You can get the upgrades for your house, and other farm buildings, from the Carpenter’s shop - it’s located a bit north of your farm, on the opposite side of the road.
The price for the “House L2” upgrade:
Best way to make money is to go fishing and get the Treasure Hunter perk when the skill is high enough and your character levels up. Wood can also be found while fishing, and stones can be found in the mine (if you’ve already cleared everything from your farm, that is).