How To Build a House in Colorado?

How To Build a House in Colorado

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Colorado is consistently voted one of the best places to live in America. And it’s not surprising, given the cool weather all year round, the breathtaking scenery, the proximity to outdoor activities, and the endless opportunities for high-paying jobs in various fields.

If you’re looking to make The Centennial State your new home, this article details steps you should follow when building a house in Colorado. Discover how to establish a budget, find land, choose the right builder, arrange finance, obtain permits, conduct inspections, and more.

Custom or Production Home?

Production houses are those designed and built to be part of a group of homes or a planned neighborhood. The price you pay for one will also include the cost of land, labor, permits, inspection, and construction.

A custom-built home is built to specific one-off specifications, and the more customization you have, the more expensive the building process will be. When building a customized house, you pay separately for the land, architecture, and construction.

Building A House in Colorado: The Step-by-Step Process

The process to build a house in The Centennial State looks something like this:

1. Create and save up for a budget.

CHL-Creating a budget

A financial plan is the foundation of any real estate transaction. The cost to build a house in Colorado varies, and before commencing building, you need to determine the required down payment and how much you can afford to pay monthly. You’ll need to include the costs for permits, materials, labor, insurance, and more in the budget. You may also need to include homeowner’s insurance and property taxes.

According to, homeowner’s insurance costs in Colorado are higher than in other states due to weather-related factors. For example, severe weather like hail and wildfires are common occurrences in Colorado and directly impact the cost of home insurance.

You should also include your down payment and closing costs in the budgeting process. Closing costs can vary from one area to another, but as a rule of thumb, they are usually 2-5 percent of your home’s purchase price.

2. Find your land and choose your builder.

CHL-Find your land and choose your builder

Once you have established a budget, it’s time to begin your search for your land and a builder.

Production House

If you choose to build a production home, the good news is you don’t have to worry about searching for land. Building a production home means you will have to find a builder, and once this is done, you should visit the seller’s website and see if they offer virtual tours or in-person viewings. Together with your builder, you should meet with sales representatives and check builder reviews. Compare floor plans and tour models, and talk to other homeowners if you can.

Custom House

On the other hand, if you choose to build a house that is customized, you’ll need to find land. This may take you a few months or even years. Hiring a real estate agent knowledgeable about Colorado’s land market is your best solution. Working with them helps make finding land, writing contracts, and making offers easier.

Make sure you have enough time to do your due diligence and consult your builder. They can advise you about the site, utility infrastructure, and general suitability for the building. Typically It takes 30 to 45 days to close a land purchase in Colorado.

3. Secure your financing.

CHL-Secure your financing

Whether you choose a custom or a production house, you must complete your mortgage documents and have funds for your down payment.

Production House

If you choose to build a production house, many builders have a list of mortgage companies or lenders they recommend. You may be inclined to finance your home through your builders’ recommendations, but you can also compare rates and fees from other lenders.

Your builder may also offer incentives if you borrow from their recommended lenders. For example, they may offer to pay for the closing costs or build optional features in your new home for free. It is also important to note that your builder’s lender will be more knowledgeable about all the details when financing a new home in Colorado.

Your deposit for building a new house in Colorado will range from a few thousand dollars to 10% of the purchase price, depending on the builder.

Custom House

For a custom-made house, it’s much the same process. You inform the lender that you want to take out a loan to buy land, and they’ll tell you what information they require to prequalify you for a loan, how much money you can borrow, and how much you’ll need to contribute to your project. Most banks will issue pre-qualifications within days to weeks, depending on how fast you can gather the documentation and data.

4. Take some time to match, plan, and design.

CHL-Custom house plans

Production House

To build a production home, you need to match the lot with the floor plan. You may not find the lot that suits your needs immediately; if this is the case, talk to the land sales staff. For some lots, you may have to pay a premium. You may also need to make compromises, as not every floor plan is possible on your chosen land.

When preparing to build a house, you’ll also need to match your budget with the floor plan. Know which features are optional and which are included in the floor plan.

Custom House

On the other hand, if you choose to build a custom home, you can expect to spend the next four to five months planning and designing your home. The planning stage is crucial because it enables easier building, helps lessen mistakes, prevents having to make time-consuming changes, and helps lessen the need for expensive do-overs.

5. Obtain permits and inspections.

CHL-Inspection checklist

Your builder will get all the necessary building permits and comply with code requirements if you’re building a production home. Colorado doesn’t have a statewide building code, but local authorities have specific code standards builders must adhere to. You may also hire a third-party home inspector to assess your home. But first, speak with your builder to determine when outside inspections are appropriate.

When building your customized home, your builder may need to submit their plan specifications, budget, and contract to the lender once a construction agreement is signed. The lender then orders a pre-construction appraisal, does the final underwriting, and prepares the loan to close.

How Long Will It Take?

The timeline for building a house varies. It takes approximately seven months to build a production house in Colorado, with the exact time depending on different factors like size, style, availability of materials, labor shortages, and more. Meanwhile, a custom size may take six to nine months from breaking ground to moving in.

Key Takeaway

The process for building a house in Colorado, whether a production house or a custom house, generally follows much the same path. Firstly, you must create and save up for a budget. Secondly, you should secure financing, and then thirdly, you should look for land and a builder. Once these three steps are completed, you match your plan and design with your budget and land. Lastly, your builder will need to obtain all necessary permits and conduct a thorough inspection of the finished building before turning it over to you.

Build a house in Colorado today.

Colorado’s beauty will make you want to stay and plant your roots. If you’re planning to build a house in Colorado and looking for a loan to finance the construction, Cedar Home Loans, a reliable Silverthorne home loans company, has you covered. Aside from home loans, we also refinance and can help you find the perfect property utilizing our local knowledge. Contact us today.

About the Author:

Andrew McBryan

Andrew McBryan is the owner and founder of Cedar Home Loans LLC, where he brings over 27 years of experience in the mortgage industry to his role. Andrew has successfully expanded the company across Colorado, including offices in Telluride, Vail, Summit County, and Boulder. His dedication to providing innovative mortgage solutions and his commitment to staying informed on the latest industry trends make him a trusted advisor to clients and referral partners alike.

When not focused on his business, Andrew enjoys the unique sport of burro racing and relishes the time spent skiing in Colorado’s beautiful terrain. Above all, Andrew is a devoted father, finding joy and inspiration in his daughter’s growth and happiness. 

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