How to Build a House in Maryland

Maryland, known for its coastal region along the Chesapeake Bay, its capitol city of Annapolis, and urban areas such as Baltimore and the suburbs around Washington, D.C. is one of the most expensive states in the country to build a house. The step-by-step process to build a house in Maryland costs an average of $206,687. Labor costs in Maryland are relatively lower than in many states, but land costs are higher.

Location is one of the main factors influencing the cost of building a house in Maryland. It costs more to build a house in locations such as Bethesda just outside Washington, D.C., and other nearby suburbs, and in Columbia, a planned community with many amenities between D.C. and Baltimore. 

Typically, it costs less to build a home in a rural area. About 25% of Maryland is rural. But some of those rural areas along the Eastern Shore of the Chesapeake Bay can also be costly because of their popularity for vacation homes.

The average price to build a house in Maryland also depends on the size and style of the home you want to build and the materials you choose.

Custom vs. Production Homes

Another important difference that will impact the cost to build a house in Maryland is whether you want to build a custom home or a production home. A production home is one a builder builds within a planned community or a cluster of homes on land owned by the developer. The cost to build a production home in Maryland is typically less than a custom home because the builder can order materials in bulk, prepare the land and infrastructure for multiple homes at once, and have floor plans and exterior designs prepared in advance. 

Custom homes require you to hire an architect and a builder, buy the land, prepare the site, and obtain permits. It usually costs more to build a custom home than a production home in Maryland.

In this article, we’re talking about how to build a production home in Maryland.

Step-by-step Process to Build a House in Maryland

Building a house in Maryland usually takes about seven months from contract to completion. 

To build a house in Maryland, you’ll need to take the following steps:

Budgeting for your New Home

The first step in building a house in Maryland – or any other major financial decision – is to review your budget. Before you can start shopping for a builder and a community, you need to know your price range. Begin by reviewing your income, assets, debt, and financial goals to generate a monthly payment you’ll be comfortable paying. 

Financial advisors and lenders recommend that your housing payment be 28% to 30% of your gross monthly income. Your housing payment includes principal and interest on the mortgage, property taxes, and homeowner’s insurance. If you make a down payment of less than 20%, you typically need to pay private mortgage insurance. When you build a new home in Maryland, it will usually be within a community with a homeowner’s association, so you’ll need to pay dues, too. 

The amount of cash you have from savings or the sale of your home will influence your price range. You’ll need cash for a down payment, closing costs, and cash reserves. Check out your estimated home value online or talk to a real estate agent to determine how much you may have in proceeds from your home sale after paying off your loan. 

Consult a lender for a mortgage preapproval based on full documentation of your finances so you know how much you can borrow. Your lender will also know if you qualify for homebuyer assistance or special loan programs.

The price per square foot to build a house in Maryland averages $160 to $300, which would be $400,000 to $750,000 for a 2,500 square foot house. In most cases, 50% of the cost to build a house in Maryland is allocated for materials, and labor costs are 30% to 40% of the price. 

You can also estimate your property taxes and homeowner’s insurance. 

Homeowner’s insurance in Maryland is lower than the national average, while property taxes are higher in Maryland than in many other states.

Homeowner’s insurance for a $300,000 home in Maryland costs an average of $1,518 per year, which is 34% below the national average of $2,305. 

The average property tax rate is 1.06% in Maryland, slightly lower than the 1.07% national average. However, the median annual property tax bill goes up to $5,582 in some counties because of high property values in the state, which is above the national median bill.

Homeowner association dues, which can be paid monthly, quarterly, or annually, vary according to amenities and services that are included. You’ll need to ask about those at each community.

Choose your Builder and Community

Now that your financial picture is clear, you can start searching for a builder and a community where you want to build a house in Maryland. Start online and narrow your search according to your preferred geographical location and price range. You can find floor plans, photos, community descriptions, virtual tours, and more online. 

Be sure to check out builder sites and community websites for more information on the specifics of houses and testimonials from customers. You can also find reviews of builders at TrustBuilder®.

Once you’ve generated a list of communities that interest you, it’s time to visit model homes and consult sales professionals about the details such as optional features, community amenities, plans, and how long it will take to build a house. If there are residents in the community, they can be a good resource for information about the homes and what it’s like to live there. 

Line Up your Financing

Even though you already have a mortgage preapproval, your builder may want you to get approved with a preferred or in-house lender. You can choose which lender to use, but working with the builder’s preferred lender often has advantages. That lender will be familiar with the timeline and procedure for the community. Some builders also offer incentives such as paying for closing costs or an upgrade if you choose their lender and title company. 

You’ll usually need to make a deposit when you sign the contract. Your lender will estimate closing costs, which are usually 2% to 5% of the sales price of the home. You’ll have time to save more and gather those funds while your home in Maryland is under construction. 

Choose your Lot, Floor Plan, and Upgrades

At this stage, you’ll also lock in decisions on which floor plan you prefer, the lot you want, and any available options. The sales professionals onsite can help you match the floor plan and the lot. Not every floor plan can be built on every lot, so you may have to compromise on the location or the exterior façade. 

Keeping your budget in mind, you should find out whether there are premiums required for some lots. Be sure to ask about plans to know what will be nearby when your house and the community are complete. 

You can also get advice from a sales professional and sometimes an interior designer about personalizing your home. In some cases, you’ll have a limited choice between a couple of packages with different color schemes or levels of quality. In others, you’ll have more custom options to choose between. Be sure you understand what’s included in the base price of the house and what will cost extra. 

Permitting and Inspections

While your house is under construction, your builder will manage all the permit and inspection requirements. Maryland has a statewide building code, and there may also be local codes to meet. 

If you want to have your own home inspection, ask your builder when an inspector can visit the property. 

Climate Considerations

Depending on where you want to build a house in Maryland, you need to be aware of potential issues with winds and flooding. Coastal Maryland has occasional hurricanes and high winds, and inland areas can be prone to heavy rain and an occasional tornado. Talk to your builder about any modifications you may want to make to increase the resilience of your home.

Timeline

Numerous factors can impact the construction timeline in Maryland, such as weather, labor, and materials shortages. Your home could be built slower or quicker than anticipated, so you need to stay in touch with your builder and your lender so you know when to lock in your mortgage rate and when to put your current home on the market. The step-by-step process to build a house in Maryland can take an average of seven months, but your house could take a longer or shorter time.