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Cheapest Type of House to Build

Building a house is an exciting adventure, but it often comes with a hefty price tag. However, fear not, fellow budget-conscious dreamers, because I’m going to take a closer look at the cheapest types of houses to build.

But what is the cheapest type of house to build?

Well, there’s actually no definitive answer, as it depends on so many variables. But don’t worry; from prefabricated homes to modular wonders and even shipping container abodes, I’ll delve into the costs of each option.

So put your thrifty thinking caps on. And let’s find the most cost-effective way to build your dream home.

Different Types of Houses

There are a variety of different house types to choose from, each with its own unique set of benefits and drawbacks. Here are some of the most common and less common homes you may find.

1 Prefabricated Houses

Also known as prefab homes, prefabricated houses are constructed in a factory setting. The construction process involves manufacturing various components. Such as walls, floors, and roof panels, which are then transported to the building site for assembly.

These components are typically made of materials like wood, steel, or concrete. And prefab homes can come in a range of styles and sizes, offering flexibility and customization options. The assembly on-site is usually faster compared to traditional construction methods. Resulting in reduced labor costs and construction time.

Prefabricated Houses

2 Modular Houses

Similar to prefabricated homes, modular houses have a few distinct differences when you look at them.

But, essentially, the building process is the same…

 Modular homes are constructed in sections called modules, which are built off-site in a factory. These modules are then transported to the building site and assembled together to form the complete house. The modules are typically made of materials like wood or steel frames. And they can be customized to meet specific design preferences.

Since modular houses do not require a concrete foundation, they can be set up quickly. Making them an efficient and cost-effective option.

3 Shipping Container Houses

You may already know that shipping container houses are a creative and affordable housing solution that repurposes cargo containers. These sturdy steel containers, originally designed for transporting goods, are transformed into habitable living spaces.

The containers can be stacked, cut, and modified to create functional layouts and multiple levels. Moreover, they are weather-resistant and structurally strong. Making them suitable for various climates.

And if sustainability is your thing…

Shipping container houses offer an environmentally friendly option by repurposing existing materials and reducing waste. With proper insulation and design considerations, they can provide comfortable and unique living spaces at a far lower cost compared to traditional construction methods.

4 Tiny Houses

The tiny house movement embraces the concept of living in compact spaces, typically under 500 square feet. These homes are designed to maximize functionality and minimize wasted space. They can be custom-built or purchased as prefabricated units.

What makes them special?

Tiny houses often feature innovative storage solutions, multi-purpose furniture, and clever design elements to optimize every square inch. They provide an affordable alternative to traditional homes, with lower construction and maintenance costs. Therefore, tiny houses are perfect for those seeking a simpler lifestyle, as well as reduced environmental impact, and the freedom to live mortgage-free.

Tiny Houses

5 Earth-Sheltered Homes

As the name suggests, earth-sheltered homes take advantage of the natural insulation properties of the earth. These homes are either built partially below ground or completely covered by earth on one or more sides. The surrounding soil helps regulate the indoor temperature, reducing the need for excessive heating or cooling.

Which significantly reduces your long-term cost of living…

Earth-sheltered homes offer energy efficiency, protection from extreme weather conditions, and a reduced ecological footprint. So, while the initial construction costs may be higher due to excavation and waterproofing, the long-term savings in energy expenses can make them highly cost-effective over time.

6 Straw Bale Houses

These houses utilize straw bales as the primary construction material. The bales are stacked or framed and then covered with plaster or stucco.

The benefits of this?

Straw bales provide excellent insulation, creating a highly energy-efficient home. Since they can help reduce heating and cooling costs significantly. Straw bale houses are also environmentally friendly, as straw is a renewable resource. Plus, the thick walls offer sound insulation and a unique aesthetic appeal. With proper design and construction techniques, straw bale houses can be durable, affordable, and visually striking.

7 Log Cabins

For many, log cabins evoke a sense of nostalgia and rustic charm. These homes are built using logs as the main construction material. And logs provide natural insulation and a cozy atmosphere.

Log cabins can be custom-built or purchased as prefabricated kits. They offer a range of size options, from small weekend retreats to spacious family homes. Moreover, log cabins can be cost-effective depending on factors like location, log type, and the complexity of the design. But while maintenance and upkeep are important to ensure the longevity of the logs, log cabins provide a timeless appeal and a connection to nature.

Log Cabins

8 Cob Construction Homes

Cob construction homes date back centuries and are known for their organic and sustainable nature.

What exactly is cob?

Cob is a mixture of clay, sand, straw, and water, which is sculpted by hand to form walls and structures. They have excellent thermal mass, absorbing and releasing heat slowly. And this helps regulate indoor temperatures.

Furthermore, cob construction is highly customizable and allows for artistic expression. It is a labor-intensive method but can be cost-effective as it utilizes locally sourced and often readily available materials. Cob homes are known for their unique aesthetics and durability. As well as their environmentally friendly characteristics.

Cost Comparisons

Let’s dive into a cost comparison between these eight house types. Ranging from the more affordable to the more environmentally friendly. Each house type has its own considerations when it comes to budget. And understanding these differences can help you make an informed decision.

Prefabricated Houses: The Winner in Affordability

When it comes to cost, prefabricated houses take the crown. Thanks to their efficient factory production and bulk material purchasing, prefab homes offer significant savings compared to traditional stick-built homes.

What kind of savings are we talking about?

On average, prefabricated houses can cost 10% to 20% less per square foot than their conventional counterparts. So, if you’re looking to maximize your budget and get the most bang for your buck, prefab homes are hard to beat.

The average cost to build a prefabricated house ranges from $90 to $120 per square foot. And the average cost to buy one ranges from $100 to $200 per square foot.

Prefabricated Houses: The Winner in Affordability


  • Limited customization options due to the assembly line production process.
  • Potential transportation and delivery challenges for larger modules.
  • Some prefab homes may have a less traditional or unique aesthetic compared to custom-built homes.

Modular Houses: Speedy Assembly, Savings Intact

You guessed it, modular houses, similar to prefabricated homes, offer cost savings due to their off-site construction. So while they may not have the same cost advantage as prefabricated houses, they can still provide a budget-friendly option. 

The construction process is streamlined, reducing labor costs and construction time. Although the savings may not be as substantial as with prefabricated homes, modular houses still offer an efficient and cost-effective solution. The average cost to build a modular house range from $100 to $200 per square foot.


  • Limited design flexibility as the modules are pre-constructed off-site.
  • Challenges in finding suitable land for placement due to module size and transportation requirements.
  • Potential for higher upfront costs compared to traditional stick-built homes.

Shipping Container Houses: Unconventional Charm on a Budget

If you’re looking for an affordable and unique housing option, shipping container houses might be your go-to choice. These repurposed cargo containers can be transformed into cozy living spaces at a fraction of the cost of traditional homes. On average, a shipping container home can cost significantly less per square foot compared to conventional construction. 

Cost savings arise from the utilization of existing containers and the reduced labor required for the construction process. So, the average cost to build a shipping container house ranges from $16,500 to $44,500. And the average cost to buy one that has been completely customized ranges from $32,000 to $61,000.


  • Limited interior space and unconventional layout due to the container’s size and shape.
  • Requires insulation and modification to ensure comfortable living conditions.
  • Permits and building code regulations may vary for using shipping containers as dwellings in certain areas.

Tiny Houses: Small in Size, Big in Savings

Tiny houses may be small in size, but they make up for it in cost savings. These compact dwellings offer an affordable alternative to traditional homes. With significantly lower construction and maintenance costs. Because the reduced square footage means less material and labor, resulting in substantial savings.

What is the average cost of building a tiny house?

Depending on your design choices and customization, a tiny house can cost a fraction of what a standard-sized home would. On average, the cost to build a tiny house is around $97,500, while the average cost to buy one is around $45,400.


  • Limited living space, which may require significant downsizing and adjustment to a minimalist lifestyle.
  • Challenges in finding suitable land for placement due to zoning restrictions and building codes.
  • Limited storage space and potential for ongoing maintenance due to compact design and multifunctional use of space.

Earth-Sheltered Homes: Long-Term Savings Below Ground

Earth-sheltered homes provide long-term cost savings, primarily through energy efficiency. By harnessing the insulation properties of the earth, these homes require less heating and cooling, resulting in reduced energy bills over time.

And as mentioned, the initial construction costs may be higher due to excavation and waterproofing. But the long-term savings in energy expenses can make them cost-effective in the long run.

Ok, but the outlay?

The cost to build an earth-sheltered home can range from as little as $20,000 to as much as $1,500,000. Depending on the complexity and size. But the average price of Earthship homes per square footage is between $150 and $225.


  • Higher upfront construction costs due to excavation, waterproofing, and additional structural considerations.
  • Limited natural light and ventilation in some designs, requiring careful planning and use of alternative strategies.
  • Potential for moisture-related issues if not meticulously designed, constructed, and maintained.

Straw Bale Houses: Affordable Insulation at Its Best

These houses offer an affordable and sustainable alternative to traditional homes. The primary construction material, straw bales, provides excellent insulation properties, reducing heating and cooling costs. This natural insulation can result in significant long-term savings on energy bills.

Additionally, straw bales are often inexpensive and widely available. Making them a budget-friendly choice. The average cost to build a straw bale house is around $2,700 per square meter.

Straw Bale Houses: Affordable Insulation at Its Best


  • Requires careful attention to moisture management and protection from potential pest infestations.
  • Challenges in finding experienced builders familiar with straw bale construction techniques.
  • May require additional fire safety measures in certain regions due to the combustible nature of straw.

Log Cabins: Rustic Charm, Cost Considerations

So, log cabins evoke images of cozy retreats in the wilderness, but how do they fare in terms of cost?

While log cabins can be an affordable option, the total cost will depend on factors such as location, log type, and complexity of the design. Initial construction costs can vary, especially if you opt for more intricate log work or premium materials. However, log cabins offer long-term value and durability. On average, the cost to build a log cabin ranges from $50,000 to $150,000.


  • Higher maintenance requirements, including regular staining or sealing of logs.
  • Susceptibility to rot, insect infestations, and settling, which may require ongoing repairs and maintenance.
  • Limited design flexibility due to the structural constraints of log construction.

Cob Construction Homes: A Budget-Friendly Option

As discussed, cob construction homes are known for their affordability and sustainability. The cost to build a cob construction home is relatively low, averaging around $70,000.

However, it’s worth noting that the cost of buying a cob construction home can vary greatly. Depending on factors such as size, location, and customization. On average, the cost to buy a cob construction home is around $499,900. Therefore, the potential to earn your money back completely on building and eventually selling your cob construction home is remarkably high.


  • Requires a high level of expertise and skill to ensure proper mixture ratios and structural integrity.
  • Longer construction time compared to conventional building methods due to the manual labor involved.
  • Vulnerability to moisture damage if not adequately protected and maintained.

Tips for Keeping Costs Low When Building a House

Building a house is a significant investment, but there are several strategies you can employ to keep costs under control. By being proactive and mindful of your budget throughout the construction process, you can ensure a cost-effective build without compromising on quality.

Here are some tips for keeping costs low when building a house

Set a Realistic Budget

Before embarking on the construction journey, establish a clear and realistic budget. Consider all expenses, including land acquisition, permits, materials, labor, and contingencies. Having a budget in place will help guide your decisions and keep your spending in check.

Set a Realistic Budget

Plan and Design Efficiently

Proper planning and efficient design can help you optimize space and reduce unnecessary construction expenses. Consider the layout and flow of the house to minimize wasted square footage. Avoid complex architectural features or irregular shapes that can drive up costs.

Simplify the Floor Plan

Opt for a simple and straightforward floor plan rather than intricate designs. Because complex designs often require more labor, materials, and time to execute, resulting in higher costs. So, focus on functionality and practicality to maximize your budget.

Choose a Reasonable Size

Consider the size of the house carefully. Building a smaller, well-designed home can save significantly on construction and maintenance costs. Assess your needs and prioritize essential living spaces, avoiding unnecessary square footage that adds to the overall expenses.

Research Builders and Contractors

Take the time to research and compare different builders and contractors. Obtain multiple quotes, check references, and review their past projects. Finding experienced professionals who offer competitive pricing and quality workmanship can help you save money in the long run.

Optimize Material Selection

Carefully select building materials to strike a balance between quality and cost-effectiveness. Compare prices, durability, and energy efficiency of different materials. Also, explore alternative options that offer similar performance but come at a lower price point.

Cheapest Materials to Build a House

When it comes to building a house on a small budget, choosing cost-effective materials can make a significant difference to your outlay. So, while cost should not be the sole determinant, considering affordable options that meet your requirements is a smart strategy.

Here are some of the cheapest materials commonly used in house construction

Concrete Blocks

Blocks made of concrete are a popular choice for their affordability and durability. They provide a solid structure and good insulation properties. Concrete blocks can be used for walls, foundations, and even as part of the structural system, offering cost savings in various aspects of construction.

Concrete Blocks

Vinyl Siding

This is a cost-effective cladding option for the exterior of the house. It is lightweight, easy to install, and requires minimal maintenance. Vinyl siding comes in a variety of colors and styles, allowing for versatility in design while keeping costs low.

Asphalt Shingles

Asphalt shingles are a common roofing material due to their affordability. They are lightweight, easy to install, and come in a wide range of colors. They provide adequate protection against the elements and can last for several decades with proper maintenance.

Laminate Countertops

For kitchen and bathroom countertops, laminate surfaces are an economical choice. They are available in various colors and patterns, mimicking the look of more expensive materials like granite or quartz. Laminate countertops are durable, easy to clean, and offer significant cost savings.

Engineered Wood

An alternative to solid wood, engineered wood products, such as oriented strand board (OSB) and plywood, are cost-effective for structural components and sheathing. They provide strength, stability, and resistance to moisture while being more affordable than traditional lumber.

Remember, while using cheaper materials can help reduce upfront costs, it’s essential to strike a balance between cost and quality. Ensure that the materials you choose meet safety standards, as well as long-term durability requirements, to avoid compromising the integrity of your home.

Costs of Building Getting You Down?

If so, have you considered reducing your overall cost of living by choosing to build in a cheaper neighborhood?

We have comprehensive guides to the most affordable neighborhoods to live in within each U.S. state, including everywhere from the 10 Cheapest Places to Live in Georgia to the Cheapest Places to Live in North Carolina, the Cheapest Places to Live in California, or the Cheapest Places to Live in Texas in 2023!

On a budget but can’t be away from the beach?

Then why not browse the Cheapest Beach Towns in California or the Cheapest Beach Towns in Florida?

You may also be interested in a more in-depth guide to the Cost of Building a Shipping Container Home.

We can also provide tips for downsizing costs for families. Like eating out together at the Best Cheap Restaurants for a Group. And answering popular user questions like Where Can I Buy Name Brand Clothes for Cheap and How to Turn a Closet into a Home Office?

Ok, back to…

Final Thoughts

Building a house on a budget doesn’t mean sacrificing quality or style. With the right knowledge and a pinch of creativity, you can find the cheapest house type to build that suits your needs and wallet.

But whether you opt for a prefabricated home, a modular masterpiece, or a shipping container haven, remember that the journey is just as important as the destination. So, grab your blueprints, and embark on this frugal and fulfilling adventure with like-minded folks, and a little love in your heart, and you’ll be just fine.

Happy home building!

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About Wendy Young

Wendy runs an employment agency with her husband, Ian, in Rochester, New York.

She loves nothing more than hosting a good dinner party and spends weeks intricately planning her next 'event.' She often uses these to introduce clients to potential employers in a relaxed, informal fashion. The food must be delicious, the cocktails and wine must be a perfect match, and the decor needs to impress without being over the top. With all that going on, it's amazing that she gets any time to write about her thoughts on securing the dream job.

They live on the outskirts of New York with their poodle, Princess.

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