How to Build a Home Addition Affordably

Why Building a Home Addition is a Cost-Effective Solution for Obtaining more Finished Living Space

By Mark J. Donovan




So, you have a growing family and need a home with more finished living space. What should you do?

You basically have two options; either build a home addition or sell your current home and buy a bigger one.

For many homeowners building a home addition is a much more affordable and less stressful option. 

As a matter of fact, with good planning and a willingness to put in some sweat equity a homeowner can save a fortune building a home addition. But let’s look at the alternative option first, up-scaling to a larger home.

Buying a Larger Home for Obtaining more Finished Living Space

Selling an existing home and buying a larger one is fraught with unexpected costs and surprises. Scaling up to a larger home is notoriously expensive, has real estate market risks, and takes a lot of effort, planning, coordination, and some luck.

It also often means tearing the kids out of their school system and relocating them to another school district. Saying goodbye to old neighborhood friends. Having to compromise on things like;

  • Having longer commutes to work
  • Switching churches
  • Not getting all the features you want in the bigger, but not necessarily new house.

The list of issues goes on with transitioning to a larger house.

Benefits of Building a Home Addition – The Affordable and Smarter Choice

So, the go-to alternative for many homeowners needing more finished living space is building a home addition.

Building a home addition offers many advantages to homeowners over selling their existing home and buying a larger one.

Home Addition Bid Sheets
  1. The family gets to stay in their community and school district.
  2. Only the necessary type of finished living space needs to be constructed, e.g. a family room or larger kitchen.
  3. Building a home addition is overall more affordable, as there are no real-estate commissions to pay, property transfer taxes to pay, moving expenses to pay, and high cost mortgage closing costs to pay. All these types of costs have to be accounted for when switching to a larger home.

In summary, building a home addition is a much more affordable solution to acquiring more finished living space than moving up to a bigger house, and has other unique benefits. 

Building a Home Addition Has its own set of Cons

Though building a home addition is a cost-effective alternative to scaling up to a larger home, it does have its own unique set of drawbacks.

  • Home addition construction is disruptive to the family, as the demolition and tie-in to a portion of the existing home is a messy reality.
Master Bedroom
Moreover, for several months a family needs to expect the comings and goings of sub-contractors on the property, and invading into the existing finished home space.
  • Home addition costs per square foot are quite a bit higher than new home construction.
    • How much more? Home addition costs per square foot can be up to 50% more than brand new home construction.
    • Why you ask? Because again, due to the demolition and tie-in of the new home addition construction into the existing home. This said, the extra costs per square foot for the home addition is typically dwarfed in comparison to all the costs of moving a family into a larger home.
Tips on How to Build an Affordable Home Addition

There are many ways a homeowner can build a home addition cost effectively. It comes down, however, to a few basic elements.

Controlling the size and scope of the Home Addition

Building what you need in finished living space, versus what you want is first and foremost to building a room addition affordably.


Not only is this important from a financial standpoint, but also for ensuring that the home addition aesthetically blends into the existing home. 

So keep the home addition size down to a minimum, to the space you really need and what your property’s lot size and house can physically and aesthetically support.

Proper upfront Home Addition Planning

Another key ingredient to building a home addition cost-effectively is good planning. Start by writing down your intentions for the additional finished living space, and your target home addition construction budget. With these two pieces of information you can then begin to formulate a set of architectural plans for building your home addition.

Deciding to use an architect can ensure you get the home addition you’re imagining, and often they can help you with ensuring an overall affordable home addition cost. Often architect already have existing home addition plans that they can sell you at a discount rate, e.g. somewhere between $500 to $1,000. 

If hiring an architect is outside your budget for building a home addition cost effectively, there is another solution. 

Create Your Own Home Addition Plans

Generate your own set of home addition plans. Creating your own set of home addition blueprints is a great way to save on a home addition project. If, for example, your goal is to build a family room addition onto the side of your house it may be simple enough in structure and complexity that you can create your own set of room addition plans. You can either do this with quad-rule paper, pencil and straight edge, or use a reasonably priced home design software package. You can purchase house design software packages for under $100, like this one.  Chief Architect Home Designer Suite 2018 – DVD.

Also make sure to check with your local building inspector before going too far down the home addition planning and construction path. You’ll want to know upfront if you have any type of restrictions on your property for building a home addition. Also, the building inspector can tell you what he will need for home addition plans to review and approve. For example, they’ll need a side view of the construction from the footings and foundation walls, to the framed walls and roof.




Prevent Change Orders with Planning and Discipline

It is important to understand that construction change orders, such as requesting electrical outlets or light fixture locations be moved after they’ve already been installed can really cost you in extra charges.

The same is true if you decide to ask a framer to move a newly framed interior wall that they’ve just installed. 

Not only did they just build it, but now you’re asking them to tear it down and move it somewhere else. Expect high change order bills for those type of change requests. Plan ahead and stay disciplined if you want to build a home addition affordably!

Get your Home Addition Financing Decided Early

If you will require home addition financing visit the banks early on, once you’ve got a set of plans and a home addition cost estimate budget. Instead of a home equity loan, consider refinancing your entire house, with extra funds for the home addition. This method can be advantageous if you can get a lower mortgage interest rate than what you are currently paying on the entire house.

If it doesn’t make sense to refinance your entire house, then you can go with either a home equity loan or a home equity line of credit if you need financing. Learn more about how to finance your home addition here.

A better alternative to financing your home addition is to pay cash for it. Paying cash is the ultimate way to build an affordable home addition, since you won’t have to deal with paying interest on the home addition for years to come. If you can wait until you can save the cash for building the room addition, then do so. Going into debt not only causes higher construction costs, but also creates pressure on you for years to come in getting out of debt for building the home addition.

Act as your own General Contractor

But only if you have the time and some experience dealing with subcontractors. By acting as your own general contractor, you can save up to 20-30% on the home addition building costs.

Hiring sub-contractors and managing them to show up on the site when you need them can be a real challenge, so make sure you have the right temperament to deal with trying to corral a heard of cattle. 

 home remodeling budget tips

Each sub-contractor has his own unique personality and set of priorities that don’t always mesh well with other subcontractors or your home addition build schedule.

Hiring a Home Addition General Contractor

If you don’t plan to act as your own general contractor make sure you do your due diligence before hiring a general contractor. They should provide you with detailed home addition construction costs with all features and key materials listed in their bids. Keep in mind part of a general contractor’s responsibility is hiring all the sub-contractors such as the foundation crew, the framers, the roofers, the electrician, the plumber, etc. This is much of a general contractor’s value add, and thus why they charge you a fee as a percentage of the cost of building the home addition. 

When looking for a general contractor make sure you do your homework before hiring one. Otherwise forget about saving a fortune building a home addition. Hire the wrong one and you could end up with major cost overruns and schedule slips.

Make sure to do background checks with the state, the Better Business Bureau, local home improvement centers that the general contractor uses and former customer references.

When vetting a prospective general contractor make sure to check that they:

  • Have a general contractor license in your state
  • Are bonded/insured
  • Are in good stead with your local building inspector
  • Have clear warranties/guarantees

See my room addition bid sheet to learn more about hiring general contractors for room addition construction projects. The room addition bid sheet provides guidance on how to hire a home addition general contractor and provides a breakdown of expected home addition costs. Also included in it is a home addition construction checklist for potential general contractors to fill out, helping you to figure out who to hire, and saving you time, aggravation and money on your construction project.

Get a Builder Discount at the Home Improvement Center

One of the best ways to build a home addition inexpensively is to buy the building materials at a discount. To do so visit your local home improvement center and sign-up for contractor rates for bulk construction material purchases. You can save anywhere from 5% to 10% on building material costs this way.

Even if you decide to hire a general contractor it is smart to visit a home improvement center to get a better understanding of the cost of building materials. This way you can be smarter when negotiating a contract with a general contractor to ensure you build your home addition affordably. 

Also, if there are appliances, cabinets, countertops or other major construction items that you want make sure to write down part numbers and provide them to your general contractor to include in his/her’s quote to you.   

Put in Sweat Equity

Consider putting in your own sweat equity where you have the will and/or skills to do it. For example, it doesn’t take a rocket scientist or a stevedore to install insulation in a home addition project. Also consider doing the interior finished carpentry and exterior and interior painting. These items cost more than you can imagine and are all physically doable by most homeowners, if they have the will and tools to do so.

Summary on How to Build a Home Addition Cost Effectively

Besides providing more living space, building a home addition is a great way to add value to your home, and particularly so if you act as your own general contractor and/or put some sweat equity in it.

By following this set of tips, you should be able to build a home addition affordably that will also meet your growing family’s finished living space needs. Keep in mind, however, no home construction project goes entirely smoothly, so expect some ups and downs.


For more help on building a home addition, see HomeAdditionPlus.com’s Home Addition Bid Sheets. Our Home Addition Bid Sheets provide you with the knowledge and information on how to plan a home building project, and what to look for when hiring contractors. They also include detailed cost breakdown tables and spreadsheets for estimating your own new home construction building costs.

Room Addition Bid Sheet

Related Information on Building a Home Addition Cost-Effectively


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