Dream Home
Business & Finances

Choosing Your Dream Home: Financing a Prebuilt or Designing Your Own

So, you’ve decided it’s time to buy a new home but that means you’ve got a hard choice to make: Will you finance a prebuilt home or start from scratch and design and build your own custom home? The choice isn’t always easy. While each has its merits, they also both come with their own sets of challenges, especially when it comes to financing. 

In this article, readers can discuss the various aspects of buying vs. building, including financing choices like VA loans

Financing a Prebuilt Home

Buying a prebuilt home is a lot like picking out a ready-made cake. You know exactly what you’re getting, and the process is quick and straightforward. When it comes to financing, the prebuilt home is often the simpler choice because you’re dealing with a single standalone price. 

Keep in mind when you’re shopping for your prebuilt home that the average price of a new home in the U.S. in 2022 was $416,100 as of mid-2023, according to Rocket Homes.

When it comes to a prebuilt home, keep the following things in mind: 

  • You’ll be able to access various mortgage options, including traditional mortgages and government-backed benefits. 
  • Closing costs can be rolled into your loan in most cases. They’ll include taxes, Realtor fees, and legal fees. 
  • Your down payment can range from 3% to 20% of the home’s price, in most cases. This number depends on your mortgage terms, your buying experience, and the price of your home.

Building Your Own Home

While the prebuilt home is like a store-bought cake, the custom home is akin to baking from scratch. While it’s custom-made just for you, the process has a lot more steps. That said, a custom-built home has the potential to be a lot more affordable. According to Architectural Digest, the average custom home in the U.S. ranges in price from $110,757 to $480,868.

When you purchase a custom home, keep these things in mind: 

  • You’ll likely need to start the process with a short-term construction loan to cover building costs. This can be refinanced into a traditional mortgage once the home is built. 
  • Building often comes with surprise expenses, so be prepared.
  • The custom finishes and choices you make can dramatically increase the cost.

The Final Decision

Choosing between prebuilt and custom comes down to your lifestyle and preferences more than anything. Think of how you’d like to handle finances and how much energy and patience you’re willing to put into your new home before you make your decision,


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