The Cost to Build a Small House - Your Ultimate Guide

Many people these days are choosing small or tiny houses to both save money and to enable themselves to live a simpler, more minimalist lifestyle. When the time comes for you to build your own home, costs are one of the first questions you'll have and many people have asked us 'how much does it cost to build a small house?'

At Fortress Home, Chicago, we're experts in building houses both big and small and here we break down the main costs involved when building your small dream home. Reach out today for a no-obligation, free consultation: [email protected] or +773-770-8607.

What options are there for small houses?

When people think of small houses they often think of the new trend for tiny homes. But what exactly is a tiny house, and what about a small home?

The average size of a house in the US is around 2,500 square feet and tiny homes are usually considered anything 600 square feet or smaller. But the definition for small houses is less clear. Some people consider it anything 2,000 square feet and under, while other people would say that's positively large. We think 1,500 square feet and smaller counts as a small but comfortable house.

A tiny house on wheels

If you are looking for true freedom with your new tiny home, the option for a tiny house on a specially designed trailer might be for you. The trailer will have RV hookups, allowing you to park your home anywhere you like and simply connect it to the water and power lines.

One of the other benefits of a portable home is no need for permits or building regulations as it's not a permanent building. This will save time, money, and hassle when building your dream home.

On the downside, these are amongst the tiniest of tiny houses and you will have to think very carefully about what you include and exclude from your home, including bathrooms and kitchens.

The average cost for the most basic of this type of tiny house will be around $12,000 but more generally range from $25,000 - $50,000. At the bottom end of this price range, you're unlikely to have a bathroom of your own, but towards the top end, you should have all the basic necessities.

A tiny house with foundations

While permanent tiny homes can be as small as the ones on wheels, there's more opportunity for a second story so these houses might be a bit larger and also a bit more expensive. As they are permanent structures they will be subject to zoning laws and require all the same building permits and inspections as a full-sized house.

With a tiny house like this, you're probably going to spend $50,000 - $150,000, depending on the quality of the materials used and the level of finish and customization required. For this price, you should have a beautiful, stylish, and practical tiny house.

The standard cost to build a small house

If your house is over about 600 square feet it's no longer considered a tiny house, and becomes a standard small home, with all the options available for house building. The average cost of a 1,000 square foot house ranges from $50,000-$400,000.

Small prefab houses

There is a huge range of modular and prefab houses to choose from, with designs to suit every taste and budget. With this style of house, your home builders will lay foundations on your land and then the modules or prefab units will be delivered to the site and installed, usually with all the plumbing and wiring ready to be connected up.

For a 1,200 square foot modular or prefab house you should expect to pay $60,000 - $276,000.

Small site-built houses

This is the most common choice for building your own house as your home builders will construct the entire structure on site, following the standard home building process. One advantage of this type of house is that it can be customized as much as you want, giving you your dream custom home.

A 1,200 square foot site-built house is likely to cost you between $120,000-$480,000, depending on the level of customization and luxury you're looking for.

Container houses

Another option for small houses, or even larger ones, is a container home. These structures are made from repurposed shipping containers and can make stylish, practical, and affordable homes. The containers are inexpensive to purchase and you can join several together to create your own modular house.

The actual cost of a container will be around $5,000, although you may want to pay a little bit more for a ready insulated, chilled container. Another advantage of shipping container houses, other than cost, is the fact that they are quicker to build than a standard site-built house.

To build your shipping container home you should budget around $60,000-$90,000, about half the price of a similar-sized traditional house.

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Tiny houses - things to consider

When building a tiny house it can be difficult to get a traditional loan as this type of house is so new. Getting permits can also be difficult as not everywhere has incorporated the concept of tiny houses into their planning system.

Your local real estate agent may also warn you that when it comes time to sell you might have difficulties finding someone to buy your tiny home, as most homeowners are looking for something larger when they move house.

The average cost per square foot of a tiny home can also end up being more expensive than that of a standard smaller house, as you still need to do all the same plumbing, wiring, and install the same appliances, just in a smaller space. Your tiny house will still be cheaper in the long run but it may not seem as good value when you're midway through construction.

Factors affecting the cost of building a house

It's very difficult to estimate the exact cost to build a house without knowing the specifics of the design and location, so we always recommend speaking to several contractors and comparing costs. They will be able to take into account the exact requirements of your house design, including choice of materials, layout, size, and location.

Regional variations by square foot

One factor that can affect the cost of building a house is the region and this is for various reasons. Soil types can impact the preparation work needed and the type of foundations that are used. Some areas have basements and others don't. Land, labor, and materials costs will also vary by region.

The average costs to build a house, including labor, according to the US Census Bureau's 2021 figures:

  • South — $122 per square foot
  • Midwest — $140 per square foot
  • West — $142 per square foot
  • Northeast — $186 per square foot

As you can see there's a lot of variation from the national average cost of $138 per square foot.

House construction average cost by type

The type of house you choose will also affect the cost to build, and this can be split into prefab/ modular homes and site-built homes (also known as stick-built homes).

  • Prefab or modular houses are built in a factory and transported to the building site, almost complete, where they are attached to the foundation. This type of home is generally cheaper to build and average costs range from around $50-$230 per square foot, depending on the style and level of customization required. They are also quicker to build than site-built houses and subject to fewer delays.
  • Site-built homes use the more traditional technique of building on-site and as such are subject to more delays due to weather and spoiled or wasted materials. They are generally more expensive than prefab houses and the average cost ranges from $100-$400 per square foot based on the level of customization and quality of materials used. As you can imagine, if you want a truly custom home, you have a lot more choices with a site-built house.

Breaking down the total cost to build a house

There are many elements involved in calculating the total cost of building your own home and we've broken down all the main elements for you. Each item factors in your home builders' labor costs, so if you can do some of the work yourself that might be an opportunity to save money.

Please note that the figures below are based on the square footage of a small standard site-built house including all labor and material costs.

Building a tiny house or using the other techniques will help to reduce the construction cost.

General contractor

Your general contractor will usually charge from 10-20% of the total home construction cost, but this will be money well spent. A general contractor like Fortress Home will manage the entire project for you, making sure it's completed on time, within budget, and to a high standard of finish.


The cost of land varies wildly based on the part of the country you are living in, and also whether it's an urban or rural area. For example, in the metro Chicago area, an acre of land can cost as much as $660,000.

Budget between: $3,000–$150,000



Whether you buy plans from an online architect or have custom plans drawn up for you, this is an essential expense. The plans will need to be drawn with all local building regulations in mind.

Budget around: $1,000–$8,000


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Permits and inspections

Unfortunately, you can't cut costs on building inspections and permits. These will depend somewhat on your local city or county building department.

Budget around: $2,000-$10,000


Site preparation

Before you can break ground you'll need to prepare the plot and this can vary a lot depending on how clear and level your land is, as well as the type of soil.

Budget around: $1,500–$5,000



Depending on your location different types of foundation will be required. But this is not an area where you want to cut costs.

Budget around: $5,000–$10,000



The framing is the very structure of the house and for a site-built house, it will likely be a standard wooden frame.

Budget around:$20,000–$35,000



Your roof needs to be well constructed using quality roofing materials to ensure longevity.

Budget around: $10,000-$20,000


Major systems

Your major systems include all the plumbing, wiring, and HVAC. With clever design, for example, putting your bathroom close to your kitchen, you can reduce the length of pipes required.

Budget around: $30,000–$50,000


Interior finishing and fixtures

Your interior finishes and fixtures can vary in cost a lot based on your personal taste. They will include internal doors, decorating, built-in cabinets, bathroom and kitchen fit-out, and appliances. These house costs can be reduced by using simple fixtures at first and upgrading later on.



Exterior finishes

These costs might include some landscaping as well as exterior cladding for the house and putting in a driveway.



Contingency budget

When building your own house it's always important to set aside a contingency budget, as plans can change rapidly. We recommend setting aside 10% of your total budget for emergencies.

Frequently Asked Questions

Is it expensive to build a small house?

The cost to build a small house varies based on many factors, including the cost of land where you live and the style of house you want to build.

But for a standard small house, the average cost per foot should be similar to that of a standard or large house of the same style.

A tiny house might work out to be slightly more expensive per square foot than a small house, as you are putting all the same amenities and appliances into a smaller space, leaving you with less empty space.

How much would it cost to build a 1200 sq ft house?

Depending on the building method used and the location of your house you can spend anywhere from $60,000 to $480,000 on a 1,200 square foot house.

If you want to save money you might want to opt for a modular or prefab home, rather than going with a traditional site-built-house.

What is the cheapest type of house to build?

One of the cheapest types of houses you can build today is a tiny house, with average costs starting at around $20,000. This will depend on your location and the style of the tiny house you choose to build.

Another idea for building your own house is a container home, which can also be very affordable, starting at around $60,000.

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What is the main asset of a construction company? Everything is simple. This is not an investment, not funds in the company's account. These are those unique houses, apartments, and buildings that have already been built and put into operation by the company. In different architectural styles, other concepts, and various tasks assigned to the general contractor. That is the asset in Fortress Home, with over 300 homes from more than 20 years of operation that delight their families.

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