Your guide to buying a new construction home in 13 steps

As today’s housing market evolves, more buyers are purchasing a new home based on several driving factors. According to Homes.com/YouGov 2025 new construction research, most buyers referenced a life-stage change, the desire for a larger home, no longer wanting to rent and future investment potential as key reasons for purchasing a new home.

Buyers also favor new construction homes over existing inventory options. Almost half of the buyers Homes.com and YouGov surveyed want modern designs and customization options. Lower maintenance costs, energy efficiency, improved safety standards and smart home technology were also among the top five reasons they choose new construction.

These findings indicate a greater demand for new construction in today's market — and builders are certainly taking notice. To help buyers achieve homeownership, major builders now employ strategies designed to boost affordability for the average buyer. D.R. Horton, for example, is constructing smaller homes and offering more incentives.

The purchase process, financing, unexpected costs and other factors can be confusing, so let Homes.com be your guide through the process of buying a new home.

Take time to determine your needs, iron out your wants and pick the best home type. Each of the four primary types has key differences in terms of pricing, move-in speed, and customization.

• "Spec" homes: This is short for speculative home, which means the builder constructs a property without a specific homebuyer in mind. Instead, that builder uses market conditions and trends to guide design choices and construction. Expect limited customization options and a faster move-in timeline. Since a spec home is already pre-built, your move-in window after closing will mirror that of an existing-inventory sale.
  
• Production homes: These homes are typically constructed as part of a larger development community. The community’s layout and home designs are tailored to meet the needs of local homebuyers. On average, the permit-to-completion timeline for production homes is 7.6 months, according to a report from the National Association of Home Builders.
  
• Semi-custom: With this option, you will start by picking a pre-selected floor plan. From there, you can make other design changes and feature selections. For example, you can expand the size of your living room or modify the layout of your kitchen. The permit-to-completion timeline for this build is similar to that of a production home; however, it could be extended by a month or so, depending on the customization options you choose.
  
• Custom: These homes are designed for the new owner — from style to layout, features to finishes. Custom homes are also classified as to-be-built properties. This means that the move-in timeline is slower than that of other options — and custom homes follow a separate process that is not covered in this guide. The permit-to-completion timeline for a custom home is 15.1 months, according to the NAHB.

“With to-be-built homes, customers select the lot and personalize features, but the timeline is longer overall," said Christie Ferro, senior vice president of financial services for production builder Taylor Morrison. "While quick move-in homes come with a preselected lot and features, they are ready sooner for buyers, which can be helpful for tighter timelines.”

Pro tip: It's important to understand your budget when picking a new-build type. According to Mike Hege, a real estate agent and broker with Pridemore Properties in North Carolina, quick-move-in homes will typically cost you more than the advertised price. Be sure to factor that into your budget.

More questions to consider:

• With spec and production homes, am I sacrificing my wants and needs for a faster move-in speed?  
  
• How can I eliminate future renovation expenses by customizing my home now?  

More on this topic:

• What to consider when building a house versus buying
  
• How long does it take to build a home?

Be careful. If you add too many upgrades, you may be building a home that is too expensive for your budget. Ask yourself whether what you are adding is a need or a want and whether your budget can accommodate it.

Preapproval is when a lender evaluates your profile by accessing your credit history, verifying your income and other financial information. By comparison, prequalification offers only a general idea of your financial capabilities based on self-reported information.

Preapproval letters show sellers you're serious about buying and can secure a mortgage. That can lend your offer more credibility. If you present only a prequalification letter, the financing process may take longer.

• What is my target home price? Freddie Mac recommends that you multiply your annual gross income by 2.5 to determine what you can afford. For example, a person who makes $80,000 annually can afford a $200,000 home. Or you can utilize an online affordability calculator. The 28/36 rule is a useful metric for figuring out what you can afford. In simple terms, 28% of your gross monthly income goes toward total housing costs, while 36% tackles your debt.
  
• What is my credit score? A higher credit score will bring you better financing options, favorable terms and a lower mortgage rate. Visit one of the three major credit bureaus — Equifax, Experian or TransUnion — to find out your credit score. 
  
• What do current mortgage rates look like? Fluctuating mortgage rates can be a hassle, so be sure to factor them into your budgeting process before calculating your potential monthly mortgage payment.  Some lenders won’t lock in mortgage rates until the certificate of occupancy is delivered, while others may let you lock it for 30 to 60 days. As such, you should remain flexible and factor in multiple rates.
  
• Which loan type suits my needs? For a new home, you can choose between a conventional, FHA, USDA or VA loan.   
  
• How much can I put down? Each type has its own recommended down payment amount. However, it’s generally good to put down 20% on a new property to lower your monthly payments and eliminate the need for private mortgage insurance. However, if you pursue an FHA loan or a similar type, you can put down as little as 3.5%. So, if you qualify for a $200,000 loan and put down 3.5%, that amount would be around $7,000. On that same loan, 20% down would be $40,000. 
• What is the difference between a mortgage insurance premium and private mortgage insurance? An FHA loan comes with a mortgage insurance premium. PMI is only for conventional loans.

Once you have finished brainstorming, select a lender or broker. Shopping for lenders means reviewing the candidates based on the options they offer, rates and more. Choosing a broker gives you guidance that would otherwise be unavailable during the financing process. Think of a broker as a person who connects you with the right lender. Builders may recommend specific lenders or brokers with whom they have preexisting relationships, or they may direct you to work with in-house mortgage lenders.

Pro tip: Working with the builder's in-house or preferred lender can be beneficial. "Qualification and market conditions change during construction, and working with a lender that understands the builder’s construction process keeps everyone working together for a seamless transaction," Ferro said.

However, in-house lenders may not offer the same incentives or terms as outside lenders. As such, it's good to keep your options open and qualify with multiple lenders before buying a new construction home.

When you obtain a preapproval letter, carefully review its conditions. For example, a letter may require you to reverify your assets or schedule a new construction appraisal, which allows lenders to assess the value and quality of a new home before finalizing your loan. Some buyers will show up to closing without a clear understanding of their offer, resulting in unexpected expenses and disappointment.

Ferro also urges buyers to use the preapproval letter to reevaluate monthly payments. You should, "carefully review loan factors, interest rates, taxes and other expenses to get an accurate monthly payment picture,” she said.

Pro tip: Tiffany Sears, broker-owner of The Sears Group in Charlotte, North Carolina, urges buyers to remain open during the financing process. "I just had a client close on new construction. She came to me preapproved through her credit union. It was Taylor Morrison, so she had to go through their qualification process," Sears said. "She compared what she had to the builder's incentive to buy down her rate in addition to some closing costs, and that was a better deal for her."

Other questions to consider:

• What if mortgage rates fluctuate before I obtain the certificate of occupancy?  

• Will my income remain the same after I accept the preapproved offer? 

More on this topic:

• Understanding the mortgage process from preapproval to closing 

What could go wrong? If your credit score drops during the preapproval process, you may not qualify for the same loan amount or terms. As such, you'll need to reapply.

The internet is a powerful tool for homebuyers looking to purchase a newly built home. According to a Homes.com/YouGov survey, almost half of respondents used a mobile phone to search for listings. Potential buyers would then call and inquire about the community where the home is located.

• Study the HOA rules. Some communities are developer-controlled, meaning that's who manages the local homeowners association. They only pass control to the homeowners once a sufficient number of properties have been sold. As such, reviewing those HOA documents during your research phase is vital because there’s often no going back once you sign on the dotted line. 

  Make sure the rules align with your lifestyle. An HOA may enforce compliance on things like your home's exterior paint color, regular lawn maintenance, the style of your perimeter fencing or quiet hours throughout the neighborhood.

• Check out the local amenities. According to Melissa Terzis, vice president and associate broker of Michael & Melissa Group of Sotheby's International Realty, “Great schools, easy access to highways and public transportation, walkability and nearby amenities such as grocery stores and other shops help support the value of a home." Other common amenities may include a pool, playground and tennis courts.
  

• Plan for long-term investment. Figure out how much your home will appreciate in the coming years. If you’re in a less-than-desirable area, your home's value may appreciate slowly or even drop altogether.

  You can also evaluate your new home's investment potential and future rental income by looking at comparable existing properties in the community. "As a general rule of thumb, find a comparable older home and add a 10% to 15% premium onto its value to get a new number. The difference between the old home's value and that new number is how much you'd generate in positive cash flow with your new home," said Jessica Vance, an investor, real estate agent and mortgage broker at San Diego-based Anchor Funding.

  But manage your expectations. “It’s unlikely that you will have equity in your home the day you close. It will take time to build market value beyond what you paid for the home,” Terzis said. “That means you should ensure that the development and the area have many positives so that the time it takes to be 'in the positive' on your home is as short as possible.”

Pro tip: J.D. Power surveys are a good source for researching customer satisfaction with large production builders, Terzis said. Online reviews, referrals and reference checks are good ways to research builders.

What could go wrong? Some communities may keep their HOA rules private, meaning you'll need to reach out directly or speak with a resident to view them. Additionally, long-term investment can be challenging to assess early in a new development's lifecycle. Therefore, it may take time to properly evaluate a community's true investment potential.

Leah Fellows, national online sales counselor trainer and founder of Blue Gypsy Inc., said many builders use online sales counselors to prescreen potential buyers before connecting them with an on-site sales representative.

“They’re not selling homes online,” Fellows said. “They are discovering what people want so that they can set up appointments on-site with an on-site sales agent. [Online sales agents] are more of the first, fast personal responder that helps answer questions, find out more about what a buyer wants, what their needs are, then match them to the right community.”

When speaking with an online sales agent, it’s important to tell your story in terms of why you're buying a new home. Ask yourself: Why are you moving? Where do you want to be and why? How much can you afford to spend, and why did you choose that number? 

From there, an online sales counselor will help you organize your goals into three categories:

“[Online sales counselors] have to understand what dictates that area you want to be in and how far you’re willing to go out to get what you want,” Fellows said. “They must understand the price range you can afford so that you know how movable the budget is — and understand your timeframe and how movable that is."

Between area, price range and timeframe, a salesperson’s job is to determine which factor isn’t flexible and help you figure out the rest. You may have to adjust your expectations based on what’s realistic.

Let’s say you’re looking for a house in the heart of Washington, D.C., that places you closer to work. Your hard price range is $350,000, but the average home price in the city is closer to $600,000. How could you shift your expectations to achieve homeownership?

“This could mean a shift in home size, looking at smaller condos instead, or even adjusting the area where you want to live,” Fellows said. “Price range can often be nonnegotiable, but where you choose to live, and how long it takes to find a home, may change. Find your non-negotiables and be flexible with the rest.”

If you don't effectively translate your needs and desires, the on-site sales representative may struggle to support your decision-making process. Online sales representatives work for the builder, first and foremost. As such, they could expedite the sales process or guide your decision-making toward an option that may not be best for you.

Builders construct homes in preplanned phases over a set time. Most phases are concentrated in one area of the community. Builders do so to avoid infill development, which is when new homes are built between or near existing residences. This ultimately preserves curb appeal and makes the development attractive.

When you’re buying a presale new development home, the first phase of yet-to-be-built homes will be more affordable. However, as the community adds more inventory, prices are likely to increase.

Location within the community is another key factor in terms of pricing. Open lots or speculative homes that are closer to desirable features may require more money upfront.

“Builders often have lot premiums on end units, corner units, units that back up to forest, units that back up to water features, units that are closer to the amenities,” Fellows said. “So, pricing isn't always determined by phase, but also by location within the community.”

If you don't buy during a community's early stages, you could miss out on affordable housing options. Picking the wrong phase and location within a community could mean buying a lot in a less-than-desirable location next to a major road, behind a commercial building, next to the pickleball court, etc.

Pro tip: "Ultimately, you want to pick the best location for you, whether it’s in the first release or the last. Location in real estate is everything, but more important than that is the location for you being the best option," Terzis said.

According to Kevin Oakley, former regional vice president of major homebuilder NVR and managing partner of online sales consultancy Do You Convert, you don’t have to use an agent for prebuilt new construction homes. But with in-progress or yet-to-be-built homes, a real estate agent can guide and support you through the process. And you may not have to worry about covering your agent’s fee — the builder may handle that.

1. Evaluate your agent’s knowledge. An agent who understands the process and knows the area is valuable. During your initial phone call with candidates, ask them general questions about the area, such as how long they have lived there and how many new-build transactions they have handled.   
   
2. Meet them in person. Have a sit-down meeting and listen to what they have to say. Do you like their personality? Do they listen and communicate well? Asking these questions upfront will save you time and trouble in the long run.  
   
3. Check out their online reviews. If agents are experienced, they’ll likely have reviews and testimonials on their personal website, broker platform or an online information portal like Homes.com. These reviews can help you gauge your agent’s reputation early on.   

More on this topic:

• 12 questions buyers can ask prospective agents 

Selecting an agent who doesn't understand the new construction home purchasing process could prolong your sale and increase your costs.

Pro tip: Check with your builder and iron out how they handle real estate compensation. While most builders cover the buyer's agent fees, compensation structures may vary among different builders. "Some major builders offer a flat rate instead of the owed amount, which can indicate lower-quality homes," said Hege. "If an agent is offered a flat rate, it may negatively impact the consumer."

Meeting with key representatives within your chosen community is a vital step.

“Connect with a community sales manager and mortgage professional. When evaluating a builder’s reputation, it’s helpful to visit communities in person (and) speak with team members and current homeowners,” Ferro said. “A face-to-face connection with the builder is also recommended.”

When connecting with the builder, visit construction sites and meet with the superintendent, who will likely handle your home’s construction.

Pro tip: Wear closed-toe shoes to avoid injuries.

"Meet the superintendent first. If they aren’t doing their jobs correctly, it could cost you money,” Oakley said. “Walk and visit the homes that are under construction in the community. Is the site clean? That can determine the final quality of your home. A coat of paint can’t cover everything up.”

During your community visit, you will tour model homes and choose your construction option.

During your tour, be sure to take photos of any features that you notice. Here are key things to look for: include countertops, cabinets, flooring type, lighting, paint, siding and roofing. Ask the builder's representative to specify the features that are included and those that are optional. Optional features often come at a higher cost, and you'll need to revisit your budget to factor them in properly.

After finishing the tour, you will select a lot — if you're buying an un-built floor plan — or a prebuilt quick-move-in home with the features and layout you want. Your ability to change features will change depending on which option you choose.

If you select an inventory home that’s already under construction, the selections may already be locked in, limiting the changes you can make. However, you can ask the builder whether you can make changes at the current stage of construction.

With a spec home, it’ll be difficult to incorporate changes because the builder has typically already chosen the layout and finishes.

If your builder is constructing your new home from the ground up based on your floor plan selection, you will likely have more options. Some builders offer design studio experiences, where you can choose features and customize your options before construction begins.

Exploring features can be exciting, but if you let emotions guide your decision-making, it could put a strain on your budget. Pick what you enjoy but be realistic about what you can afford.

After you choose your home, the next step is to create a purchase agreement alongside your builder and a real estate lawyer, if you have one. During this stage, you will discuss pricing, preapproval status, additional financing options and incentives.

You will need to revisit your list of wants and needs here. As you finalize the agreement, that list may change quite a bit. Your goal is to find the sweet spot between what you need and what you can realistically purchase.

On paper, a purchase agreement includes information on your earnest money deposit, contingencies, disclosures, title insurance, closing, loan details, property information and incentives.

But before you finalize it, understand that there’s always room to negotiate. “If you decide to negotiate the offer, flexibility is important. Remember that the builder is a seller, just like any other buyer-seller transaction in real estate," Oakley said.

Be flexible with your move-in date

If you’re working with a builder publicly traded on the stock exchange, they often have sales deadlines. However, everything is negotiable. Being flexible with your move-in date will make the builder more open to adding additional concessions.

Get preapproved by the builder’s preferred lender

Preapprovals from outside lenders may be heavily scrutinized; however, those from builder-preferred lenders often process faster, and incentives are commonly baked into transactions with preferred lenders.

Larger builders are generally more open to finance-based incentives instead of base price changes.

Even if an outside lender has approved you, get preapproved by the builder’s lender, too. You may be eligible for different rates, and you’d be working with some that are more familiar with the new construction home purchase process. However, outside financing in the form of FHA, VA or conventional loans may be better for you in some circumstances.

Be open to removing features

Preconstructed inventory homes often come with additional features that you can remove at your discretion. Builders may also mark those features down to help you save money.

Review your warranties

Before signing the purchase agreement, determine which warranties your builder offers. According to the Federal Trade Commission, many builders offer one-year, two-year or 10-year warranties. One- and two-year warranties cover workmanship and essential systems, respectively. A 10-year warranty covers major structural defects, like an unstable roof.

Warranties are there for a reason. If you don't understand them or if any are missing from the purchase agreement, you may be responsible for any future repairs or issues that arise.

When you’re picking floor plans and design elements for a property that's being built from the ground up, a design studio appointment presents an opportunity to be intentional about your home’s new features.

However, not all production builders offer a design studio experience. Some may simply choose to meet you in the showroom of a vendor and help you make selections from there. Or, if you're buying a prebuilt or quick-move-in home, you may not have the option at all.

If you do have the option to use a design studio, builders will let you select features a la carte, or you can choose a design package. To prepare, bring your list of must-have and nice-to-have design elements. From there, you may visit virtually or attend in person as you discuss your home’s features with a professional.

More on this topic:

• Design studio 101: What to expect and how to save money when customizing your new build  

Once the home is built, schedule a third-party inspection. In most states, third-party inspections are not mandatory. Existing-home buyers often rely on third-party inspections to identify common issues associated with purchasing a property from a previous owner. As a new-home buyer, a third-party inspection helps you catch outstanding design flaws and system-related issues.

"Our job is to protect homeowners and help them avoid costly or dangerous mistakes. We’ve seen everything from cut roof trusses to electrical hazards that could have been prevented," said Brian Blackwell, CEO of third-party inspection provider Code Pro Resources.

• Pre-drywall. This occurs after the builder installs the doors, windows, foundation, flooring and other critical components that drywall would normally obscure. In addition to the foundation, the inspector will review the floor, roof, wall, plumbing, electrical, HVAC, coverings and more. This stage presents an opportunity to ask questions and request changes.  
  
• Final inspection. An inspector will conduct a comprehensive walkthrough of your home once it’s complete. The goal is to identify any safety concerns or last-minute issues before entering the final walkthrough. 

1. Reach out to a firm. To find an eligible inspection agency, you can visit your county’s website. Most municipalities provide a list of third-party inspectors.   
   
2. Submit an inspection request. You will input the inspection date, address, permit number and the type of inspection. Following that, you’ll input basic contact information, and the inspection service will reach out.  
   
3. Follow up after the inspection. After the inspection firm finishes its review, follow up with them and take notes on any findings that you will share with the builder. 

After the inspection, your builder will perform a punch list walkthrough of your finished home. Issues pertaining to appliances, HVAC, plumbing, lighting or cosmetic elements will be added to the punch list. "With a third-party inspection, we're going to get that report three to four days prior to our final walk with the builder," Sears said. Builders may or may not accept third-party inspection reports. While this may bring the builder's reputation into question, it also means that you could be responsible for taking care of any items on the list.

During the pre-settlement walkthrough, you will examine the home alongside a representative of the builder and your real estate agent. As you walk through the home, the builder or your agent will mark problematic areas with blue tape. Later, the builder will return and address those issues within a few business days.

During your walkthrough, pay attention to specific items and don't hesitate to speak up. Here are a few things you should look out for:

• Site grading. Check the foundation slope and drainage for signs of erosion. Also, ensure that vegetation is placed far enough away from the foundation for moisture and pest management.
  
• Roof and gutters. Ensure the shingles on the roof aren’t damaged or loose and test the gutters to ensure they are draining far enough away from the house.
  
• Exterior features. Check weather strips, trims, fittings and paint coverage. Make sure everything is sealed, protected and free from cracks or similar damage.   
  
• Doors and windows. Make sure they’re sealed properly.   
  
• Finish quality. Inspect all painted surfaces to ensure the finish meets expectations. If you notice any missing spots or improper molding, inform the builder.  
  
• Flooring. If you have carpet, check for tears, seam lines and tightness.
  
• Appliances and systems. Check each appliance and system to make sure they’re in working order.  

Pro tip: Bring a notebook and a cellphone or camera to record any issues you discover for future reference and to ensure that those things are addressed.

After the inspections and the final walkthrough are concluded, reports will be exchanged and you'll move toward closing.

"The final walk with the builder is usually a week before closing, so we will submit that report to the builder," Sears said. "They will take care of anything or add it to the list that they already have. And then when we meet with the builder the week prior to closing, that's when we're doing sort of the next stage, which is looking for any cosmetic imperfections."

During a final walkthrough, you may notice some outstanding repairs that haven't been properly addressed. If so, you will be responsible for notifying the builder. Last-minute repairs could prolong the closing process and delay your move in.

After the final walkthrough and settlement, it’s time to move into your new home. Before you unpack, transfer your utilities — including electricity, water, internet and other services — over to the new home.