It's generally a good idea to modify the land as little as possible.
The soil is most likely to slip where it's been disturbed:
- where the bank has been cut,
- where soil has been added to make a level surface (see arrows).
If you're building on a steep hillside, instead of taking one big bite out of the hill,
take two or more smaller bites, and make different floor heights.
This will minimize the disturbance to the land and the amount of retaining work that will need to be done to discourage the soil from slipping.
You may decide to build up the floor on the downhill side of the house site.
If you dare, and if the hill is not super wet, the retaining wall can second as a foundation. If you decide to do this, it will require lots of care to keep the water out of the house!
If you do, it's still a good idea to put the foundation on solid subsoil. If the hill is steep and you are adding a lot of in-fill to level the floor, build a heavy duty foundation that's tall enough to support the floor in-fill.
You might need to build a retaining wall on the uphill side of the house.
This will ensure that the hill stays where it is, after you've taken away the supporting soil when you've levelled for the house site.
Make the wall extra heavy duty and add a good drainage system and maybe a moisture barrier as well to keep your wall and floor as dry as possible. Slant the foundation stones into the drainage area. Place the cob wall on top of the solid part of the retaining/foundation wall. Do not put the door opening on the same side of the house as the retaining wall. It would be an invitation to water.