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Buying a home limits you to what’s on the market in your target area and time frame, and typically comes with a list of compromises. Building a home solves for a lot of that—and opens up a world of possibilities.
Whether you’re looking to avoid costly renovations, live in a wholly energy-efficient house, or create your dream home, a custom build and home design offers more control and options.
It takes time, careful planning, and working with the right custom home builder. You’ll also need insight into local regulations and market conditions. Read on for the essential toolkit for building a home in Ohio and tips on how to finance your dreams.
Like most of the country, Ohio has encountered a lot of change in recent years when it comes to residential real estate market trends. New construction is faced with:
At the same time, with a slowdown in housing construction relative to population growth in Ohio, some cities and counties have made regulatory changes to lessen wait time and red tape in the way of new builds. You’ll easily be able to find qualified residential builders and lenders—both banks and credit unions—to work with for your Ohio home.
New construction in Ohio averages $111.24 per square foot (SF), or $222,480 for a 2,000 SF house.3 Current homes in Ohio average 1,803 SF with a sales price of $277,452 in April 2024, which calculates to $153.88 per SF.4,5
On top of that average $222,480, add these expenses if you’re not building on a build-ready property you own:
That’s not to say that you’re guaranteed to pay less for a new build. But if you plan and budget for a house build carefully, a new home can be an affordable alternative to buying a home in Ohio.
Most buyers opt for a construction loan when looking to finance building a house. A construction loan is a short-term loan held throughout the building period (typically a year or less).8 Construction loans can cover the cost of land, labor, building materials, excavation and other land preparation, and permits, as well as a cushion for unexpected costs.
Borrowers can either opt to convert the loan to a conventional mortgage or seek a mortgage with another lender once the house is built.
Because the lender doesn’t yet have collateral to secure the loan, construction loan interest rates are about 1% higher than conventional mortgages and may be more strict on borrower qualifications.8
Loan approval requires:
The lender releases funds directly to the builder as each building phase is completed.
Each of the major steps is broken down into smaller tasks, including extensive research, questioning, and comparing before you’ll be ready to move forward.
Early in your planning:
Next, you’ll want to:
Now you’re ready to get the job done:
In terms of the actual building process, the sequence of construction typically follows this series:
The majority of regulations and permits to build a home in Ohio are at the local level. Check with your county and city offices about9:
You’ll need to obtain a building permit from your municipality that declares the location, size, and building type of your home. Depending on location and infrastructure, you may also need supplemental permits10:
At the state level, you’ll need to apply for permits if your house design uses commercial construction materials such as concrete blocks or steel beams.
The builder you choose will make a monumental difference in your home-building experience. Think of them as your project manager or orchestra conductor, making sure the project or show goes off without a hitch.
You’ll need them to:
Don’t skimp on the time you invest in selecting a builder. Meet with several, obtain itemized estimates that include specific material choices, and ask about their working processes:
You’ll also want to:
Building materials aren’t just about aesthetic preferences and house design style. Climate and location play a key role in selecting which materials are effective and available.
Ohio is a four-season state, with hot summers and cold winters that require effective insulation. The state’s current homes—traditional, historic, and new—offer a mix of structural styles with brick, wood, stone, clapboard, and composite exteriors.
Your architect and builder are resources to find the right balance of taste, affordability, and quality. Ask about:
Note that the expense of different materials isn’t always just their price tag. If materials require specialty application, more time to obtain or install, or even separate skilled professionals, your labor costs could also increase.
If you sell your current home to fund the down payment for a new construction loan, where do you live in the meantime? A residential sale-leaseback has an answer for that.
Truehold's sale-leaseback combines the sale of your house with a lease that switches you to renter status on closing day. Instead of funding your home construction through new debt, you’ll pay off your current mortgage and convert all of your equity to cash, all without needing to find a new place to live.
Plus, you can turn your focus entirely to the construction project. Truehold will cover the cost and hassle of major repairs, property tax, and homeowners insurance, and you can stay throughout construction—even if it goes longer than expected—so long as you pay rent and comply with the lease.
Ready to find out more? Call us at (314) 353-9757 to ask about our Cincinnati sale-leaseback or Cleveland sale-leaseback. Then, one of our advisors will reach out to review the process, answer your questions, and see how Truehold's sale-leaseback can help you transition from your current house to a one-of-a-kind home of your dreams.
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