I really like this look (though I would use it as an opportunity to create higher ceilings in the basement). It gives you good light in the basement, creates a nicer "presence" for the house (think older Victorians), with more vertical lift, and creates the opportunity for nice porches raised up from the ground level.

Downsides are the potential for running into height limits, need for an attractive surface on the exposed foundation (expensive if you do stone), and need to be sure your footers are deep enough for your frost line. Also, handicap access is more difficult, and everything you move in or out needs to go up and down extra stairs.

Having 10-12 ft ceilings in the basement with full size windows turns it into useful and attractive space.

Our house is a split foyer, so the lower level is as you pictured - half in ground, half above. We just don't have the third level.

Advantages:
- every room has the potential for full-sized windows, so your lowest level has more potential for living space.

Disadvantages:
- If you use the basement as living space, you don't have basement storage space.
- you can't get in our out of the house without stairs. That's fine for us - we're all healthy - but is a pain when elderly or disabled folks visit.

- if you will have an attached garage, you'll need stairs in and out of that as well, unless you either build up under the garage, or dig it down (which would require a floor drain).

Even though I listed more cons than pros, turning the basement into valuable living space is huge. We love, love, love our split.

Full size windows!!! Depending upon how you grade your lot and whether you need the entire basement to be the same finished grade, you can leave part of the foundation exposed and get full sized windows for the parts you want to finish. However I left part of my foundation almost fully buried so that my front door/porch only needed one step. I love the huge windows and light airy feeling in the one side, and put the mechanicals on the "dark" side. It's awesome.

For energy efficiency, I'm going to have 8 ft ceiling on the ground and upper levels so height limit shouldn't be an issue. Any idea what the frost line would be in MD? I wonder if it is sufficient to have the pipes about 4-5 ft underground to avoid freezing.

remember that is you want 8 ft ceilings in the basement you probably need a 9-10 ft foundation wall to allow space for plumbing and ductwork. Your local building inspector will tell you exactly what's required for depth. In our part of MA footers need to be 4-1/2 ft down, it could well be less in MD.

There will be an attached garage. I was thinking about having excavating of only 3-4 ft deep. The dirt from excavation would go to the garage to raise it up and grade the front 2 ft higher and other sides 1 ft higher.

Scale. If you have neighbors, be aware that this can make your house look disproportionately tall. There is a new condo built like this in our neighborhood, and it looks SOOO tall compared to the 2.5 story houses on either side of it (and its only half a story taller, in effect) that it dominates the entire street. I wouldn't call it desireable as a result, and I can only wonder how frustrated the neighbors are - as its going to block alot of their light.

It makes it look like a split foyer, with a too high off he ground entry. If you want a three storey, just build a regular three storey rather than burying half of it underground.

What is a full size window? My windows are 5 ft tall, are those considered full size?

Think carefully about what your grading will look and how it will change your runoff. If you build up the garage 2 feet, what does that do to the driveway?

Thanks for the feedback, I now updated the plan to add another window to the basement. In my case I don't think full size or 5ft tall windows will fit because about 4ft of the basement is underground.
House width will be 34ft + 24ft attached garage and if the height is 24ft ? I think it will look OK. I want 5-6 steps which is 4-5ft for the stoop and found some pics that look not so bad. My plan is landscape the front which will hide the foundation. One neighbor is about 1000ft away, the other side, front and back are wooded so it shouldn't block their light.
I'm curious about that too, dekeoboe. My house and all neighbor houses also have 5ft tall windows.
"If you build up the garage 2 feet, what does that do to the driveway?" A section of the driveway needs to build up and grade properly as well.