Can You Actually Afford to Build? The Math Most People Skip

Before we broke ground on our own house, we spent weeks building a spreadsheet. It was supposed to answer one question: can we actually do this?

The number everyone fixates on is cost per square foot. It's the first thing people research, the figure contractors throw around, the benchmark that makes a project feel real or impossible. But cost per square foot is only the beginning. It doesn't tell you whether you can actually execute.

The spreadsheet kept breaking. Every time we thought ew had the numbers right, we'd discover another variable. The gap between hard costs and total project cost. The soft costs that scale with design complexity. The cash you need upfront before a construction lender will even talk to you. The difference between what you can technically qualify for and what you can comfortably carry.

By the time we finished, the spreadsheet worked. But the process—pulling numbers from contractor forums, guessing at contingency percentages, trying to reverse-engineer what banks actually look at—was brutal. 

The Hidden Math of a Custom Build

Most people planning a custom home focus on construction costs: foundation, framing, roofing, finishes. These are real and significant, but they're not the whole picture. A realistic feasibility analysis has to account for several categories that don't show up in a simple cost-per-square-foot estimate.

Soft costs include architecture, engineering, permits, inspections, and other professional services. On a standard custom home, these might run 18-20% of your hard costs. On a high-design project with structural complexity, they can climb higher. These aren't optional line items; they're non-negotiable prerequisites to breaking ground.

Construction interest is the cost of money during the build. Unlike a traditional mortgage, a construction loan charges interest on funds as they're drawn. On a 12-month build at current rates, this can add tens of thousands to your total project cost—money that never shows up in a contractor's bid.

Contingency reserves are the buffer for the unexpected. Scope changes, material price fluctuations, site conditions that weren't visible until you started digging. The standard recommendation is 10-15% of hard costs, but complex projects or owner-builders should budget higher. 

Cash required before construction is the figure that catches most people off guard. Construction lenders typically finance 80% loan-to-value, which means you need cash for land, design, permits, contingency, and closing costs before the first draw. Depending on your project, this can be 20-30% of total project cost—in hand, before you pour a single yard of concrete.

What Lenders Actually Look At

Beyond total project cost, banks evaluate whether you can carry the finished home. The two numbers that matter most are your housing debt-to-income ratio and your total debt-to-income ratio.

Housing DTI is your projected monthly payment (principal, interest, taxes, and insurance) divided by your gross monthly income. Most lenders want this under 28-31%. Total DTI adds all your other debt payments into the numerator. Lenders generally require this under 43% for a qualified mortgage.

These ratios determine whether your dream project is financeable. A beautiful home that pushes you to 45% DTI isn't just uncomfortable; it may not close.

Why We Built the Calculator

The methodology we developed during our own build—the spreadsheet that eventually worked—became part of Building Blueprint's Module 1. But spreadsheets require you to know what to put in them. The inputs aren't obvious. The relationships between variables aren't intuitive.

So we built something simpler: a calculator that runs the same analysis in five minutes.

You enter your target location, home size, and design complexity. You tell it about your site conditions, available cash, and income. It gives you a total project cost range, a cash position check, a DTI analysis, and a monthly payment breakdown. It tells you if your project is financially viable—or where you need to adjust before going further.

It's free and requires no email. We built it because this is the analysis that should happen before you fall in love with a piece of land or sign an architecture contract. The earlier you know the math, the better your decisions.

The Goal Is Clarity, Not Discouragement

Running the numbers isn't about killing dreams. It's about building them on solid ground.

Some people will use the calculator and discover their project is more feasible than they thought. Others will realize they need to adjust. Smaller footprint, different parcel, less costly architect, more time to save. Both outcomes are valuable. The worst outcome is committing six figures to design and land acquisition before understanding the financial picture.

A custom home is one of the most significant projects you'll ever undertake. It deserves the same rigor you'd apply to any major investment. Five minutes of math can save months of misalignment.