What Are Soft Costs in Home Building?
The non-construction costs of a build, and why they belong in your budget from day one.
Soft costs are everything you pay for that isn't lumber, labor or fixtures. They're real, they're unavoidable, and they're the category most often left out of a first budget because none of them produce anything you can point at.
The main categories
Design and engineering
- Architectural drawings and revisions
- Structural engineering, where required
- Site or civil engineering on complex lots
Land and site studies
- Boundary survey and staking
- Topographic survey on sloped or complicated parcels
- Soil evaluation, which is required before a septic permit in Ohio. See soil evaluations
- Percolation or site testing where the health department requires it
Government fees
- Building permit and plan review
- Zoning permit
- Electrical, plumbing and mechanical permits, which are often separate
- Septic and well permits from the county health department
- Water and sewer tap fees, which can be substantial
- Driveway, culvert or right-of-way permits
Fees vary by jurisdiction. See permits in Stark County and Akron and Summit County.
Financing
- Loan origination and application fees
- Appraisal, often required more than once on a construction loan
- Title work and closing costs, twice if you use a construction-only loan
- Interest on drawn construction funds. See draws
- Inspection fees charged by the lender at each draw
Insurance
- Builder's risk or course-of-construction coverage
- Homeowner's policy effective at completion
Why they belong in the budget on day one
Soft costs are front-loaded. Many of them are due before a foundation exists, and several are out-of-pocket rather than financed. Knowing the number early is the difference between a smooth start and a scramble. See what's not in a builder's quote.