To a certain degree, your lender will have a say in what your budget is for the home you are building. But do keep in mind that most lenders are willing to lend more than you can afford. There is a lot to be taken into consideration when determining what your budget is, and the best way to determine what you can afford is to work with your certified public accountant or financial advisor.

Issues that should be discussed and taken into account when determining your loan amount include:

How much cash you have in the bank, Current tax bracket,Capital gains issues, Diversification of assets, How long you think you'll own the home,Your investment strategy for the long term, Property appreciation,Tax deductions for interest and points, Other debt such as credit cars, car payment, school loans, etc.

Once you have taken all of this information into account, you can arrive at a payment figure that you are comfortable making each month, Once you arrive at that payment figure, you can translate it into a loan amount. How do you do that? You can ask your lender to translate based on the current interest rates and the loan program that interests you, or you can go online and use one of the many mortgage calculators available there.

After you've figured out your loan amount, you also need to look at the amount of cash you have on hand. Your goal is obviously not to spend it all, but when building a new home cash is king. If you have some to fall back on your home construction project is sure to go more smoothly. So figure out how much cash you have and are willing to spend, add it to the loan amount you have arrived at, and voila, you now have an estimate of your total home construction budget.