8 Hidden Costs in New Construction Projects You Must Budget For

Why Your Construction Budget Needs a Reality Check

So you’ve got a quote from a builder. The number looks good. Maybe even better than you expected. Here’s the thing — that quote probably doesn’t tell the whole story.

I’ve seen it happen dozens of times. Someone gets excited about their New Construction in McHenry IL project, signs a contract, and then watches their budget spiral out of control. Not because the contractor did anything wrong. But because nobody explained all the extra costs that come with building from scratch.

And honestly? It’s not your fault if you don’t know what you don’t know. Most first-time builders have no idea what’s included in a construction estimate versus what’s considered “extra.” Let’s fix that right now.

Site Work and Preparation Costs

This one catches people off guard constantly. Your builder quotes you a price to construct your home. But what about the land itself?

Site preparation includes things like:

• Clearing trees and vegetation
• Grading and leveling the lot
• Soil testing and compaction
• Excavation for the foundation
• Erosion control measures

Depending on your property, these costs can range from a few thousand dollars to tens of thousands. Got a sloped lot? That’s more excavation. Rocky soil? More equipment time. Wooded area? Tree removal adds up fast.

Some builders include basic site prep in their quotes. Others don’t. Always ask specifically what’s covered before you sign anything.

Utility Connections and Infrastructure

Your new house needs water, sewer, electricity, and gas connections. Seems obvious, right? But the cost to actually connect these services might surprise you.

If you’re building in a developed area with utilities at the street, connection fees might run $2,000 to $5,000 total. But if you’re on a rural lot? Now you’re talking about drilling a well, installing a septic system, and potentially running power lines hundreds of feet.

According to the septic system guidelines, installation costs vary significantly based on soil conditions and local regulations. A standard system might cost $6,000 to $10,000, but complex sites can push that to $25,000 or more.

New Construction Services in McHenry typically factor utility access into their planning discussions. But you need to verify exactly what’s included versus what you’ll pay separately to the utility companies.

Permit Fees and Inspection Costs

Building permits aren’t free. And they’re not cheap either.

Most areas charge permit fees based on your project’s total value. Expect to pay somewhere between 1% and 3% of your construction cost just for permits. On a $400,000 build, that’s $4,000 to $12,000 in permit fees alone.

Then there are inspections. Your project will need multiple inspections throughout construction — foundation, framing, electrical, plumbing, HVAC, and final. Some jurisdictions charge separately for each inspection. Others bundle them into permit fees.

Don’t forget about impact fees either. Many municipalities charge impact fees for new construction to cover the strain on roads, schools, and public services. These can easily add another few thousand dollars to your total.

Landscaping and Exterior Finishing

Here’s something that trips up nearly every new home builder. You get your certificate of occupancy, move into your beautiful new house, and look out the window at… dirt. Lots of dirt.

Construction contracts typically don’t include landscaping. That means you’ll need to budget separately for:

• Final grading and topsoil
• Grass seed or sod installation
• Trees and shrubs
• Mulch and decorative stone
• Irrigation systems

A basic landscaping package might run $5,000 to $15,000. Want mature trees, extensive plantings, and a sprinkler system? Budget $25,000 or more.

Your driveway might also be a separate line item. Concrete driveways typically cost $8 to $18 per square foot installed. Asphalt runs less but still adds up on longer driveways.

Upgrade Costs That Sneak Up on You

Every builder offers a “base” package with standard finishes. And almost nobody actually takes the base package for everything.

You’ll walk through the design center and suddenly that basic carpet becomes hardwood. The laminate countertops become granite. The builder-grade faucets become oil-rubbed bronze fixtures. Each upgrade seems small. But they add up incredibly fast.

For expert guidance through these decisions, Midwest General Contractor Company LLC helps clients understand the true cost implications before they start selecting finishes. That kind of upfront planning prevents sticker shock down the road.

Common upgrade categories include:

• Flooring throughout the home
• Kitchen cabinets and countertops
• Bathroom fixtures and tile
• Lighting packages
• Appliance upgrades
• Window and door upgrades

Budget at least 10% to 15% above your base construction cost for upgrades. More if you have champagne taste.

Financing Costs During Construction

This one’s purely financial, but it hits your budget just the same. New Construction Services in McHenry projects typically take six to twelve months to complete. During that time, you’re paying interest on your construction loan.

Construction loans work differently than traditional mortgages. You usually pay interest-only during the build, then convert to a permanent mortgage at completion. That interest adds up.

On a $300,000 construction loan at 7% interest, you’re looking at roughly $1,750 per month in interest payments. Over a nine-month build? That’s $15,750 in carrying costs before you even move in.

Plus, you’ve still got to live somewhere during construction. If you’re renting, that’s double housing costs for the build duration. Even if you’re staying with family, there are usually some expenses involved.

Contingency: Your Budget Safety Net

Smart builders always recommend a contingency fund. Most suggest 10% to 15% of your total project cost set aside for unexpected expenses.

What kinds of unexpected expenses? Things like:

• Poor soil conditions discovered during excavation
• Material price increases during the project
• Design changes you decide on mid-build
• Weather delays extending your timeline
• Code requirements you didn’t anticipate

Without a contingency fund, any surprise becomes a crisis. With one, it’s just a minor adjustment. For helpful resources on project planning, having that buffer makes all the difference.

Trust me on this one. Nobody has ever regretted having extra money set aside during construction. Plenty of people have regretted not having it.

Putting It All Together

So what does this mean for your actual budget? Let’s say you get a construction quote for $350,000. Your realistic total budget should look something like this:

Base Construction: $350,000
Site Preparation: $8,000 – $15,000
Utility Connections: $3,000 – $8,000
Permits and Fees: $7,000 – $12,000
Landscaping/Driveway: $10,000 – $25,000
Upgrades: $35,000 – $50,000
Financing Costs: $12,000 – $18,000
Contingency (10%): $35,000
Realistic Total: $460,000 – $513,000

That’s a 31% to 47% increase over the base quote. And honestly? These numbers are conservative for many New Construction in McHenry IL projects.

Frequently Asked Questions

What percentage should I add to a construction quote for hidden costs?

Plan for 25% to 40% above your base construction quote. This covers site work, utilities, permits, landscaping, upgrades, financing, and contingency. The exact amount depends on your land conditions and finish selections.

Are permit fees included in most construction contracts?

Sometimes, but not always. Some builders include permit costs in their quotes while others list them separately. Always ask specifically whether permits, inspections, and impact fees are included before signing any contract.

How much should I budget for landscaping after construction?

Basic landscaping typically costs $5,000 to $15,000. This includes grading, topsoil, grass, and minimal plantings. More extensive landscaping with irrigation, mature trees, and decorative elements can easily exceed $25,000.

Why do I need a contingency fund if I have a fixed-price contract?

Even fixed-price contracts have allowances and exclusions. Unexpected site conditions, material substitutions, and change orders happen on almost every project. A contingency fund prevents financial stress when surprises occur.

When should I finalize my upgrade selections to avoid cost overruns?

Make all major upgrade decisions before construction begins. Changes made after contracts are signed or construction starts typically cost significantly more than selections made during the planning phase.