About the Build vs Buy House Calculator
This build vs buy calculator compares the true all-in cost of building a new house with buying an existing one. A builder’s price per square foot is only part of the bill: you also pay for the lot, site work such as clearing, driveway, well, septic or utility connections, permits, impact fees and plans, a contingency for overruns, interest on the construction loan while the house goes up, and often rent or a second mortgage until you can move in.
Enter those build costs on one side and the purchase price of a comparable resale home plus any updates it needs on the other. The calculator totals both, shows the difference, and compares cost per square foot so you can judge a smaller resale house against a larger new build fairly. The stacked chart shows where the money goes in each option.
Construction-loan interest is estimated on the building costs only, assuming the loan is drawn gradually so the average balance is about half the total over the build period. Closing costs, moving costs and the long-term savings of a new home (lower maintenance and energy bills, warranty) are not included, so weigh those alongside the result.
With the default inputs, the building costs more (+) or less (−) by is $65,133.33. Change any value above to recalculate instantly.
How to use the build vs buy house calculator
- 1Enter the lot price and the size of the home you would build.
- 2Enter the builder’s cost per square foot plus site work and permit/plan fees.
- 3Set a contingency, the build time, the construction loan rate and your interim housing cost.
- 4Enter the price, size and needed updates of a comparable existing home.
- 5Compare the totals and the equal-size difference to decide.
Formula and method
The house construction cost is the new home’s size times the builder’s cost per square foot. Site work and permits/fees are added, and the contingency is a percentage of that subtotal. Construction loan interest is estimated as (construction subtotal + contingency) × rate × months ÷ 12 × 0.5, because draws are released in stages so the average balance is about half the total. Interim housing is the monthly rent or carrying cost times the build time.
The buy side is the purchase price of a comparable existing home plus the updates it needs. All-in cost per square foot divides each total by its home size, and the equal-size difference compares the build total with the existing home’s all-in price per square foot applied to the new home’s size.
- C
- Construction subtotal (house + site work + fees)
- k
- Contingency percentage
- i
- Construction loan interest = C(1 + k) × rate × months/12 × 0.5
Worked examples
2,200 sq ft new build vs a $520k resale home
Building costs $385,000 for the house, $55,000 for site work and fees, a $44,000 contingency, about $16,133 of loan interest, $20,000 of rent during the 10-month build and $90,000 of land — $610,133 in total. Buying a 2,000 sq ft home and updating it costs $545,000, so building costs about $65,133 more. At equal size the gap shrinks to about $10,633.
Cheaper lot, simpler house, no interim rent
A 1,800 sq ft house at $150/sq ft ($270,000) plus $35,000 of site work and fees, a $30,500 contingency, about $8,947 of interest and a $50,000 lot totals about $394,447. A similar existing home costs $430,000 after updates, so building saves about $35,553.
Same build vs a move-in-ready $600k home of equal size
Against a 2,200 sq ft home priced at $600,000 with no work needed, building costs only about $10,133 (1.7%) more, so the choice comes down to timing, location and the value you place on a brand-new house.
Frequently asked questions
Is it cheaper to build or buy a house?+
It depends on land and construction costs where you live. Buying an existing home is often cheaper per square foot once land, site work, fees and financing are counted, but building can win where lots are affordable or resale inventory is tight.
What costs are missed when comparing building and buying?+
People often forget site work (driveway, utilities, well and septic), permit and impact fees, architect or plan costs, construction-loan interest, a contingency for overruns, and rent or a second mortgage during the build. These can add tens of thousands to the builder’s quote.
How does a construction loan work?+
A construction loan pays the builder in draws as stages are finished, and you usually pay interest only on the amount drawn so far. When the house is complete the loan is paid off or converted into a regular mortgage.
How much contingency should I budget when building?+
Many builders and lenders suggest 5%–10% for a straightforward build with a fixed-price contract and 10%–20% for custom homes, difficult sites or cost-plus contracts, where changes and surprises are more likely.
Are there long-term savings with a new house?+
New homes usually need fewer repairs in the first years, often have lower energy bills and come with builder warranties. Those savings are not in this calculator, so weigh them against any higher upfront cost.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.