing, insurance, legal, project management. (~20–30% of budget)
- Rule of Thumb: Always add a 5–10% contingency.
Final Note
At Home-Cost, we’ve spent over 20 years helping homeowners turn their dream homes into reality with accurate, detailed estimating software. Just enter your zip code and design choices to get a tailored cost report that covers every detail — from framing to permits and financing.
With a clear budget for both hard and soft costs, you can move forward confidently and avoid the nasty surprises that derail most homebuilding projects.
Frequently Asked Questions (FAQs)
1. What are hard costs when building a house?
Hard costs are the physical construction expenses — materials, labor, equipment, foundation, framing, roofing, plumbing, HVAC, and finishes.
2. What are soft costs in home construction?
Soft costs are indirect expenses like design, permits, financing, insurance, and legal services. They support the project but aren’t part of the physical structure.
3. How much of a budget is hard costs vs. soft costs?
Typically, 70–80% hard costs and 20–30% soft costs. This varies by location, project complexity, and design.
4. Do I need to include land in my construction budget?
Yes. Land acquisition is a major expense and should always be factored in along with site prep and utility connections.
5. How do I estimate the total cost accurately?
Use a home building cost estimator. Home-Cost’s tools provide local, detailed estimates for hard construction costs.
6. Why do costs vary by location?
Local labor rates, codes, permits, and material availability all impact costs. That’s why zip-code-based estimating is critical.
7. Should I include a contingency in my budget?
Absolutely — set aside 5–10% of hard costs for unexpected changes or surprises.
8. Do soft costs continue after construction is complete?
Some do — like loan interest, insurance, and certain legal services. This is why soft costs are less predictable than hard costs.
