Financing

How paying for a new build works

Buying a home that isn’t built yet changes the money side. Deposits come early, the loan closes months later, and the appraisal happens near the end. Here’s the whole path in plain English.

How the money moves on a new build

1. At contract: an earnest money deposit, set by the builder’s purchase agreement.
2. At selections: design-center and upgrade deposits, often non-refundable, because the builder orders your choices.
3. Soon after signing: a loan application, with an approval deadline written into the agreement.
4. Near completion: the appraisal and final loan approval.
5. At closing, when the house is done: the rest of your down payment and your closing costs.

Locking a rate when the house takes months

A standard rate lock runs 30 to 60 days, and a build can take much longer. Lenders offer extended locks and float-down options, usually for a fee or a slightly higher rate. Ask what the lock costs, when it starts, and what happens if the house runs late.

The builder’s preferred lender

Builders often tie incentives, such as closing-cost credits, to using their preferred lender. Weigh the incentive against the rate and fees on Loan Estimates from other lenders. The choice of lender is yours.

Selling to build

If the home you own is paying for the next one, timing is the puzzle. The usual tools are a home-sale contingency (when the builder accepts one), a bridge loan, or a rent-back that lets you stay in your current home for a while after it sells.

Coming soon What’s your home worth before you build? An instant estimate of your current home’s value.

Upgrades, homesite premiums and the appraisal

The appraiser values the finished home against recent comparable sales. Some upgrades and homesite premiums add less to the appraised value than they cost. If the appraisal comes in below the contract price, the loan is based on the lower number, and the difference is usually yours to cover in cash or to negotiate.

Loan types in plain English

• Conventional: not government-insured. With a smaller down payment, private mortgage insurance usually applies.
• FHA: insured by the Federal Housing Administration, with more flexible down payment and credit guidelines, plus mortgage insurance.
• VA: backed by the Department of Veterans Affairs, for eligible veterans, service members and some surviving spouses.
• USDA: backed by the U.S. Department of Agriculture, for eligible homes in designated rural areas, within income limits.
• Construction-to-permanent: for building on a lot you own. One loan pays for construction, then becomes your mortgage.

Mortgage calculator Coming soon

Run your own numbers: price, down payment, taxes and HOA dues.

Questions about your numbers? Talk to Nick.

Nick can walk you through a builder’s deposit schedule and deadlines, and what to ask a lender about a new build.

General education, not a loan offer or financial advice. Loan programs, terms and deadlines vary; talk with a licensed loan officer about your situation.