I did something like this on my parents house, their foundation walls have about 2 feet exposed above ground, so I dug down just over two feet all along the house so I could put 4x8 foot sheets on the foundation walls, and a bit over a foot wide strip at the bottom (was working on this alone or I would have gone farther out), I could have gone straight down on their house, all the way to the footing but then I would have had to rent an earth compactor and compacted the soil as I back filled it, it took me just over two days to dig by with a regular shovel, in clay soil and I filled a wheel barrow with bricks that were used as fill in the soil.
On my own house I plan to get a keg of beer and ask people to show up with shovels (keg gets tapped after the work is done), plan again is to go down about two feet, this time going out farther (because I'll have help this time) and lay a full 4x8 foot sheet out flat to make the above noted Tutu but I'll most likely use two layers of 1.5" foam and stager the seams so I get a total of 3" and the only seam I have to worry about is the transition from flat foam to upright foam.
on the one side of our house we also have a drainage problem, my plan is to dig a trench at the edge of that foam, 4 feet from the house, that slopes towards the lower part of the yard, away from the house, use some gravel drain tile (black pipe with holes and a cloth silt shield) in the bottom, then 2" crushed rock on top of that, that area is the edge of the driveway so the crushed rock will blend in, if it was yard then I would go to finer rock, maybe some land scaping fabric and top soil.
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