I'm about to build a house out of concrete block and then berm it on 3 sides and the roof. What can I use to waterproof the outside of the block walls that will withstand being underground? I'm on a tight budget (of course).
Honestly, I would find a good local excavator that specializes in foundation work. They will know the soil makeup in your area, as well as how to waterproof the block and place drains to protect your foundation, and keep water from entering your "below ground" home. Money well spent in the long run - just my 2 cents.
You are building what is called an "earth sheltered" home because it will have grass & goats on the roof. Otherwise it is "earth bermed" with a traditional framed or concrete roof without the dirt. Most are built in the midwest or north to take advantage of the terrain and benefits of the soil sheltering from the weather. Many use virtually no heat in the winter in a -20F climates.
Waterproofing, soil moisture and ventilation are the keys to a low energy use home. Construction is not cheap unless you supply some (a lot) of the "bull work" or untrained labor.
There have been thousands built, that are working well, but just as many the have suffered because of a bad design and construction. Try to find and engineer/contractor that has done these to benefit from experience. At one time in the late '70s and into the '80's, the University of Minnesota (Underground space Center) was the resource for ideas, books and suggestions.