Building your own house in Ontario is a huge step, especially if you’re designing your dream home. You need to make countless decisions that impact the functionality and appearance of your house. That said, the most critical factor you need to keep in mind is the overall cost to build a house in Ontario.

In this article, we’ll explain different variables affecting home construction prices and go over the average cost of building a house in Ontario.

What is the Average Cost of Building a House in Ontario in 2025?

How much does it cost to build a house in Ontario?

The cost of building a house in Ontario remains influenced by a variety of factors, from material prices and labor shortages to market trends across different cities. As of 2025, the average cost to build a detached house in Ontario ranges between $155 to $285 per square foot, reflecting a slight increase compared to previous years. However, in high-demand urban areas like Toronto or Ottawa, this figure can climb to $400–$500 per square foot or more, particularly for luxury builds or custom-designed homes.

Key Factors Affecting Building Costs in Ontario:

1. Location: Building in major urban centers like Toronto, Ottawa, or Hamilton is significantly more expensive than in smaller cities or rural areas. Urban construction sees higher costs due to demand, permitting fees, and competitive labor markets.

2. Home Size and Design: A basic bungalow costs far less per square foot compared to a multi-story home or a custom luxury build.

3. Material Costs: Global supply chain disruptions and inflation have caused building materials such as lumber, steel, and concrete to fluctuate in price.

4. Labor Costs: Skilled trades and labor shortages continue to drive up wages, adding to overall construction costs.

5. Permits and Fees: On average, permits and regulatory fees can add anywhere from $10,000 to $30,000 or more, depending on the municipality.

6. Additional Expenses: Costs such as land purchase, utility hook-ups, landscaping, and financing (e.g., construction loan interest) are separate from the per-square-foot estimate.

Total Cost Example:

For a 2,000-square-foot home in 2025:

• Low Estimate: 2,000 sq. ft x $155 = $310,000

• High Estimate: 2,000 sq. ft x $285 = $570,000

Add in additional costs like permits, land purchase, and utilities, and the total cost could surpass $600,000–$800,000, depending on location and specifications.

Average Cost Breakdown by Type of Home

Type of Home	Low-End ($/sq ft)	High-End ($/sq ft)
Basic Single-Story	$155	$220
Two-Story Standard Home	$175	$275
Custom-Built or Luxury Home	$250	$500+

Factors that Can Influence the Cost of Constructing a Home

Here are some of the elements affecting the home constructions costs in Ontario:

Current State of the Land

If you’re buying land, the state of the property is the first thing you want to look at.

The state of the land will give you a rough idea of how much work needs to be done. If there’s an existing home, the land should be easier to build on.

Now, if you’re buying vacant land that has never had a building, you need to include plot preparation in your building costs. This usually involves construction machinery, which translates to additional costs.

Your real estate agents will guide you through this process and help you understand all the work that needs to be done before new construction can be built.

Plot Location

In addition to the state of the actual house land, the location of the plot also exerts a huge amount of influence on the price of a custom home.

Property in rural areas usually has a lower cost than in suburbs or cities. Metropolitan areas like cities are the most expensive places to build on because they are in high demand. There are also stricter regulations, which can result in higher costs.

Fees, Permits, and Inspections

There are always regulations that need to be met when building a new house. The extent of these regulations depends on the exact location of the property. These requirements can be as general as overall safety ratings or strict enough to limit you to specific building materials.

In order to meet these regulations, you’ll also have to pay for permits, home inspections, and additional fees depending on where you are.

Design, Size, and Format

The design, size, and format of your dream home will also influence its building price. Building a two-story home is more expensive than staying on the ground floor, plus modern designs tend to be more expensive. With that said, certain classic designs represent additional work, so consult with a trustworthy builder to get a ballpark figure.

Builder and Materials

The builder you choose is also a key factor in determining the overall price of your new house. As a general rule of thumb, rural areas and smaller cities will offer the lowest construction rates.

Ontario has the fastest-growing housing market in Canada, so it’s normal for prices in big cities and their surrounding areas to be much higher.

Custom-built homes may also require specialized materials, which also influence their price. Material costs are directly related to the size of the construction, which also impacts additional features like HVAC systems and their overall cost.

How to Get an Estimate for Building a House

It’s difficult to find the average cost to build a house in Ontario, especially for custom designs. Construction cost calculators may offer an approximate total cost, but you need to verify this.

If you want to get an accurate estimate of your construction costs, your best bet is to get a quote for a reliable builder.

The construction of a house is different from a home renovation project for a variety of reasons. While experienced contractors may be able to offer approximates on the spot for renovations, the same can’t be said for house constructions.

Builders need to know everything about your dream home and the land you’ve purchased to give you an accurate estimate of the overall cost. For example, you should tell your builder the total square footage, the type of build (semi or fully detached home), and whether it’s being built on built-ready or vacant land.

How Can You Lower the Cost of Building a House?

Although the average cost to build a house in Ontario is lower than in other parts of Canada, there are specific steps you take to reduce costs and save money on your mortgage.

Evaluate Different Bids

Your dream home is perhaps the most important project of your life. You shouldn’t make decisions solely based on price as this can compromise the quality of the construction.

With that said, there’s no reason why you can’t take bids and evaluate the different builders you can work with. If you narrow down the list of construction firms or designers based on quality and ask all of them for quotes, you may be able to reduce the total cost of your house without making any compromises.

Select Home Designs that Already Exist

Just because you’re not renovating an existing home doesn’t mean you can’t get inspiration from buildings that already exist.

As a matter of fact, choosing an existing house design can save you a significant amount of money on design and final costs. Plus, this will also help you avoid potential hidden costs that come with custom design and special materials.

Reduce the Construction Size

Reducing the square footage of your house means lowering the number of raw materials and work required for construction, which translates to a lower cost.

Save on Aesthetic Elements

Aesthetic elements can ramp up the cost of your house, even if they don’t offer any functional value. For example, choosing window sills made from deluxe materials rather than generic components.

You can opt to simplify your house design and eliminate or temporarily omit some aesthetic features in order to reduce the construction cost.

Now, keep in mind that some aesthetic elements can increase the improvement value of your home. Therefore, it’s worth adding some of these later on if possible.

Make Other Adjustments Based on Your Lifestyle

No one knows your family’s requirements and must-haves more than you. So, take the time to analyze your builder’s quotes and find areas where you’re willing to make adjustments that help reduce the cost of your home.

Note that this applies to building materials, the mortgage broker you work with, and the amount of the down payment you’re making.

How Do You Pay for Your Home’s Construction?

Once you have the construction cost per square foot, you need to start thinking about paying for your house.

While some buyers can afford their land and construction outright, others have to work with financial institutions like mortgage brokers. These entities can offer a construction mortgage, self-build mortgage, or similar loan that allows you to build your house in a set period of time. The property and future house serve as collateral on these loans.

Is There Another Option for a Custom-Built Home?

Building a house in Ontario gives you full control over your home. That said, this is not the only way to end up in your dream home.

As mentioned earlier, Ontario’s house market is booming and homeowners can choose from a huge collection of properties across its many cities.

To learn more, check out the properties for sale in Ontario available through Justo.

Conclusion

We hope that our article has helped you understand the potential cost of building a home in Ontario and the alternatives you have available.

To find out more about purchasing your dream home, get in touch with Justo and our agents will be glad to help you find the perfect house.