1.On a new lot, put down staircases to lower the terrain. Go to the bottom of the first
  one, miss out one tile and put down another staircase. Repeat this once more - you 
  should have 3 staircases.
2.Delete the staircases.
3.Use the level terrain tool to level the terrain from the lowest tile. Make it as big 
  or as small as you want.
4.Using the straight line wall tool, build walls around this hole, so now there's walls 
  pressed up against hills
5.Build the room above, so it covers the whole basement.
6.Cover around the house with the foundation tool - all the slopes should be covered up
7.Put one tile in the top floor, and create a staircase leading down to the basement.
8.Make two or more foundation blocks at the front of the house, and place a staircase 
  leading up them.