When people think about building a new place, they usually focus on the big stuff like buying land, paying the builder and budgeting for materials. But here’s the truth—the final cost is often way more than what’s in the construction contract.
Research shows that a whopping 94% of construction projects run into at least one surprise issue, and most of those bumps turn into extra costs. If you’re not ready for them, these sneaky expenses can blow up your budget, cause delays or even halt your project.
So what are these hidden costs, and how can you get ready for them? Let’s break down seven common hidden expenses when building a home—and, more importantly, how to keep them in check.
1. Permits, Fees, and Inspections
Before your builder even picks up a shovel, you’ll be dealing with paperwork—and that paperwork comes with a price tag. Each city or county has its own set rules for permits, plan approvals, and inspections.
Here are some common fees to be aware of:
- Building permits: You need these almost everywhere. They will typically be based on the size and expected construction cost of the home.
- Zoning approvals: If you need to change your land’s zoning or apply for variances, legal fees and admin costs can pile up quickly.
- Plumbing, electrical, HVAC permits: Each system may need its own permit, so keep that in mind.
- Impact or development fees: Some towns charge builders to help fund roads, schools, or utilities in growing neighborhoods.
- Inspection fees: Whether it’s for the foundation, electrical work, or final occupancy, expect to pay for each inspection.
Many homeowners get blindsided by these since they often aren’t included in the builder’s contract. They’re called “soft costs,” but there is nothing soft about them. Soft costs require hard cash just like your home construction.
Tip: Call your local building department early in the planning stage and ask for a list of all required permits and fees. Make sure to add these into your budget, so you’re not caught off guard later.
2. Land Prep and Site Development
Even if you snag the perfect plot, chances are it’s probably not ready for building yet. Getting raw land into shape for construction can be one of the biggest hidden expenses.
This can include:
- Clearing trees or brush: Heavily wooded lots might need days of heavy equipment work.
- Grading or leveling: If the lot is uneven or on a slope, leveling it can cost thousands.
- Soil testing and remediation: If the soil won’t support a foundation, you may need to bring in fill dirt or find special solutions.
- Drainage improvements: If drainage is poor, you might need retaining walls, swales, or French drains.
- Driveway or access roads: Even a basic gravel road for construction vehicles can run you several thousand bucks.
For example, one family found out their soil couldn’t handle a standard foundation and had to pay an extra $20,000 for an engineered solution—something they definitely didn’t plan on.
Pro Tip: Before you commit to any land, hire a soil engineer for a geotechnical test and ask contractors for ballpark quotes on clearing and grading. If the lot isn’t flat and cleared, budget accordingly for site prep.
3. Utility Connections and Infrastructure
You can picture the walls and roof of your new home, but what about the water, power, and internet that make it livable?
Connecting utilities can be straightforward in some neighborhoods, but in others, the costs can hit hard:
- Septic systems: Expect to pay $5,000–$15,000 (or more for engineered systems).
- Wells: Budget $10,000+ for drilling, pumps, and treatment systems.
- City sewer and water taps: Often these run several thousand dollars each.
- Electric hookups: If lines already go to your lot, fees might not be too bad. If not, you could end up paying for poles, transformers, or underground conduit. One builder reported an electrical upgrade to 200-amp service costing $9,800.
- Temporary construction utilities: Things like portable toilets and temporary power might only be a few hundred apiece, but over months, it adds up.
And don’t forget about communications. Running lines for cable or internet can sometimes cost a pretty penny, especially in rural areas.
Tip: Call utility providers before you finalize your build. Ask about connection fees, distance charges, and whether any upgrades to infrastructure are needed. These might not be the most exciting costs, but they’re super important.
4. Financing Costs and Insurance
If you’re taking out a construction loan, interest payments and fees can be hidden costs many don’t consider.
Here’s the scoop: the bank releases your cash in “draws” as the project moves along, and you pay interest only on the amount drawn. For example,
A $400,000 loan at 5% could mean you pay about $833/month halfway through when $200,000 is drawn.
By the end of it, you might end up spending $10,000–$15,000 in interest—money that doesn’t really go toward your home itself.
Other financing costs to keep in mind:
- Loan origination fees
- Draw inspection fees (the bank needs to check progress before releasing funds)
- Closing costs for converting to a permanent mortgage.
Then there’s the insurance part. Regular homeowners insurance doesn’t cover houses under construction. You’ll need:
- Builder’s risk insurance: This protects materials and the unfinished home against theft, fire, or vandalism.
- Liability insurance: This helps with accidents or injuries not covered by the builder.
And don’t forget personal costs—if you’re renting or juggling another mortgage during the build, those costs can pile up.
Tip: Chat with your lender and insurance agent sooner rather than later. Get detailed quotes so you know how to budget for financing and coverage.
5. Change Orders and Upgrades
Here’s a classic budget buster: mid-build upgrades. It starts off innocent enough—maybe you want a bigger window, better cabinets, or upgraded tiles. But every change means a change order, and change orders usually mean extra costs.
Examples of upgrade costs include:
- Premium hardwood floors instead of standard: we’re talking thousands of dollars.
- Larger or higher-grade windows: also thousands more.
- Extra outlets, lighting, or a skylight: hundreds here and there add up fast.
On top of the direct costs, changes can cause delays—and delays rack up financing and labor costs.
Tip: Walk through a model home or a basic version of your builder’s design before signing. Decide on upgrades upfront and budget for them. Also, add a “change order buffer” to your budget so you’re not caught making tough decisions midway.
6. Landscaping and Outdoor Features
Once the house is done, you’re often left with a yard full of dirt. That’s when many homeowners realize they forgot to budget for landscaping.
Basic landscaping (grading, topsoil, sod/seed) typically runs a few thousand dollars. But if you want trees, shrubs, gardens, or an irrigation system, costs can skyrocket.
Other outdoor expenses to consider:
- Driveways: Gravel might be included, but asphalt or concrete will be at a cost of two to five times gravel..
- Patios and decks: If you want more than just a stoop or porch, that’s also an added cost.
- Fences: A fenced backyard often costs several thousand dollars depending on size and design..
Some builders don’t provide any landscaping at all, leaving it up to you. Others might seed a lawn but won’t add trees or irrigation.
Tip: Prioritize—do essential work (like a driveway and basic lawn) during construction and save bigger landscaping jobs for later when you’ve built your savings back up. But plan ahead for things like running underground conduit for lighting or gas lines for a grill—these are easier and cheaper to add while building.
7. Furnishings, Appliances, and Moving Costs
Once your house is finished, there’s still more to do to make it feel like home. That’s when more expenses can sneak up on you.
- Furniture: Moving from an apartment to a larger home usually means buying new beds, sofas, and tables. Outfitting a whole house can easily add up to tens of thousands of dollars.
- Appliances: Not every new build comes with a fridge, washer/dryer, or even AC. A refrigerator alone can cost $1,500 to $2,500+.
- Window treatments: Blinds and curtains for windows can easily cost $200 to $500 each.
- Moving costs: Hiring movers can range from a few hundred bucks to several thousand, depending on distance and size. Even DIY moves with rental trucks add up with fuel, packing supplies, and time.
Tip: Extend your budget beyond the building costs. Set aside cash for furniture, appliances, and moving expenses so you’re not left scrambling after getting your keys.
How to Plan for Hidden Costs
So how do you avoid being derailed by these hidden costs when making your dream home? The key is prep work.
- Do your research early—Talk to your local building department, utility companies, and contractors.
- Ask your builder directly—They know about common “extras” that might not be on the base contract.
- Learn from others—Talk to people who’ve built homes and ask what they didn’t see coming.
- Keep a contingency fund—Set aside at least 5–10% of your budget for surprises.
- Use a detailed cost estimator— Home-Cost’s estimator tool has over 300 line items (utilities, site prep, landscaping) so you don’t miss anything.
Final Thoughts
Building a place of your own is super exciting, but it’s also filled with hidden expenses that can catch you off guard. From permits and site preparation to landscaping and moving costs, these overlooked items can add huge amounts to your budget.
The bright side? With careful planning, research, and a well-padded budget, you can avoid these costs and keep your project moving smoothly. Instead of being surprised, you’ll get to step into your new home with confidence instead of hearing the dreaded words, “We’re over budget.”
Frequently Asked Questions
1. What are the most common hidden costs when building a house?
The biggest hidden costs usually include permits, site prep, utility hookups, financing fees, landscaping, mid-project upgrades, and moving expenses. These aren’t always in your builder’s base contract but can easily add tens of thousands to your budget.
2. How much should I set aside for hidden costs in home construction?
Experts recommend keeping 5–10% of your total budget as a contingency fund. This cushion helps cover unexpected expenses like soil problems, permit delays, or change orders without derailing your project.
3. Are permits included in a builder’s contract?
Not always. Some builders handle them and roll the fees into your cost, but many leave them to the homeowner. Always confirm who is responsible for permits and inspections so you’re not blindsided.
4. How can I avoid surprise utility costs?
Before you buy land, check with utility providers about connection fees for water, sewer, electricity, and internet. If the lot is rural, be prepared for higher costs for wells, septic systems, or power line extensions.
5. Why do landscaping and driveways cost extra?
Many builders only finish the house itself. A lawn, trees, driveway, patio, or fencing may not be included. Even basic landscaping can cost several thousand dollars, so it’s smart to budget for these separately.
6. Do construction loans have hidden fees?
Yes. Beyond interest, loans often include origination fees, inspection fees, draw fees, and closing costs when converting to a permanent mortgage. These can add $5,000–$15,000 over the course of a build.
7. What upgrades cause the biggest surprise costs?
Flooring, cabinets, countertops, windows, and lighting are common budget-busters. Upgrades sound small individually, but once change orders pile up, they can add tens of thousands of dollars.
8. Can I reduce hidden costs when building a home?Absolutely. Plan thoroughly, get detailed estimates, ask your builder about “extras,” and avoid last-minute changes. Using a comprehensive Home Cost’s cost estimator tool can also help you see all potential line items upfront.
