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1) Go into topdown view by pressing the green icon
that you can see on the bottom-left of the screenshot above. Then use
the connecting stairs and place one on the ground.
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2) Do it again, until you have 3 sets of stairs, like shown in the picture
above.
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3) Using the stair tool, hold down the CTRL key, and
click on each staircase to delete it.
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4) Select the flatten terrain tool, and position it as shown, at the
bottom of your slope.
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5) Click and drag it, to create a nice big square hole in the ground.
6) Using the wall tool, hold down SHIFT
and create a room that takes up half the hole, like shown in the pic
above.
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7) Using the foundation tool, click and drag a foundation
that is next to one of the walls.
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8) Repeat until you have surrounded 3 walls, like in the pic shown above.
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9) Go into first floor view mode, and place a staircase
somewhere.
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10) Add a second level to the house
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11) Add a deck somewhere on the second floor.
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12) Use the connecting stairs to give the sims a way to get onto the
deck, and add doors so that they can get into the house.
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Finish off the house however you would like, and you are done!
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