The main purpose of preparing a budget is to understand and control costs. Beginning with estimates, one is then able to guess the total dollar amount for the style and size of a home on a particular lot. At the very least the owner should be able to consider if the project is feasible once estimates are made. The total dollar amount should be broken down into two categories: hard costs and soft costs. Hard costs will include labor and material to build the house. Soft costs are the ones that include everything else. There are many web sites that can provide a detailed outline of all costs to be considered and the best way to design your home building budget.

The budget estimates for material and labor is considered the departure point when considering the entire scope of your blueprints and specifications. These budgetary considerations must begin early in the planning phase of the design and build process. The initial study of costs should be considered as an exercise of the project feasibility. The budget should provide enough information on the projection of costs for material and labor that the owner should be able to weigh and consider all the design and building options. When the estimates are prepared, then the potential owner can give attention to the budget review process. This process includes:
1. Identifying priorities
2. Recognizing trade-offs
3. Doing cost/benefit analysis
4. Revising the cost estimate

The resulting percentage is simply an estimate of the hard costs and is only a guess. It is simply a beginning point for determining if the amount you have to spend will be even close to the house you want to build. It is crucial to realize that this is a very volatile estimate. For example, if you choose a "high end" brand refrigerator for your appliance package (and if comparable products are used), then you might as well accept that once you complete your estimate, you will hold the price tag on a very high-end, luxury house. If you purchase a "medium priced" brand refrigerator for your appliance package (and remain with comparable products), then your estimate will result in a medium-priced, custom house. There is a wide cost range from economy, to modest, to custom, to luxury which directly correlates with the products and materials you choose to install in your home. It is important to match your material and product choices with the price category in which you can afford to build.

It is important to remember that you are not looking to be a "weekend warrior" to do all the work yourself. This usually fails as a cost cutting strategy unless you are highly trained in home building. Your job is to create a preliminary budget estimate by accounting for all the labor and material it takes to complete your home building or remodeling project. There are several resources that can help you develop a complete budgetary picture for your home building. After developing your budget remember that you must go through a budget review process with your architect, designer, trade contractors and suppliers in order to be able to do a thorough cost analysis.