Photovoltaic thermal systems (PVT) have higher electrical efficiencies than photovoltaic systems because they bring down solar cell temperature, thereby increasing the electrical yield of solar cells, while simultaneously providing thermal energy in the form of hot fluid. Use of nanofluids in such systems have become increasingly popular due to the superior thermal properties of nanofluids. A nanofluid-cooled photovoltaic/thermal system is designed to meet the electrical demands of a residential building for the climate of Dhahran, Saudi Arabia. Optimum collector design is selected through computational fluid dynamics after which daily and yearly performance evaluation of the system is analytically performed through Engineering Equation Solver. Additionally, an economic feasibility study is performed to demonstrate the financial benefits of the proposed system. Results show an increase of 8.5% in the electrical output of a water-cooled PVT system over a PV system and an increase of 13% in the thermal output of a nanofluid-cooled PVT system over a water-cooled PVT system. Furthermore, the cost of energy from the proposed system is 82% less than the domestic price of electricity in Saudi Arabia and the system could prevent the release of 16,974.57 tonnes of CO2 into the atmosphere.