Preparing for a home addition doesn't mean you'll want to pull your hair out. If you approach it the right way, it'll be a smooth experience. Two important things to consider are what type of home design you can afford and how much time you want to take to complete the project. If you calculate your budget and plan out the project in phases, you'll ensure your project runs smoothly with minimal problems.
Whether you're planning to have your garage converted into a guest room or if you're thinking about expanding and closing in your back porch, you'll have to decide what you're able and willing to spend. Regardless of the size of your planned addition, using a debt-to-income (DTI) formula is a good starting point.
Usually a number is reached by multiplying your gross income by a variable percentage that represents your housing costs (in this case your project expense). Whatever the other number may be, you don't want your DTI to be more than 30 percent of your income under any circumstances. No, you may not need to get a loan for the type of design you're going for, however, you will spend money. The great thing about the DTI ratio is its flexibility; you can calculate it to account for monthly or yearly expenses, depending on your project's estimated timeline.
No matter how much you plan to spend, you can easily go over budget if you don't properly segment your project. The best thing to do is break the job into phases. In terms of home design, you generally plan for a demolition phase, framing phase, plumbing phase and an electrical phase first. After that, permit inspections and finishing work (drywall, painting, electrical finishing) should be estimated. Specifically with the permit inspection phase, be aware of unforeseen difficulties. Difficulties always pop up and it's really impossible to plan for everything.
With that said, your budget should inform your decisions on phase time much more than the reverse: time as a determiner of your budget. Try to be a little flexible with your design plans but not so flexible that you overextend yourself.
Though you may be a seasoned DIY veteran, there will come a point in the project that you'll have to call in an Atlanta-based contractor; discuss in detail estimated phase completion times and other design ideas with him/her.