The selection of dam types and their stability is influenced by various factors such as material availability, financial resources, environmental and geographical constraints, and societal concerns. Nepal has a great variation in geological formation ranging from plain areas in the southern part to high hills/mountains in the northern part. Embankment and earth-fill dams can represent predominant choices in contemporary development projects in the southern region of Nepal. This study focuses on the design and stability assessment of an earth-fill dam using GeoStudio software to retain a required height of water. Numerical simulations were performed for optimizing dam’s cross-section. Besides, the cost of the earth-fill dam was compared to the rock-filled dam so that the scarcity of rock/stones in the low land area could be evaluated. The findings of this research can be useful for policymakers, local governmental bodies, and implementing agencies for the cost optimization of dam construction considering the local resources.