You can go either way. The air supply should be with a device designed for the task and interlocked with the furnace so if there is no air supply, the furnace will not start. I would do both if it is possible. Give the furnace its own space sealed off from the living space. Install an interlocked air supply. http://www.hoyme.com/

Even if the design and structural plan were free, (and you're risking a LOT working with family/friends without an actual contract in place spelling out exact responsibilities and payments in place) the actual implementation of those plans will be a great deal more than $65 a square foot. Beams are not cheap, and to get the head height needed for code, you're probably going to have to do steel, which has tripled in price in the last couple of years. Steel is hard to deal with, and getting the beams into the location (attic) that you need them may require a crane to bring them in through whatever window access you have. The first floor has to be able to support the additinal weight of living space vs. storage space, and that may mean taking off the lower space's siding or drywall to reinforce the studs. That also leads to the foundation being only poured for a single story in the beginning and maybe needing reinforcing for second story living space. That will require excavation and additional concrete pours and on site supervision by the engineer who designs it. Don't forget that you will need to heat and cool that space. Your home's original heating and cooling is sized to the space of the original home and you're not going to just be able to add on a duct and call it done. The entire system may need to be replaced, or a second complete system added. You'll have to figure out the ductwork runs and where you can place them. YOu'll have to add additional electrical outlets. If your panel isn't already 200 amps with plenty of open slots with which to add, you may have to upgrade your panel. You'll have to figure out how to insulate an awkward space with minimal room for insulation. Spray inulation would be the best, but it's the most expensive. THe roof ventilation either needs to be reconfigured or design eliminated by a professional familiar with closed system insulation roofs. Doing otherwise will lead to premature shingle failure for your home. If you're ever thinking of adding a bathroom space up there, the rough plumbing should be designed and implemented now. Retrofitting will be a lot more expensive. Don't forget permits and inspection fees. There's a LOT more too it than just slapping up drywall and moving in.

If you don't put some backing on the framing you may have the insulation slumping and falling out the back, even if the facing is stapled in place. You could back the framing with foam insulation board that is glued or stapled to the framing. Since its on the cold side of the framing you don't want it to be a moisture barrier, so I think a product with Tyvek or other moisture-permeable barrier would be best. Bruce

I have an older 1 story brick home with a walkup attic converted to living space about 20 years ago. These converted spaces are common in my area, in both 1 and 2 story houses. Pre Covid, when DH was on the road most weeks, I would often sleep in the main floor guest room. Our biggest issue with the upstairs space is HVAC. The previous owner added a trunk line from the furnace to the attic but did not put in an air return. They added a gas fireplace which will heat up the space very nicely so a flip of the switch handles that side of the issue. AC is a major issue. The ceiling was finished so we do not know how well it is insulated but not enough. We did spray foam in the attic spaces under the gables but that isn't enough to stop major heat gain in the summer. Right now, we have a casement window AC unit which is sufficient to bring the temperature down to 78 or 79 F but it isn't as quiet as central air. We knew that HVAC would be a problem. We considered extending supply and return lines but that would have been costly and taken a good portion of the main floor closet space. A minisplit system was a better option but ultimately, we decided to wait and see how much it was needed before throwing several thousand dollars at the issue. Before the upstairs floor and basement ceiling were finished, we put in an empty run of conduit from the install location to the electrical panel for a possible future unit. Perhaps a third floor attic would be different than a second floor space, but I don't find it an issue to run upstairs for this or that. It isn't really any different than going down to the basement for my sewing space. If you have mobility issues or need to answer the door often, the answer might be different. For me, the physical separation of the space is a positive aspect as I can focus better without the main floor distractions like fridge, snacks and tea kettle.