How Much Did You Spend on Home Builder Upgrades?

Have you ever wondered what is the average spend on new home builder upgrades? On average, you can expect to spend 20-25% of the base cost of your new home on builder upgrades. This cost will include both structural upgrades and finishing upgrades.

When we purchased our new build home, we had many questions about how much to spend on builder upgrades. We heard many stories from other buyers, and it was definitely a scary process.

Whitby New Homes One family we knew spent about $190,000 on builder upgrades, while another family spent $85,000 – both in the same project.

The reality is that every home build is unique to the buyer. On average, after talking with a few home buyers in the province, we’ve estimated the cost of new home upgrades to be 20-25% of the base price of the house.

In Whitby, Ontario – one of the projects was selling a corner home; a detached 4-bedroom house with a 2-car garage. The base price of the home started in the 890k range, and went up to 1.05M within a 1-year period. Not to mention the lot premium, which is of course separate. The lot premium went from 5k to 30k within this time.

This particular home was finished for one family at a cost of $170k – which is just under 20%.

Let’s talk about how much to spend on builder upgrades and what is included in all their offerings.

Table of Contents

What Does Base Price Mean for a House?

The base price of a new construction house is the sticker price you see advertised for the model home you are seeing. A home’s base price includes the base structure and base finishes. This will not include cabinet hardware, landscaping, lot premiums, and finished basements.

A builder will usually invite you to a model home. A model home is a fully lifted and enhanced home that includes a ton of builder upgrades. A model home is not a base model home. We found out that the model we visited would cost model home kitchen about $200,000 more than the base price of the house ($890k).

Essentially, a base price for the home is just the bare minimum. There is no hardwood flooring, tall doors, high ceilings, crown molding, window blinds, etc. All of the finishing work is extra. Any structural change to the home is extra – such as widening doors, adding a bathroom in the basement, bringing a gas line to the home, etc.

While a 890k price tag for a home can be daunting, imagine being hit with a 30k price for the premium lot and 170k for upgrades. Our home is now $1.09 million – which can break our budget sometimes.

So, remember not to be fooled by the new construction base price you see on the A-Frame signs and billboards on the road.

Can You Upgrade Your Home For Less than the Average?

Yes, you can always spend less than the average on new home builder upgrades. However, a 10% spend on new upgrades is considered to be a very basic home. You get to upgrade the ceiling height, the flooring, finish the basement and possibly add a walkout entrance for the basement.

However, keep in mind that there are ways to save money on builder upgrades. We recently wrote an article on new home upgrades to avoid and skip. It’s recommended you take notes on the items you can skip on to save money.

For example, a home builder can charge several hundred dollars for cabinet hardware. Yes, the knobs and handles for your drawers and cabinets. You can easily get these on your own and install them – saving you on the builder markup and labor!

Lastly, home builders may offer incentives such as credits towards the upgrades. We’ve seen builder credits of up to $30,000 on our project.

So, How Much Should I Spend on New Builder Upgrades?

The average new builder upgrade cost is estimated at 20-25% of the cost of the base price of the home. On a luxury home, this cost can increase to 30-35% of the cost of the base price.

Our model home had quartz countertops, 10ft high ceilings, 10ft/34-inch doors, oak floors and a designer-style backsplash. We were appalled at the beauty of the home, and forgot that all of this would be an upgrade.

Even the layout of the kitchen, and the layout of the bathroom in the master – yes, they were all upgrades.

The garage door opener was an upgrade, the window blinds and sills were an upgrade and even the light fixtures are upgrades. The paint job in the home was an upgrade (a two tone paint job). Also the tiles, carpeting, baseboard moldings, crown moldings, staircase railings – all upgrades.

You can definitely see where a builder makes their money – yep, all in the upgrades. There is a ton of markup in the builder upgrades – as it includes both cost of material and labor. It’s one of the reasons why some builders can afford to offer credits.

Even if you were to remove something, it would cost you. We added 10ft high ceilings across the home, and a 9ft high basement. We finished our basement and added a walkout entrance. We did our kitchen just like the model home.

Your costs for the individual new home upgrades will vary, because home sizes are different:

A gas line to your property can cost $250-$500. Want it inside your home? Add another $2500-3000.

A fully loaded kitchen can cost you about $50,000.
Hardwood flooring for the home could cost $35,000-$70,000 – depending on quality.
An additional room in the home can cost $10,000.

A finished basement can cost $35,000.
Want 200amp electrical service? Yes, add some money here.
Want 10ft ceilings? Add about $15,000.

Want cabinet hardware? Add about $1000.

Before you know it, you will be sitting at $150,000 in upgrades for a home that looks average.

How to Plan Your New Home Builder Upgrades

Prior to visiting your design center, you need to have an idea of all the builder upgrades you want to avoid, and all the builder upgrades you want.

Understand the impact of all the different upgrades and take into consideration the value it will provide your home.

You can always go into the builder office knowing which model home you are interested in, and give them an offer. Your offer will include the upgrades you want for the home.

We would recommend starting your home upgrades in the kitchen – because it is the one place you will need it. If you can start here and be very critical of what you spend on, it can save you a ton of money.

Before walking into a design meeting, you need to know what you want in the kitchen. Obviously, things like light fixtures, backsplash, and knobs for cabinets can be skipped. Focus on the essentials you cannot do later – such as the cabinets, islands, countertops.

A neighbor of ours stuck with the basic cheap builder kitchen (really valued at probably $1250). After the closing of the home, he took possession and changed all the kitchen cabinets for $8,000. Have a look at his $8,000 kitchen below.

Would you like access to a great custom kitchen builder? Send us a message, and we’ll give you their contact information!

custom kitchen new home

Can Home Builder Upgrades be Included in the Mortgage

Yes, you can include the cost of home builder upgrades into your mortgage. However, this will increase the amount you are borrowing, the amount of your down payment and your monthly mortgage payments. If you’re pre-approved for a specific amount, this can push you over the limit.

Some home buyers choose to pay for the home upgrades in cash, by offering a bank draft to the builder. You can do this to offset any hit on your mortgage.

In our case, the home upgrades costed us 170k, which meant we had to bring an additional down payment of 34,000 – or else we would’ve been placed under a PMI situation. If your down payment is less than 20% of the purchase price, you need to pay mortgage insurance to one of the insurers.

Final Tips to Consider When Budgeting for Home Upgrades

Our final tips are from our own experience of buying a home from a builder. We’ve purchased three new homes from different builders in the last decade.

Focus on Structural Upgrades: A structure can’t be changed inexpensively once it is up. If you have plans to make changes or upgrades, do it up front. It will save you money.

Start with Kitchen Upgrades: Your kitchen is the focal point of the home, start your upgrades in this space. If you know a contractor who can build you a $5,000 kitchen; ask them for a quote. We saved $40,000 in our kitchen.

Avoid Organizers and Extras: Your builder doesn’t need to install closet organizers and drapes for you. These are areas you can save a considerable amount of money in. We saved over $15,000 in this area.

Add a Finished Basement with a Walkout Entrance: A walkout entrance for your basement can increase value for your home, and it can serve as another entrance. This walkout entrance allows you to rent your basement and earn an additional income. This is a dramatic home value increaser!

Add Rough-ins Where Needed: A rough-in is when electrical, plumbing and HVAC lines and pipes are brought into the home and fixed in certain area. For example, if you have plans of building an extra bathroom in the basement, you can save money by adding a rough-in for a bathroom in the basement. When ready, you will have the setup in place without the need to dig.

A few resources for new construction home buyers:

How Much Did You Spend on Builder Upgrades?