A budgeting primer for the custom home, 2026 edition.
Somewhere in Cincinnati right now a couple is sitting at a kitchen table with a sketchbook, a laptop, and a number. The sketchbook holds a house they have been drawing in their heads for years, which is to say a kitchen with a long window over the sink, a few bedrooms, a porch deep enough for a table, something unique that you can’t find in a typical house, and a basement that could become something later. The laptop holds a browser tab with a lot listing. The number is $500,000, and it arrived at the table by a route nobody can quite reconstruct: some combination of what the last house sold for, what the bank said, what a friend’s cousin paid in 2019, and the general sense that half a million dollars is a great deal of money, which it is.
The number is sincere. The question is what it buys.
Where the money goes
An all-in budget for a new house in Cincinnati divides into five piles, and the house itself is only the largest one.
The first pile is land. A buildable lot in the city runs anywhere from $30,000 in a neighborhood still waiting for its turn to well past $200,000 on a hillside with a view, and the lot price tells you almost nothing about what the lot will cost to build on, which is the second pile.
Site development is where budgets go to be surprised. An efficient city infill lot with sewer and water at the curb, a flat grade, and a short driveway might ask $40,000 for utility connections, grading, stormwater, and the pad. An exurban lot with a septic field to design and permit, a well to drill, a quarter mile of gravel to lay, and a stand of trees to clear can ask $100,000 before a footings are excavated. The soil report, which costs a few thousand dollars, is the single best investment in the whole budget, because it tells you which of those two lots you have bought.
The third pile is the house, which I measure in square feet of conditioned space. In Cincinnati in 2026, a custom house built to a good standard by a careful builder runs somewhere between $250 and $300 a square foot, with the spread driven by envelope performance, structural complexity, and finish level, in roughly that order. A garage costs about half the conditioned rate. A porch or a deck costs a fraction of that. High end finishes or really unique design features can push all of those numbers up.
The fourth pile is everything that is neither land nor lumber: the architect, the structural engineer, the survey, the energy model, the permits, the certification if you are pursuing one, and the cost of borrowing money during the months the house is a hole in the ground. Together these run somewhere between 12 and 20 percent of the construction number, with the architect typically carrying 9 to 15 points of that.
The fifth pile is contingency, and it is 10 percent of construction, and it is the pile people try hardest to talk themselves out of. It is the money for the thing the soil report missed, the lumber price that moved during permit review, and the moment halfway through framing when everyone realizes the window over the sink wants to be eight inches wider.
What $500,000 buys in Cincinnati in 2026
Put the piles together and a few scenarios fall out.
Say the couple at the kitchen table buys a modest city lot for $75,000, and the lot is kind to them: sewer at the curb, a gentle grade, $40,000 in site work. Soft costs and contingency take their share. What remains for the house itself is a little over $300,000, which at $260 a foot builds about 1,200 square feet of conditioned space. A very good 1,200 square feet. Two bedrooms, a bath and a half, the long window over the sink, and the porch if the porch is the thing they refuse to give up. The basement that could become something later is the first thing to go, because a basement inside a high-performance envelope costs real money whether or not it ever gets drywall, and we will come back to that.
Say instead they already own the lot. A parent’s back acre, a parcel bought a decade ago, an inheritance that came with a survey. The land pile vanishes and the house pile grows to something near $370,000, which builds a little over 1,400 square feet. The third bedroom comes back. The porch gets its table.
Now say the sketchbook holds the house they actually drew, which is 2,500 square feet with the basement and a two-car garage. At $260 a foot, the house alone is $650,000. Add the garage, the site work, the soft costs, the contingency, and a lot to put it on, and the all-in number lands somewhere between $900,000 and $1 million. That is a gap. The number at the table is honest, and so is the sketchbook, and the two of them are simply describing different houses. This is the conversation I have frequently. Trilobite Design loves drawing dream houses, and iterating lovely design concepts is much less expensive in the computer than on the construction site. But knowing what is feasible and within expectations is one of the most valuable pieces of starting this process.
There is, of course, a less expensive way to have a house in Cincinnati, which is to buy one that is already standing. Plenty of them trade for well under $500,000, and some of them are lovely. In amazing neighborhoods and without a construction schedule. What the lower number buys is a house with a history nobody fully knows, a performance nobody has measured, and a floor plan that was somebody else’s idea. The air leakage in a typical existing Cincinnati house runs five to seven air changes an hour at test pressure, roughly 10 times what a Passive House allows, and the furnace in the basement has an opinion about the gas bill every January. The window over the sink is wherever the previous owner wanted it. The lower number is real, and so is what it is made of.
The levers
The levers that actually move a budget are three. Size, which is the big one and the one everyone resists longest. Scope, which means the garage, the porch, the finished basement, the length of the driveway, the number of bathrooms, each of which is a line that can be deferred or deleted without touching the bones of the house. And systems, which means the choice between a conventional furnace and air conditioner and a heat pump paired with an energy recovery ventilator, a choice that costs more the day it is installed and considerably less every month after.
There is a fourth lever people reach for, and it does less than it looks like it does. The unfinished basement. The instinct is sound: pour the foundation now, leave the basement raw, finish it in five years when the money arrives. In a conventional house that works tolerably well. In a high-performance house, the basement walls are part of the thermal envelope, and the envelope is either complete or it is leaking. The walkout wall still wants its insulation, its air sealing, its triple-glazed doors. The slab still wants its foam. The mechanical system still has to condition the whole volume. Leaving the drywall off and the floor bare saves the cost of drywall and flooring, which on a basement is a few percent of the total, and the rest of the money is already in the ground. The honest version of the phasing lever is to build a smaller footprint now and add on later, which is harder to draw and much cheaper to do.
The premium, and what it buys
A Passive House in Cincinnati in 2026 runs about $260 a square foot of conditioned space, which is 5 to 10 percent more than a conventional custom house at a comparable finish level. On a 1,400-square-foot house, that is somewhere between $18,000 and $35,000 up front, and it is a fair question what the money buys.
What it buys is a house five times tighter than the building code allows, which in the plain version means the air you paid to heat stays inside in February and the air you paid to cool stays inside in August. The walls carry roughly twice the insulation of a code-minimum build. The windows are triple-glazed, and the frames are built to hold the temperature at the glass rather than bleed it out through the sash. An energy recovery ventilator trades the stale air leaving against the fresh air arriving, so the house breathes continuously without throwing the heat away with each breath. And the heat pump that handles whatever heating and cooling remains is small, because the load it serves is small. In short, that premium buys cheaper utility bills, better indoor air quality, more durable construction, and a house that is proven more resilient in he event of extreme weather events and climate change.
The house Trilobite finished in Mt. Airy in 2023 is 3,100 square feet and measured 7,000 BTU per square foot per year before the solar array went on the roof. A typical existing house in Cincinnati uses 7 to 10 times that. After the array, the Mt. Airy house measured zero. Its HERS score, which is the rating a lender or an appraiser reads, came in at 32, meaning 68 percent below the code-reference home.
Here is where the arithmetic turns around. The federal definition of affordable housing, which most lenders and most city programs reproduce more or less verbatim, is spending no more than 30 percent of gross income on housing costs including utilities. The utilities are inside the number. A house that runs on a few hundred dollars of electricity a year, or on nothing at all once the panels are up, has quietly moved a line out of the monthly budget for as long as the house stands. With local electricity and gas rates climbing the way they have these past few years, that line was never going to shrink on its own. The person who could afford the better envelope up front turns out to be the one who spends less on the house over its life, which is a thing that is true of boots and of roofs and of most things worth buying once.
The premium also carries a certification that stays with the property through resale, qualifies for a growing list of utility rebates and grant programs, and holds the indoor temperature comfortably through a multi-day winter outage with no backup heat running. Those are harder to put a number on, and we would rather leave them unpriced than invent one.
The homework
So what does the couple at the kitchen table do with all of this?
The first thing is to arrive at one number, together, that both of them are comfortable with and that counts everything: the lot, the site work, the soft costs, the contingency, and the financing that carries them from here to the certificate of occupancy. One number, all in. It is a different number from the one that arrived at the table by mysterious routes, and it is the only number worth bringing to a first meeting.
The second thing is to get some research done on any lot they are serious about, before they fall in love with it, because the lot decides how much of that one number is left for the house.
The third thing is to walk the site with an Architect before anybody signs anything, with the sketchbook and the number both in hand. That is the meeting where the two find out how far apart they really are, and where the levers get pulled in the right order: size first, then scope, then systems, with the bones of the house kept whole.
The house in the sketchbook is still in there. It may be 1,200 square feet instead of 2,500. It may have the window over the sink and skip the basement. It will almost certainly be warmer in February than the number at the table ever imagined, and it will run on less for as long as anyone lives in it.
Bring the number. We will bring the pencil.