Buying a new construction home in 10 steps

There are many perks to buying a new construction home.

You might get to customize some details or even the whole thing. Everything will be new when you move in, and you typically will enjoy warranties for the first few years, which can cut the cost of home maintenance. New homes can be blank slates for owners to put their mark on.

The process of buying a new home can be complicated, and there are many variables that can impact your timeline and the price.

This guide will walk you through how buying a newly constructed is different and what you need to know when signing a contract.

Newly built homes are not all the same. They range in price, customization and location. Generally, new homes are sorted into four categories: speculation (spec) homes, production homes, semi-custom homes and custom homes.

• Spec homes: These new homes are built without a buyer in mind. Buying this type of new home will be similar to buying a resold home because they aren’t listed until they are complete and don’t offer any customization.
• Production homes: This type of home is built with a buyer, but there is limited opportunity to customize. Production home builders offer a few floor plans and set customization upgrades that buyers can choose from. You cannot adjust the layout outside of the set floor plan options.
• Semi-custom homes: In between full custom and production homes, semi-custom homes allow buyers to add to a floor plan and customize finishes, but you aren’t starting from scratch. Buyers who want an extra garage, bedroom or bathroom may want to opt for a semi-custom.
• Custom homes: Buyers will have the most control over a custom home project. From acquiring land to drafting plans, buyers are involved in every step.

When contemplating the types of new construction homes, you will need to consider your budget, timeline and priorities.

“The primary differences come down to level of personalization, timing and buyer involvement,” said Harrison Polsky, principal of development and sales at Catēna Homes, a luxury home builder in Dallas, Texas.

Once you know the type of new construction you want, you need to figure out what you can afford. Similar to buying a resold home, you need to talk to lenders who will assess your income, credit, savings and other financial factors. You can use the Homes.com mortgage calculator to get a sense of what you can afford.

Buying a spec or production home is fairly straightforward, and you will only need to secure a traditional mortgage.

However, some semi-custom and all custom homes will require what's known as a construction‑to‑permanent loan. This type of loan covers the cost of construction crews, plans, supplies and anything else you will need until the home is complete. These loans may be refinanced into a mortgage after the completion of the project.

"First, lenders will need to assess the builder’s reputation and the full building plans to make sure their cost estimates are accurate," said Darren Robertson, founder and real estate agent at Northern Virginia Home Pro. "Next, they’ll have to account for all planned upgrades, which will add to the base price of the home and thus the loan amount. Then, they’ll need to develop a schedule for the release of funds as the project progresses; for new-constructions, loans are divided between construction and permanent costs, with funds released in stages."

You can either seek a third-party lender or use a lender who works with the builder. The lenders will need to assess the builder’s ability to complete the project as well as your ability to pay the loan.

Start your search for a new construction home online. Homes.com has a filter to show new homes or land for sale.

• Spec homes: Filter your search for new homes. Work with a real estate agent to set up showings and attend open houses.
• Production homes: Search for builders who are working on production homes in your area. Review the floor plans, location and home styles. Contact their sales representatives to see what lots are available.
• Semi-custom homes: Identify builders who offer changes to the floor plans. Contact the team to discuss what lots are available and what changes can be made to the home.
• Custom homes: Interview builder and architect teams who can build a custom home. Once a team is hired, look for land for sale and tour potential build sites.

Across all types, buyers should research neighborhoods, compare builders, evaluate timelines, confirm customization options and schedule tours."

I always advise finding the development that best fits your lifestyle first; only then should you consider which builder best fits your needs," said Robert O'Connor, a real estate agent with Serhant in Tampa, Florida.

Each section comes with its own checklist to help buyers evaluate whether a home type and community fit their needs.

When looking at different builders and their prices, you need to understand what will be included at the base price and what are upgrades. Since spec homes are complete when purchased and custom homes are built with the buyer's input, this only applies to production and semi-custom homes.

The base price will cover simply the home and standard lot. For premium lots — corner, waterfront or cul-de-sac — buyers will pay a bit more. If you want the best lot, buying at the beginning of a development is recommended. Builders usually complete homes in sets or phases, so ask about the construction timelines.

Upgrades in the home, like adding granite counters instead of quartz, will always cost a little extra. It’s recommended to only upgrade parts of the home that are hard to replace like the floors. For semi-custom homes, consider what value you are getting from the added rooms.

"The things that affect the value of the home: the bathrooms. If you have two-and-a-half baths versus two, that affects the value of your home greatly," said Ken Harthausen, president of NewDay USA Home's Builder Division based in Palm Beach, Florida. "If you have a game room, that affects the value of your home. If you have a garage, a two-car versus a one-car, that affects the value of your home."

Touring a spec home is very similar to touring a resold home, but there is a bit of a higher standard of the home’s condition because no one has lived there. The home should be move-in ready and complete down to the knobs on the bathroom vanity. While you assess the layout, functionality and style, also look at the craftsmanship.

When possible, tour a model unit or home built by your builder. However, remember that the model home is designed to showcase the best of what the builder has to offer. Model homes often have the upgraded options that cost extra.

“When touring a model home, I tell my clients to assume that anything that is not a plain wall is an upgrade,” O'Connor said.

They will likely be staged as well. When touring a model home, try to look past the glamour and observe the craftsmanship.

"You can spot poor work by looking for sloppy paint on the trim or crooked outlets," said Andrew Fortune, a real estate broker with Great Colorado Homes in Colorado Springs, Colorado. "Look for gaps in the siding or windows that do not close and latch easily. Check the garage floor for large cracks that might mean the soil was not packed correctly."

Buyers of semi-custom and custom homes should tour a site with their builder and talk to past clients about their experience.

Now you know what you can afford, found a builder and decided what type of home you want. From exploring builders, you likely have been exposed to some architecture types. For custom and semi-custom homes, you should have a vision board for your home. Take a look at that with your architect and builder.

When buying a production home, many experts suggest only upgrading a few items that are a priority, add value or are hard to replace.

For custom homes, the buyer needs to make a lot of design decisions. To start, agree on the basic plans and style of the home. Some of the finer details can be decided on later.

Purchase agreements are legal documents that spell out the contract between a builder and a buyer. Builders will have a standard purchase agreement to work off. It's important to read it carefully and have an expert look at it. You can consult a real estate attorney or ask the real estate agent you are working with to read it over.

Purchase agreements are sort of like order forms for production, semi-custom and custom homes. The elements you want that are not included in the base model need to be spelled out in change orders.

• Property description: Lot number, community subdivision and address if known.
• Scope of construction: Approved architectural plans.
• Purchase price: Total cost.
• Deposit/earnest money: This is a good‑faith deposit made on signing day by the buyer, held in an escrow account.
• Payment schedule: Payment amounts and due dates for each phase.
• Construction timeline: Start date and estimated end date. This may change because of weather delays, supply issues or labor shortages.
• Change orders: Where the buyer outlines any changes to the base model plans.
• Warranties: Coverage for workmanship, systems and appliances.
• Inspections: Includes the pre‑drywall inspection and final inspection to ensure the home is built correctly.
• Builder responsibilities: Obtaining permits, complying with building codes and carrying liability insurance.
• Buyer responsibilities: Securing financing, making payments on time and approving design selections by the deadline.
• Default: What happens if one party does not uphold the agreement. For example, if the buyer defaults, the builder may retain earnest money; if the builder defaults, the buyer may receive a refund and seek available remedies under state law.
• Closing and transfer of ownership: Outlines the process for handing over keys after the final walkthrough.

A unique part of building a home is that inspections happen in multiple phases. Once the home is half built, the frame is up and systems installed, there is an inspection. Simply called the pre-drywall inspection, this step is one of the buyer’s last chances to adjust what is behind the wall. Changes become much harder and more costly once drywall is up.

"A pre-drywall inspection happens after framing, electrical, plumbing and HVAC [heating, ventilation and air conditioning] are roughed in but before walls close," said Dan Kelly, president of Contractor Source in Orlando, Florida. "That window is your only chance to see what happens behind those walls. Once the drywall goes up, that access is forever lost."

A final inspection happens after the home is completed. At this stage, the focus shifts from mechanical systems to finish quality, similar to a resale inspection. Minor imperfections are acceptable, but visible seams, cracked joints, screw pops or uneven corners are not. Make a punch list of things that need to be fixed.

"Final inspection should be more about quality of the finish work than location or routing of any mechanicals," said Joe Marchionni, owner of Amity Home Maintenance Solutions in Branford, Connecticut. "It should be a fully different mindset from the homeowner."

Before you get the keys and close, you will have the final walkthrough. This usually happens a few hours before closing and ensures all agreed‑upon work is complete. Buyers should bring their punch list from earlier inspections and confirm that cosmetic issues — such as paint touch‑ups, trim, nail pops, sticky doors and missing hardware — have been fixed.

Minor imperfections are normal, but major issues involving electrical, plumbing or heating, ventilation and air conditioning should be corrected before closing.

"The purpose of this walkthrough is to ensure that all punch items have been addressed," said Neil Brooks, a president at NewDay Home in Phoenix, Arizona.

Once the walkthrough is complete and fixes are addressed, buyers proceed to closing, review documents, sign paperwork, receive keys and warranty information and take final measurements before moving into their newly finished home.

Moving into a newly built home involves extra steps compared with moving into a resale property because new construction often comes with unfinished items, ongoing neighborhood development and the need to track warranty-covered issues.

Even after the final walkthrough, homeowners should continue updating their punch list as the home settles and new problems surface.

"New homes often have a variety of issues that you wouldn’t expect in a new construction, especially when built en-masse," said Jordan Benjamin, president of Done Rite Services in Tucson, Arizona. "We often see cosmetic issues like chipped paint, gaps in trim or other minor flaws. Depending on where the home is located and how it was built, settling also occurs, which can cause additional problems during the first few years, including things like cracked drywall and offset door frames."

Some buyers are surprised to learn what isn’t included in the finished home: accessories like towel bars, toilet paper holders, garage door opener remotes, shelves, mature landscaping and certain storage upgrades. Additional expenses may include window treatments, security systems, sprinkler systems and other essentials.

New construction comes with builder and appliance warranties, usually lasting at least one year. Homeowners should keep a file of all warranty documents and understand what each covers.

"Before your one-year builder warranty expires, have a pro go up on the roof, check the foundation and run the systems," said John Gluch, a real estate agent at eXp Realty based in the Phoenix, Arizona, area. "Take that professional report to the builder and say, 'Fix this before my warranty is up.'"

More on this topic:

• Buying a home in 10 steps
• How to buy land for a custom home
• How to choose the right builder for a custom home