Install aluminum flashing around the bottom sill of the house framing where the framing sill meets the foundation sill. The lip of the flashing should be wide enough to cradle the rigid foam boards, the furring strips you will nail to the foam boards and the siding you will install into the foam boards. For example, if you are using 1-inch foam boards and 1/2-inch furring strips, and your siding will be 1-inch thick, use aluminum flashing with a lip of 2-1/2 inches. Use construction adhesive to adhere the aluminum framing to the wood. Secure the flashing with roofing nails to the wooden sill every 12 to 18 inches.
Measure the area for the first foam board. Begin in an inside corner, if possible. Make sure that the first board is plumb, as this will make the rest of the installation easier. To plumb the board, set the board in place and hold a level vertically along its side. Shift the board in place until the bubble in the level is positioned in the center of the guide. Screw the board in place with screws, making sure that you attach the board to the wall studs of the house framing.
Squeeze a thick bead of construction adhesive on the wall studs where you will place the next foam board. Set the board in place tightly against the first board, and press the new board against the studs.
Screw furring strips onto the installed foam boards every 16 inches on center as you go along installing new boards. Furring strips secure the foam boards to the house framing and also provide a solid support for securing the house siding later. Be sure to attach furring strips to the foam boards as you go along while the studs are still visible. If you cover the exterior with foam board without installing furring strips as you go, the boards will eventually cover the studs entirely, and you will be unable to locate the studs later. If your home has plywood sheathing covering the studs, you can install the furring strips through the foam boards into the plywood.
Continue installing the foam boards and furring strips on the exterior of the house.
Seal the seams between the foam boards with specially designed foam board tape. This tape is usually 3 inches wide and is extremely sticky. Use a utility knife to make crisp cuts as you go along.
Fill in any holes, cracks and crevices with exterior-grade weatherproof caulk. Carefully caulk around doors and window openings.