Is It Cheaper to Build or Buy a House?

Why Building New Might Cost Less Than You Think!

When families start hunting for a new home with a firm budget, they often discover a frustrating pattern. That perfect resale house listed at an attractive price needs a new roof, has an outdated HVAC system, or a complete kitchen renovation. The “affordable” $280,000 house quickly becomes a $320,000+ investment once you factor in immediate repairs and updates.

This scenario plays out frequently, where families assume new construction automatically costs more than purchasing an existing house. But when you factor in hidden costs, renovation expenses, and long-term savings, is it cheaper to build or buy a house? The answer might surprise you, especially if you’re considering homes in Indiana and Kentucky, where land prices and building costs offer distinct advantages.

This extensive guide breaks down the real costs of both options, revealing why building your own home has become a surprisingly competitive choice for families ready to make their move.

The Real Cost of Buying an Existing Home

The home’s purchase price represents just the beginning of your financial commitment. Most families focus on the listing price and monthly mortgage payments, but the true cost of homeownership extends far beyond these obvious expenses.

Closing Costs and Immediate Expenses

Closing costs typically range from 2% to 5% of the loan amount, meaning a $300,000 existing home could require closing costs between $6,000 and $15,000. The average closing costs for a home buyer are $4,661 nationally.

These expenses include:

• Real estate agent commissions (typically split between buyer and seller agents)
• Home inspection fees ranging on average from $296 to $424
• Appraisal fees averaging $314 to $423
• Title insurance, attorney fees, and documentation costs
• Property taxes and insurance prorations

Unlike new build homes, existing home purchases often involve negotiation periods after inspections, potentially requiring additional closing costs for re-negotiations or repair credits.

The Hidden Renovation Reality

The cost to renovate can range from $15 to $150 per square foot. For an existing house, these costs often become immediate necessities:

Major systems typically need updating within 5-10 years of purchase:

• Heat pumps or air conditioners over 10 years old
• Electrical panels in homes built before 2000
• Plumbing systems showing signs of age or mineral buildup
• Windows lacking energy efficiency features

Kitchen renovations alone average $158,530 for a complete overhaul, while bathroom renovations typically cost $5,000 to $25,000. These aren’t luxuries – they’re often necessities for making an older home functional for modern family life.

Many families discover unexpected costs after purchase, such as outdated wiring that requires replacing or HVAC ductwork that doesn’t reach newer additions to the home.

What Building New Actually Costs

New construction costs have stabilized in recent years, making building a new home more competitive with purchasing resale than many people expect. According to the National Association of Home Builders (NAHB), the average cost to build a new home in the U.S. typically ranges between $150 and $250 per square foot, depending on location, finishes, and design choices.

At Jagoe Homes, our pricing reflects this national average — with new homes in Indiana and Kentucky starting in the mid-$200s. Because we build in established communities with streamlined processes, our buyers enjoy predictable, transparent pricing without the unexpected expenses that often come with resale or full custom builds.

Every Jagoe home price covers the essentials:

• Foundation and site preparation – Professional grading, excavation, and concrete work
• Framing and roofing – High-quality lumber, engineered roof systems, and durable weather protection
• Major systems installation – Modern HVAC, electrical, and plumbing built for comfort and efficiency
• Exterior and interior finishes – Energy-efficient windows, doors, insulation, flooring, and more

Unlike resale homes — where costs can skyrocket after inspections and renovations — new construction with Jagoe means no surprises and no hidden expenses. What you see is what you get: a brand-new home built to today’s standards, backed by an industry-leading warranty and our commitment to long-term value.

Financing Advantages of a New Construction Home

For many families, one of the most intimidating parts of building a home is financing. Most builders in our region require buyers to secure a construction loan — a process that typically comes with 20–25% down payments, higher variable interest rates, and the added expense of paying interest during the build. On top of that, construction loans often involve two separate closings, which means duplicate closing costs.

At Jagoe Homes, we do things differently. When you build in one of our established communities, you can use a traditional mortgage rather than a construction loan. That means:

• No construction loan applications or approvals
• No monthly interest payments during the build
• No duplicate closings or extra closing costs

This simplified approach allows families to avoid paying both rent/mortgage and construction interest while their home is being built. Instead, you get straightforward, predictable financing — and immediate savings that most builders in our area simply can’t offer.

Long-Term Financial Benefits That Tip the Scale

The financial advantage of building new isn’t something you have to wait years to see. In fact, many families begin saving right away — from lower utility bills to avoiding costly repairs and renovations. In some markets, the price of a new home is even less than a comparable resale. And over time, those savings only continue to grow, adding up to thousands of dollars within just the first few years of homeownership.

Energy Efficiency: Your Monthly Savings Add Up

Jagoe EnergySmart new homes are at least 68 percent more energy efficient than used homes, and include additional features that typically make them 20–30 percent more efficient than standard new homes.

The impact on your utility bills is substantial:

• EnergySmart homes like those built by Jagoe achieve at least 38% greater efficiency than standard new homes
• Proper air sealing and insulation can provide energy savings of up to 11% per year
• Replacing single-pane windows with energy-efficient windows can reduce household energy bills by an average of up to 13% nationwide

For a family spending $200 monthly on utilities in an older home, energy efficiency improvements could reduce bills to $120 to $140 monthly. Over 10 years, this represents $7,200 to $9,600 in savings—money that stays in your family’s budget instead of going to the utility company.

Understanding your home’s energy efficiency starts with knowing about the HERS Index, which measures home energy performance on a scale where lower numbers mean greater efficiency.

Maintenance and Warranty Protection

One of the biggest differences between buying new and buying resale is the peace of mind that comes with warranty coverage. At Jagoe Homes, every new home is backed by comprehensive protection — covering structural elements, major systems, and workmanship for years after closing. Not every builder offers this level of coverage, so it’s important to ask about warranties when you’re comparing your options.

Lower maintenance costs in the first decade of ownership mean fewer surprise repair bills and more predictable household expenses. Resale buyers often spend tens of thousands of dollars on repairs within the first few years.What truly sets Jagoe apart is our dedicated Service & Warranty Department. While most builders in our area leave homeowners to juggle contractors on their own, our in-house team provides direct support long after move-in. That means faster solutions, lower costs, and the confidence of knowing you’re never on your own.

Making the Numbers Work: A Real-World Comparison

Let’s break down the real costs for a family considering a home in the Indiana or Kentucky market—comparing the expense of buying an older home that needs updates and projects versus moving into a brand-new home.

The key takeaways here include:

• Year 1 savings add up fast: When you factor in remodel costs, a used home actually costs about $21,490 more in the first year compared to a new build.
• Built-in savings: With a new build, you avoid $126,490 in immediate upgrade/replacement costs (kitchen, siding, bath, roof, windows).
• Energy efficiency advantage: New homes deliver lower monthly utility bills, saving about $1,368 every year, or nearly $7,000 over five years, compared to an older home.
• Peace of mind: New builds include a builder warranty, protecting you from costly surprises that older homes often bring.
• No disruption: Move-in ready comfort without living through months of remodeling projects.
• Long-term value: Over 5 years, the combined savings on repairs, replacements, and utilities add up to tens of thousands of dollars with new construction.

Beyond the Numbers: Quality of Life Factors

Financial considerations tell only part of the story. Building new provides lifestyle benefits that existing home purchases cannot match, regardless of renovation investments.

Modern new homes are built for the way families live today, eliminating the awkward layouts often found in older houses. Open kitchen concepts, dedicated home office spaces, and family-friendly traffic patterns enhance daily life in ways that renovations can rarely achieve cost-effectively.

Technology integration also comes standard — from pre-wired smart home systems and high-speed internet access to energy management features — making it easier to stay connected and efficient. Retrofitting these into an older home often requires costly electrical work and structural changes.

In many new construction communities, families also enjoy thoughtfully planned spaces that older neighborhoods may not provide, such as walking paths, playgrounds, or shared green areas. While amenities vary by location, every Jagoe community is designed to foster connection, convenience, and a welcoming environment.

And perhaps most importantly, building new allows you to personalize your home from day one — choosing the finishes, floor plan, and design details that fit your lifestyle — instead of adapting to someone else’s choices and spending more on renovations later.

Start Your Journey to Smart Homeownership

The math is clear: when you account for renovations, energy efficiency, and long-term maintenance, building your dream home can cost less than purchasing and updating an existing house. The key is working with established regional builders who understand local markets and offer streamlined processes.

Your family deserves a home designed for how you actually live – not a compromise based on someone else’s decades-old choices. Modern new construction provides energy savings and lifestyle benefits that make homeownership more enjoyable and financially secure. And with Jagoe Homes, you also gain the peace of mind of warranty protection — something not all builders in our area provide.

Whether you’re ready to start planning your dream home or still exploring your options, taking the next step costs nothing. Knowledgeable building consultants can provide personalized cost comparisons based on your specific needs, helping you make informed decisions without any pressure or obligation.

FAQ Section

We know that choosing between building new and buying existing involves many considerations beyond just the numbers. These are the questions we hear most often from families exploring their options in Indiana and Kentucky markets.

Financing Your New Home Build, Simplified

Need answers fast? Our Jagoe Acrisure Financing Team is located in Owensboro, Kentucky, and has the resources and staff to get you into your new Jagoe Home. We work closely with you, combining expertise and advanced tools to make navigating your home loan process simple and seamless. Whether you’re ready to build a house on your land now or just exploring financing options, we are committed to helping you achieve your goals quickly and effectively. Our team is committed to getting you started with a stress-free experience from start to finish.

Acrisure Mortgage

For Financing please call an Acrisure Mortgage Team Member

Bambi L. Winstead

Branch Manager
Mortgage Loan Originator
NMLS# 369809
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502-389-0088
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Kevin Young

Mortgage Loan Originator
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904-673-3173
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Kyle Chubboy

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 352-978-1811
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Exceptional Energy Efficiency in Every Jagoe Home 

An energy-efficient Jagoe Home begins with intelligent design, quality construction, and generations of working to exceed our own standards of excellence. Jagoe Homes is committed to all the practices it takes to build truly energy-efficient homes, and we work closely with RESNET (Residential Energy Services Network) to achieve great ratings from that organization.

HERS® (Home Energy Rating System) INDEX

*Based on the US Department of Energy definition of HERS index of 130. This information presented for educational purposes only. Savings are average estimates based on Jagoe Homes’ top five selling plans. Savings will vary based on house type, orientation, house size, utility rates, climate and operations of the home.

The lower a home scores on RESNET’S HERS (Home Energy Rating) Index, the more energy efficient it is. A standard new home that’s built to meet the 2006 IECC will score a HERS Index of 100. New Jagoe homes score an average of 62, making them at least 38% more efficient than a standard new home and at least 68% more efficient than a used home.

TELL ME MORE

Brand-new Jagoe homes are built with nothing less than advanced materials and modern innovations engineered to reduce energy use and lower utility costs all year long. Owning a home designed with energy-saving features ensures long-lasting efficiency, exceptional comfort, and an eco-friendly carbon footprint throughout every season.