Buying Land to Build a Home: The Only Guide You Need Before You Buy
- Ro
- Nov 9, 2017
- 4 min read
Updated: Nov 28, 2025
What Your Budget Actually Builds
These examples use:
15 percent land
40,000 dollars site prep
Home size calculated at $280 dollars per sf (low end) and $350 dollars per sf (mid-range build)
Total Budget Of: $300,000 – builds a 614 to 768 SF home
Land target: $60,000
Total Budget Of: $600,000 – builds a 1,342 to 1,678 SF home
Land target: $90,000
Total Budget Of: $900,000 – builds a 2,071 to 2,589 SF home
Land target: $135,000
Total Budget Of: $1,200,000 – builds a 2,800 to 3,500 SF home
Land target: $180,000
Total Budget Of: $1,500,000 – builds a 3,528 to 4,410 SF home
Land target: $225,000
These examples show clearly why buying land first often creates disappointment. The land price must always come from the home you can actually afford to build.
Once you see the math laid out this way, you can understand exactly what you can build and which land price makes sense.
The Core Problem: People Shop for Land Backwards
Buying land to build a home is one of the most exciting dreams in real estate. It feels like the first step toward creating your forever home. Many buyers feel a sense of urgency, worrying that land is disappearing and they need to grab a piece before it is too late.
Here is the part most people never hear. It is very common to buy land based on fear or emotion, only to try to resell it later when the numbers do not work. Land is usually far less liquid than homes. In many markets, it can sit for years without selling, especially if the parcel is steep, remote, or requires heavy site work. Once you have a real picture of what you can actually build, you may decide the land you wanted does not match the budget. That is why thinking carefully before purchasing is essential.
Once you understand the true home size you can afford to build, go to www.AllstarCertified.com and look at existing new construction or remodeled homes in the same price range. You may discover you can buy something beautiful and move-in ready without waiting out a long build timeline. Comparing the two options will help you choose wisely.
There is also a smart shortcut many people use when buying land. Instead of purchasing raw land, consider buying a property with an old or inexpensive mobile home. These properties often already include septic, well or city water, clearing, driveway access, and power. You may replace the structure later, but you avoid the largest development costs right at the start.
This guide walks you step by step through how to choose land based on your total budget, not emotion or fear. It is the only way to avoid overpaying for land and ending up unable to build the home you want.
Most buyers begin with this:
“I want land. Show me everything under 60,000 dollars.”
Here's a better statement
“Here is my total budget and the size of the home I want to build.”
But your budget drives everything. It determines your home size, which determines your construction cost, which determines exactly how much you should spend on land.
Buying land before doing this math is like buying wheels before you know what kind of car you are building. You can do it, but when the builder hands you the estimate, the numbers often do not match your expectations.
The Correct Order
Step 1: Start With Your Total Budget
Your comfort total budget is the anchor. Everything else fits inside that number.
Step 2: Decide the Home Size You Want
This immediately tells you where the build cost will land.
Step 3: Subtract Mandatory Site Prep
A realistic placeholder: Site prep: 40,000 dollars
This typically includes driveway, clearing, septic or sewer, well or water hookup, grading, and power. Mountain terrain or long driveways can increase this.
Step 4: Determine the Land Budget
For a typical residential lot:
Land should be about 15 percent of your total budget.
This helps maintain resale value and keeps the land purchase aligned with the home size you can actually afford. If you are building a forever home and resale does not matter, the percentage can flex, but it is still a useful guideline.
Why Existing Homes Often Look Cheaper Per Square Foot
Price per square foot on an existing home includes the land.
Price per square foot for new construction usually does not include the land or site prep.
This makes many existing homes appear cheaper, but it is not an equal comparison. When you price out a build and then compare existing inventory at www.AllstarCertified.com, you may find a great home already inside your budget.
Build Timelines Matter
Tract home markets: about seven monthsCustom home markets: one year to eighteen months
Mountain and rural markets can take longer. If you need to move soon, existing homes often make more sense.
A Smart Shortcut: Buy Land With Utilities Already In Place
Buying an inexpensive mobile home or small cabin on land can be a powerful move. Often these properties already include:
DrivewayCleared build areaSeptic and well or city utilitiesPower hookup
You can remove the structure later, but you skip the most expensive and complicated parts of site development
What If You Want 10 Acres or More
Acreage changes the financial structure completely.
For typical lots, land at 15 percent of the total budget makes sense. For 10 acres or more, you are buying privacy, usable land, farming potential, homesteading space, or long term value.
For acreage, land often becomes 30 percent to 50 percent of the overall budget.
House First Buyer With Acreage
Budget: 600,000 dollars Land: around 180,000 dollars Site prep: around 70,000 dollars Build budget: around 350,000 dollars Home size at 280 dollars per square foot: about 1,250 square feet
Land First Buyer With Acreage
Budget: 900,000 dollars L and: about 360,000 to 450,000 dollars Site prep: about 80,000 dollarsB uild budget: about 370,000 to 460,000 dollars Home size at 280 dollars per square foot: about 1,300 to 1,600 square feet
Acreage buyers often trade house size for land size. The key is knowing the tradeoff ahead of time.
Comments