When you start to dream of building a custom home, price is one of the first things that may come up. How much does it cost to build a house in Minnesota? It may not surprise you that custom home building prices in the East Metro area have a big range with many factors. We’ll walk you through what you can expect, as well as a few things that might impact your budget.

Is Building a Custom Home in the Eastern Minneapolis Suburbs in Your Budget_

How Much Does It Cost to Build a House in Minneapolis?

The cost to build a house ranges from $250 to $450 per square foot for most options. Custom homes can cost more, up to $500 per square foot depending on a lot of factors, such as:

  • Total square footage
  • Types of materials
  • Amount of materials you need
  • Labor needed to build
  • Current market for material costs

Coming up with an average price per square foot in Minnesota is tricky. Most homeowners will pay $300 to $400 per square foot, but that’s still a pretty big range.

Custom Home Cost Factors to Consider

As you start thinking about creating a budget, you should look at these custom home costs first. That way, you can reduce the likelihood of unexpected expenses.


When you look at estimates on the average cost to build a house in MN, it’s important to keep in mind that land usually isn’t always included in the price. In some cases, it’s expected that you will buy the land as a separate transaction, even if your builder is guiding you in the decision. Some builders, like Derrick Custom Homes, typically work exclusively on land they source. There are a lot of factors that go into the perfect land for your custom home that doesn’t relate to the home itself, such as location, access to amenities, school districts, and more. If you’re not sure how to choose, ask your builder before you start shopping.

Material Prices

The cost of materials, and the time needed to source them, can add a lot to your estimate for building a house in MN. The year 2021 ended with many building materials running more than 20% higher than the year before. If you’ve read about this situation at all, you probably heard about the dramatic fluctuation of lumber prices in 2020 and 2021. It’s good to remember that prices rise and fall regularly, and the demand for materials isn’t the same in 2022 as it was the year or two before.

It’s a wise idea to ask your builder if material price changes are a major factor at the time you want to build. Just don’t let the idea that prices could drop stop you from making a decision. With a realistic budget and an experienced builder, you can make the most of the situation as it is now.

Square Footage

Size is probably the biggest thing affecting your budget, more than flooring choices or other finishes. A 4,000 square-foot home will almost always cost more than a 2,500 square-foot home. Homeowners of custom homes often build bigger, but it doesn’t have to be the case. Consider all different options for your custom home, and don’t hesitate to get creative. Larger homes aren’t necessarily the most efficient use of space. If you have a tight budget, finding a way to get everything you want from a smaller home may be more practical than trying to stretch your finances. Here’s a list of questions to ask your builders to help you choose the right one.


If you’re planning on financing a custom home, there are a few things you should know in advance. Custom home building often has different requirements, including the types of loans you should seek. In most cases, you’ll start with a construction loan, which is a temporary loan meant to provide funding at the right stages of construction. Then, you can refinance the loan into a regular mortgage. Some lenders allow you to do both loans with one application and one closing process. Unlike buying an existing home, where you might be able to qualify for down payments as low as 3%, you can expect to put down 25% for a custom home.

How Much Does It Cost to Build a 2000 sq ft house?

Based on the broad range of prices per square foot and many factors that come into play with a custom home, it can cost $400,000 to $1 million to build a 2,000 square-foot custom home in Minnesota. If you’re looking to keep costs down to stick to your budget, ask your builder for tips about minimizing total expenses without compromising on quality.

How Much Does a Custom Home Architect Cost?

Hiring an architect to design a custom home can be extremely expensive. When you work with a design-build firm, you don’t have to hire an architect separately from the rest of the design and building process, it is provided within their planning already.

How Much Does It Cost to Build a 2500 Square Foot Home in Minnesota?

Wondering how much it will cost to build a house in MN? Although there are many factors that come into play when building a custom home.  For 2,500 square feet, you can plan to pay $500,000 to $1.25 million. At Derrick Custom Homes, we aim to make the purchase of a custom home in 2022 easier, transparent on cost, well-planned, and overall more enjoyable. With our decades of experience, we are happy to walk you through the process and answer any questions you may have, especially about creating a budget that works for you. Contact us to learn more.

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