Abstract: Homestead reconstruction is one of the most effective means to govern rural planning. Traditional research cannot fully consider the individual differences of rural homesteads, easily leading to uneven spatial development, and even social and economic problems. In this study, a novel framework of rural settlement was reconstructed to integrate the land suitability and reconstruction urgency of rural homesteads. The individual differences were considered in the rural homesteads using a questionnaire survey in Pingba Village, Chongqing City, in southwest China. This framework combined the differentiated characteristics of rural homesteads, in terms of the concentration ratio, utilization status, livelihood, travel convenience, and willingness to relocate. A comprehensive evaluation index was established to divide the rural homesteads into different reconstruction types. Participatory rural assessment (PRA) was selected to conduct the questionnaire survey in all 292 peasant households living in the study area. The results show that: 1) more than half of the rural settlements were distributed in the high-suitability areas before reconstruction. A trend of agglomeration was found under the complex terrain and location conditions in the mountainous areas. 2) The scale of rural homesteads were expanded three times that need to be optimized in the study area after considering individual differences, compared with only land suitability. The newly added rural homesteads shared the land suitability, but there was low utilization or a conflict between the expected production output and lifestyle. 143 rural homesteads were then determined to be optimized using reconstruction, according to their own utilization problems. The obstacles of these homesteads were identified, in terms of the utilization status, travel convenience, and concentration ratio. 3) The land suitability and individual needs were comprehensively considered to divide into five types: the retained, locally rebuilt, integrated, production-, and travel-based relocated homestead. The proportions of the five types of homesteads were 34.79%, 22.89%, 9.04%, 16.94%, and 16.34%, respectively. Furthermore, the types were varied in the different reconstruction needs. Among them, the retained homesteads were the fundamental reconstruction. Production- and travel-based relocated homesteads needed to be optimized and reconstructed after relocation. 4) The five types of homesteads constituted of three optimization modes: relocation, integration, and space replacement. The new spatial pattern of rural settlements was established after rebuilding, relocating, and replacing the five types. Finally, 10.34 hm² of construction land resources were saved after optimization, which was far greater than the amount of the conserved when considering only the land suitability. The integration and replacement modes were added to produce the more complex reconstruction of rural homesteads within the village, compared with the simple demolition and relocation. The rural homesteads were shifted from areas of low or no suitability into high ones, indicating the increasing number. Therefore, the larger scale of rural homesteads in the regions with the higher suitability was conducive to the realization of a new pattern with the moderately centralized residency in the mountainous villages. The reconstruction significantly improved the level of agricultural suitability in the rural homesteads, fully meeting the differentiated needs of farmers for utilization. The finding can provide a new perspective on rural planning and space governance. An exploratory tool can be expected for rural space optimization, considering the influence of individual differences in the rural homesteads on the rural reconstruction plans.