First, contact a structural engineer and ask for his evaluation about converting your attic to living space. You want to make sure your 1920 home can handle the additional load. We are very nearly at the end of completely gutting and remodeling a 1/2 story in our 1913 bungalow. It was finished living space before we started, but because we were contemplating expanding an existing shed dormer (making it much larger) and opening up the ceiling to make it a "cathedral" ceiling, we did consult a structural engineer. This was very necessary. We had to add a structural beam to the center of the roof in the main living space and we had to leave some cross members between some of the rafters. But we managed to get the two big things we wanted - the much larger dormer and opening up the ceiling - and it has made the space so open, airy and sunny! Try to plan what other work on the house you can tackle while you are working on the attic. Does the roof need to be replaced? Maybe you should do that first? Will the work in the attic open up the ceiling joists from the floor below? Is there electrical to downstairs light fixtures, etc. that could be replaced while you are working upstairs? Or do you need to add insulation to that ceiling before you floor the attic? Is your home balloon framed? If so, can you run wiring or plumbing up the walls from the basement? (Oh my, how these projects do tend to grow!) We did a lot of the work ourselves, but you do have to know your limits. For example, we knew we needed a qualified electrician because we needed to replace all of the electrical. We tried to hang drywall ourselves and it was a job that was too big for us and we eventually contracted that out. The drywalling pros really "wowed" us, after the experience of trying it ourselves! We did all of the demo ourselves. We did the floorplan. My DH has a degree in "industrial arts", even though his profession is something far removed from that, so he understands construction, design and is handy. We did use a GC for some of the bigger parts of the project, mainly because he could manage the subs (and back then, subs were hard to get). We did the interior wall insulation ourselves. We have done all of the finish trim/woodwork with the help of our BIL. What you can do yourselves will definitely save you some money. Also, be careful about what permits your city may require. Often homeowners try to avoid those, and we certainly dreaded paying the fees... but the city inspector actually helped us understand that the insulation we were going to use between the roof rafters didn't meet our code requirements and we could have ended up with a mold problem. Also, if you plan to sell the house and the work required a permit but you did not get one, you could end up with some problems. So, it is best to look into the permitting requirements. Keep in mind that DIY is in "your spare time"! It took us several years (interrupted by other home renovation projects that took precedence and took our money - like the roof and the kitchen) before the upstairs project arrived where it is now... but we are finally almost at the end! If you can manage it, it can give you lots more living space.

There's a lot of reading in this thread, and I tried to get through it all. But please pardon me if I missed something and am repeating here or offering a suggestion already shot down. Are you familiar with Sarah Suzanka's books? NOt-so-big house concept? One of the points she makes is that people keep adding on to houses thinking that more space will solve the problem they're having, when it isn't the lack of space that's the issue, but the way the space is used. 10 years or so ago, I took that to heart when I wanted to add a master suite and a family room. After a lot of soul searching, I realized that we weren't using the space we had effectively. We had a living room that was almost always empty. And that when folks were in it, I was almost always far off in the kitchen. You say you're a traditionalist, so this may not work for you, but I urge you to give it some hard thought. Do you live the kind of lifestyle that requires a large formal living room? Someplace where you entertain adults regularly or where if someone were to come by the house for a meeting...insurance discussion, lawyer, etc....you would not want them to see your family room? Either because it's a mess or because you're just a more formal person? If so, stop reading. But if not, consider this: Convert your current living room into the family room and open it up to the kitchen by taking out the awkward powder room. You'll be near the kids and you'll have a large comfortable space for the whole famiy to hang out. If you have a play room downstairs (spend some of the money you'll save by not needing a new foundation to do really good waterproofing job...proper drainage and grading, sump pump, etc.) That can be where the truly noisy, rough stuff goes on. Then close off the current family room and turn it into a quiet, adult haven. Make it a library/living room...someplace you and hubby can go for peace and quiet or an older child (and they will get older) can quietly do homework. Put your masterbedroom suite, as planned over the top and save yourself the foundation costs. You can also use the room, if necessary as an emergency guest room with some creative furniture (a murphy bed? built-in daybed/window seat?) Or you might even think about putting a small private stair case from the adult living room to your bedroom. I'd try to fit a powder room off the family room or kitchen somewhere...if no where else, carve out part of that laundry room. It isn't optimum, since kids coming from the back yard would track all the way across the family room to get there...but it wouldn't be bad. And when you design that upstairs master bedroom DO consider sneaking at least a stackable w/d up there. Right now, a first floor laundry is a god send, cause your kids are little and you need to be close by all the time. But by the time the 2 year olds are in school, you'll be able to do the laundry when they're gone. And by the time they're teens, they can do it themselves. And believe me, the only thing better than a first floor laundry room is a laundry on the same floor as the dirty bedlinens and smelly boy socks. No more hauling baskets up and down the stairs. Of course, the idea of expanding out onto the deck to connect kitchen and family room accomplishes much of the same goals...a separate adult space and an integrated family living space and kitchen. But I don't know if you need to go to that expense, frankly. FWIW....

The only window that I'd recommend there is the soft lite. That said, if the "Balt" in your username refers to Baltimore, you may be in luck. I believe that Windows on Washington serves Baltimore. He's a long time contributor here, top notch organization. One of probably a handful of people across the country that if trust to work on my own home or my family.

Full disclosure -- my contractor was my neighbor for 10 years, at my previous home and took on my renovation, including looking at houses with me, after my husband died from brain cancer at age 60. So, before I purchased my house, he, and an engineer friend of us, looked over everything in my basement, foundation, attic, roof, etc. to make sure I wasn't buying a money pit. They didn't charge me for looking at houses I was considering. He also let me manage the crew, buy my own fixtures, use my cabinetmaker (who had built my kitchens in two new builds) so that he didn't have to charge me for as much of his time nor for markup on the fixtures and cabinets. He also had his guys do the repairs for the house I sold, when the buyers asked for a few things. I am very fortunate to have a neighbor like that --and, that's another reason why I didn't bother him until he showed up!