How Much Does It Cost to Build a Custom Home?

The cost to build a house in Ontario varies depending on factors such as location, square footage, materials, and labour. Building custom homes in Toronto and the GTA is our specialty at Lumara Homes. We understand that creating a budget can be overwhelming, but with our experience, we can help simplify the process. Let’s explore a breakdown of the costs associated with building a house in Toronto and the Greater Toronto Area (GTA).

Key Points Summary

  • The average cost to build a custom house in Ontario is $320 per square foot.
  • On average, a custom home in the GTA costs between $600,000 and $720,000 to build.
  • The cost to build a house varies depending on location, square footage, materials, labour, and the complexity of the build.
  • Hard costs are the direct expenses associated with construction. Soft costs are indirect expenses that are necessary for the project but not directly related to construction.
  • Financing options include completion and progress draw mortgages.
  • A completion mortgage transfers funds upon completion of the project.
  • A draw mortgage transfers funds to the builder in stages.
  • You cannot change the construction mortgage after signing the mortgage agreement.

Average Cost to Build a House

In Ontario, the average cost to build a house is $320 per square foot. There are many aspects that influence how much your home will cost to build, such as the cost to build custom homes compared to the cost to build a detached home.

The cost per square foot goes up with the increased complexity and labour that comes with a custom home and depends on the location of the home. Here’s a list of the average square footage costs for building a detached home versus a custom home in the GTA:

Type of HomeLow End Cost Per Square FootAverage Cost Per Square Foot
Detached Home$215/sq ft$260/sq ft
Custom Home$300/sq ft$360/sq ft

Average Cost to Build Custom Homes in the GTA

When it comes to custom homes, every detail is hand-picked to reflect your one-of-a-kind vision, from the finishes to the custom cabinetry. Of course, custom work comes with higher prices to accommodate the increased complexity of the build.

Location is also important to consider, as the cost of the lot and the popularity of the region can also impact the cost per square foot. The following table outlines the average cost to build a custom home in the GTA:

LocationAverage Cost
Toronto$350/sq ft
Halton$350-400/sq ft
Durham$330-$360/sq ft
Peel$320-$370/sq ft
York$370-$390/sq ft

What Determines the Construction Cost Per Square Foot?

The cost of construction per square foot is determined by a combination of factors like land development, permits, and the size of the home. It’s important to analyze and understand each element to plan and budget effectively for a construction project.

Let’s take a detailed look at what determines the construction cost per square foot of your home:

The size of a plot of land affects its price, especially in cities like Toronto where land is becoming increasingly scarce. Factors such as soil quality, terrain, tree removal, and utility connections can contribute to additional expenses during the land development and construction process.

Meeting building codes, obtaining permits, and complying with local regulations can add to the construction cost. The complexity of the approval process and the need for additional inspections or certifications can impact the overall expenses.

The layout complexity, number of rooms, and including additional structures like garages or basements can affect the cost per square foot. Larger homes also cost more to build because they require more materials and labour.

The amount and type of materials you use in your home, such as premium versus standard, contribute to the overall cost of the build. Lumber, cement, brick, stone, and steel are all examples of common construction materials.

Labour costs contribute to wages, payroll taxes, and benefits for the people involved in planning, designing, and building your home. Location, availability of skilled tradespeople, duration of the project, the need for specialized skills or materials, and the home’s size and complexity can all affect labour costs.

The cost of building your home involves design fees to architects, engineers, and interior designers for their services. Architectural fees cover home design and floor plans, engineering fees apply to structural and mechanical aspects of the home, and interior design fees involve materials, finishes, and furnishings.

When you’re building a home, the custom work refers to the personalized features that go beyond the standard construction. For example, you might want to build a two-way fireplace, install built-in shelves, or install custom tiles in the foyer.

There are many types of interior finishes such as countertops, paint and wallpaper, tiles, trim work and more. The exterior finishes of your home include siding, stucco, and shingles.

Specialty rooms include home theatres, gyms, wine cellars, and saunas. The costs for each room can differ based on size, design, and specific features. For example, a home theatre room may have built-in audiovisual equipment or a small kitchenette for snacks.

What are Hard and Soft Costs of Build a Custom House?

Hard costs of building a house refer to the direct expenses associated with construction. Soft costs are indirect expenses that are necessary for the project but not directly related to construction. Hard costs typically account for the majority of the total cost of building a house.

Soft costs can fluctuate throughout the duration of the project. Here’s a closer look at the differences between hard and soft costs:

Hard CostsSoft Costs
Land developmentLegal Fees
FoundationBuilding Permits and development charges
FramingArchitectural Design fees
Exterior finishesEngineering fees
Interior rough-ins like plumbing and electricalSite Surveys
Interior finishes like drywall, flooring, and cabinetsTaxes
LandscapingManagement Fees

What Composes the Pricing?

Building a house is an extensive project with a multitude of cost-related variables. The information in the chart below is based on the average size of a house in Ontario, which is approximately 2,380 square feet.

Here’s a simplified breakdown of the costs involved in constructing a house:

ItemAverage Price
Electrical System$13,000
Windows$1,000 each
Flooring$4-$15/sq ft
Exterior Doors$700 each
Skylights$3,300 each
Living Room Full Penthouse Renovation

How Can I Finance My Home Building Project?

If you’re looking to finance your home-building project, you can apply for a construction mortgage. A construction mortgage provides financing for you to build your home. Construction mortgages take on more risk and therefore have stricter approval standards compared to traditional mortgages.

Banks need assurance that the project will be completed within a specific timeframe and that the builders have proper licenses and a reputable history. Lenders may also ask for a 25 to 30 percent down payment. In Ontario, you cannot change the total amount of the construction mortgage after signing the mortgage agreement. You are responsible for any additional costs for home upgrades or changes.

Here are the two types of construction mortgages you can choose from to build a house in Ontario:

  • Completion mortgage: This type of mortgage involves a single transfer of funds once construction is complete. There are no incremental payouts based on recurring inspections. You can modify the loan as necessary for up to 30 days before you take ownership of your home.
  • Progress draw mortgage: Builders receive progress draw mortgages through incremental payments that are contingent upon meeting inspections and other benchmarks. Draws are payments made to contractors and subcontractors based on project progress.

Here’s an outline of how a progress draw mortgage works:

DrawProject Completion PercentageState of ConstructionPercentage of fund advancement
First Draw15%Land excavation and building the foundation.15%
Second Draw40%Roof is complete, and the building is weather-proofed.25%
Third Draw65%Electrical wiring and plumbing installation have started. Installation of the furnace, plaster, drywall, and exterior wall cladding is done.25%
Fourth Draw85%Installed kitchen, bathroom, and bedroom fixtures, including cabinets and doors.20%
Fifth Draw100%Move-in ready with all interior and exterior work complete, including yard and driveway.15%

Frequently Asked Questions

When it comes to building a home, it is common to have a multitude of questions. Luckily, Lumara Homes is here to help. With our experience and expertise, we can answer any lingering questions you may have. Let’s dive into some of the most frequently asked questions about building a custom home:

The top three biggest cost considerations when building a house in Ontario include the price of land, construction materials, and labour. Land costs can vary significantly depending on location and size, with urban areas such as Toronto typically being more expensive. Construction materials, such as lumber, concrete, and fixtures, also play a significant role in the overall cost of building a house. Labour costs, including hiring skilled tradespeople, contractors, and architects, can add up quickly and impact the final price of the project. Keeping a close eye on these three factors is important to staying within budget.

The cost of building a custom home in Toronto ranges from $300 to $360 per square foot. In the Greater Toronto Area, the average hard cost for constructing a 2000-square-foot detached home is around $520,000. Soft costs for building a single-family house in the GTA can vary from $40 to $80 per square foot, depending on the neighbourhood and extent of the project. In conclusion, the total estimated cost to build a 2,000-square-foot home in the GTA falls between $600,000 to $720,000.

Yes, anyone can apply for a loan or construction mortgage to build a custom home in Ontario. Eligibility will depend on factors such as credit score, income, employment stability, and the value of the property being built. Individuals may also need to provide a detailed construction plan and budget for the project. It’s important to research and compare different lending options to find the best fit for your financial situation.

The cost of utility connections for a custom home in Toronto can range from $5,000 to $20,000, depending on the utility provider and location of the property. Utility permits in the GTA often come with additional fees of $500 to $2,000. Certain utility companies in Ontario provide incentives or rebates for energy-efficient utility installations, like solar panels or high-efficiency appliances. You can contact your utility provider to learn about potential savings.

When you’re building a single-family home, you choose from a variety of pre-designed options for elements such as the layout, finishes, and fixtures. Building a custom home gives you the opportunity to design a completely unique home without design limitations. Guidelines and restrictions may be in place in certain neighbourhoods to ensure a consistent aesthetic for new buildings, including single-family and custom homes.

Lumara Homes Building Approach

Lumara Homes is a top home building and full home renovation company in Southern Ontario. We serve a wide range of regions throughout the Toronto and GTA, including Missisauga, Vaughan, Markham, and Oakville. Our experienced team of professionals is fully insured and dedicated to producing nothing less than high-quality homes. We have years of experience in the industry and are ready to take on a multitude of different projects, from building custom homes to full home renovations.

Now that you know the average costs to build a custom home in Toronto and are ready to take the next step, contact Lumara Homes to set up your initial consultation.

Related Article: Should I Build a Custom Home?

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