Is A Ranch House With A Finished Basement Cheaper To Build Than A Two Story House Of The Same Size?

We were told by a local builder that it is cheaper to build (and heat/cool) a raised ranch (ranch with a daylight basement that includes 3 of our 4 bedrooms and family room) rather than building a two story (4 bedrooms up) with an unfinished basement.

The raised ranch would be 2400 square feet plus the daylight basement vs. the 3000 square foot 2 story (main floor approx 1800 square feet with the remaining upstairs).

Is this true?

As per the neighborhood covenants, the ranch must be at least 2400 square feet on the main level, and a two story must have at least 2600 square feet total.

Thanks for your help.


Hi Marsha,

This is sort of comparing “apples to oranges”. You have 2 vastly different size homes you are trying to compare. That 2 story is 37.5% smaller than the raised ranch!

The local builder may or may not be correct. All things equal, finishing a basement can be cheap space.

By finishing the basement one entire level of a two story house is eliminated yet in this case, you end up with 4,800 sq ft of living space.

BUT, I don’t have enough information on the 2 story to compare. Besides the smaller size, a home’s design and quality of construction affect building costs.

Have the builder provide plans & specifications for both houses, give you a “Preliminary Contract to Build” for each house, and give you his references. Be sure to check those references!

If possible, get two additional builders to do exactly the same so that you can compare.

If you are planning on being your own General Contractor (owner builder) you will have to get bids from subcontractors and building material suppliers for both houses before you can decide.

Before you decide anything, ask yourself and a local Realtor if there is a demand for homes with basement living space in the area in which you plan to build. Some people don’t care for living areas, especially bedrooms, in a basement.

If there is not a ready supply of comparable sales in the immediate area you and/or your lender may have trouble getting a high enough appraisal to make the raised ranch feasible.

Good luck,