Thanks again for all the good feedback. Moving the water heater out of the bathroom will be a last resort if we just can't figure out a solution to keep it all in there, but I'm determined to try my best first. The paper cutouts help with trying out different arrangements. My preferred option would be New #1, even if it makes the plumbing more complex. The water heater could be enclosed and have some towel storage above it, too. Using an 18" deep vanity should leave plenty of space to walk through (maybe I wasn't very clear in my original post, the width is 6' to 6'6"( that wall isn't in right now), so it is flexible where exactly it will land. I tried to use some actual product dimensions. Let me know if I am missing anything. New Option 3 is just a more elaborate version of the previous idea. This is really the only one I can see that could have a plumbing wall and still keep everything in the bathroom. A sliding door in the shower should work better than a hinged one, it will be a tight squeeze, but should work, at least on paper..... Option 3 is the one mentioned by wdccruise, where the water heater gets ejected. Critique away if you have anything I should know :)

our basement opens to a patio. the patio floor is concrete, and the whole area was dug out so it's level with the basement floor. there's a retaining wall and steps up to the yard. we love it, but I cannot stress how much we hate that you have to go all the way downstairs to get to it. we rarely eat out there because it's so annoying to run up and down the stairs with all the food and stuff. honestly, if you can swing it, I recommend a deck that's level with your main floor, with stairs that go down to the yard. if that blank back wall is not a good spot to add a door, then have the deck wrap around to the right side and put door over there somewhere. if you must DIY a ground level deck w/o a retaining wall: I suppose you could build one that has steps down to the basement door. you'd probably still have to move a lot of dirt to get it level. but honestly, I think this design would be kind of weird and not as useful.

Thank you everyone for your time and great feedback. Let me try to answer some of your questions and clarify a few things… The kitchen and current dining space combined is 11’5” deep by 23’8” wide. Our budget is around 20K and we could and are willing to do some plumbing or move a gas line for our oven/stove. We recently replaced our dishwasher and oven/stove. Our fridge is still fine but could be replaced if necessary (but we don’t want to spend 6-10K on a new counterdepth fridge). So the budget would be primarily for cabinets, countertops, any plumbing or gas line work, etc. We are one of the largest houses in the neighborhood so we aren’t wanting to spend a ton on the kitchen and overprice the house for the area, but for the size of our house our current kitchen is not working (we only have one drawer for silverware and then a small 12” drawer for utensils…it’s just not very user friendly or functional) and needs redone. We tinkered with flipping the current kitchen and dining space but run into some problems. 1) The large 72” wide picture window in the dining space is only 29” up from the floor, so it would be below the cabinet and countertop. The smaller 36”x36” above the current sink would likely need to be altered to fit the space more appropriately. We have stucco so it is a lot more involved and costly to change window sizes or placement leaving us pretty much stuck with the present windows. 2) We have soffits above our current kitchen cabinets that we were hoping to be able to open up but we realized the one along the top wall over the sink is filled with plumbing from our 2nd floor main bathroom as well as HVAC. Too costly to move for our budget so it would have to stay and look out of place all alone over there without cabinets or something else to help camouflage it. The one along the shorter wall can be taken out and we plan to do so in order to have taller cabinets on that wall. There was a wall between the kitchen and current dining room that we took out (only a small 30” deep stud wall remains next to the fridge). We have a standard fridge and would like to try to decrease the amount of space it takes and projects from the wall. We realized there is a double wall on the right wall in-between the kitchen and bathroom. We have decided to move the fridge there because we can recess it back 3-4” making it appear closer to a counterdepth fridge. Our current “living room” acts more like a family room for us, but we also just refinished our basement in the last year and that area serves more as our present family room. Since it is a large room, it would be a bit awkward to put our kitchen table there and have some extra space in the living room that leaves us wondering how it would be used. Our current “family room” with the fireplace is a room we don’t use because our fireplace isn’t functioning. It is merely a room we walk through in order to access our backyard and why we thought taking some space from the room for a mudroom might be a good option. Our current kitchen table is large (40x72) with a bench and 4 tall/high back chairs. It takes up a lot of space in the current “dining room” space and why we were tinkering with a smaller table for the kitchen and moving the larger table to a new dining room in the back. However, it does make sense that we would likely no longer use that second table and would be a wasted space. @emilyam819 Yes, we will be removing the small stud wall by the current fridge to allow more freedom in the design. Please see note above about the wall removal and possible fridge relocation. @latifolia Our current dining area is the left part of the open space in front of the large picture window. We are considering putting a smaller table there so we can still have a place to eat yet have more room for cabinets and then moving our large kitchen table to the back room with the fireplace. It currently is an unused space as the fireplace is nonfunctional and why we are considering making a mudroom back there as well. But we understand dining rooms often go unused so maybe that area is better served as a den or office space like you suggested.Our laundry room is in the basement as we have a laundry chute and don’t have the room to put it on the 1st or 2nd floors. @Cherie “Too bad you can't remove the walls.”—I know, right!?! It’s so frustrating! But we have sulked about it too long and need to accept it and move on, but it is such a bummer in our books!

Idk if this is in discussion - not a pro, but the royal-rich blue on leather is very striking... almost too much with white background rug. If you have a liked item that you've placed around experimenting with your furniture, could use for inspiration/// whether 'pretty' colors [from the rug maybe?]... or transitional textured pillow and rug with bright blue in art.. etc.