buying a new construction home

Unless you’re paying cash, buying a new construction home requires mortgage financing. Your lender will walk you through different loan options and help you choose the best one for your needs.

It’s a good idea to work with a real estate agent who knows the area well and has experience with new construction homes. They can evaluate the neighborhood, zoning and crime rate.


The buying process for a new construction home starts with getting preapproved for a mortgage. This is crucial to determine what you can afford. It will also help you narrow down your search for homes that meet your price range and other criteria.

The next step is finding a real estate agent with experience in new construction. A buyer’s agent can be valuable in both the purchase and building stages, but they are especially important when it comes to negotiating with builders on financial details and timelines. They can also help you choose upgrades that will add value to your home.

Once you’ve selected a builder, your real estate agent will help you review and sign the contract for your new construction home. This will include a description of the property, the timeline for completion, the cost, and payment schedules (if applicable). It may also contain warranties on your new construction home.

Then, the lender will conduct an appraisal of the property. This will ensure that you’re not lending more than the property’s actual value. This is one reason why it’s important to work with a lender like Movement Mortgage who understands how specialized construction loans work from start to finish.

Researching Builders

The builder you choose will make a huge difference in the buying process for a new construction home. Look for builders with a reputation for building quality homes in the neighborhood you’re considering. Ask friends and family for recommendations and search online to learn more about the builders in your area. Read customer testimonials and look for builders who have received industry awards or accreditations.

Once you’ve found a builder, get preapproved for financing and start making choices. Knowing how much you can afford to spend will help prevent you from overspending or being denied financing later on in the process.

Keep in mind that the buying process for a new construction home can take several months. You may need to sell your current home first or make temporary living arrangements until your new house is ready to move in.

Also, keep in mind that the home must be appraised before closing. This will ensure that the home is worth the purchase price. Your lender can discuss with you loan programs that are suitable for new construction homes, including the Fannie Mae HomeReady mortgage and loans backed by the government like FHA or VA. Talk with your lender about rate lock options too, which can protect you from interest rate increases during the build.

Finding a Home

When buying a new construction home, the process is a bit different than purchasing an existing property. First, buyers should get preapproved for a mortgage to determine their buying power. Then, they can begin looking at homes that fit their criteria and budget.

When buyers find a builder they’re comfortable working with, they can make a purchase agreement. During this time, builders will often allow buyers to pick out features like carpet, paint colors and other finishing touches. They also might offer financial incentives, such as lower interest rates, to help buyers afford the home.

Another important step is evaluating the neighborhood, including the crime rate, schools and proximity to amenities. A real estate agent who specializes in new construction can help with this.

Buyers should look at a range of floor plans to see what suits their needs, Klosterman says. They should also talk to a builder about what types of energy-efficient upgrades are available, such as solar panels, smart home technology and windows that can reduce energy costs. In addition, newer homes often have up-to-date safety and building codes that can save on insurance premiums.

Making an Offer

It’s a good idea to use a mortgage lender who has experience financing new construction homes. Your real estate agent may have recommendations, or you can find one online. At Movement Mortgage, we offer specialized loans for new construction that make the process easier for everyone involved.

When you’re ready to put in an offer, your real estate agent will work with the builder to ensure your loan is processed correctly. In most cases, you’ll need to submit your lender preapproval documentation, a financial profile and personal biography, as well as non-financial terms including inspection and closing preferences. In addition, if you’re buying a custom home or one that’s under construction, the builder might require a best and final offer process to determine which buyer gets the home.

The on-site real estate agents that builders employ aren’t necessarily working in your best interest, says Kerron Stokes, a broker/Realtor with RE/MAX Leaders in Denver. That’s why it pays to have a real estate agent who specializes in new construction, she says. The right agent can review contracts and help you avoid agreeing to terms that only benefit the builder. They can also counsel you on upgrades and designs, telling you which ones are worth the investment, versus those that won’t increase your home’s value.


It’s easy to assume that a brand-new home is going to be perfect, but even if you choose the best builder with the best reputation in town, issues can still arise. That’s why it’s so important to have a buyer’s agent who is familiar with new construction and knows how to work around potential hiccups.

A good home inspector will do a thorough inspection of the entire house, including all major systems (electrical, plumbing, HVAC, etc.). They’ll also check for functional ground fault circuit interrupters in all outlets to protect against electrical fires and other hazards. It’s always a good idea to attend your home inspection so that your agent can explain what they found and answer any questions you may have.

After the inspection is complete, it’s time to start negotiating with the seller. A good rule of thumb is to ask for only the most critical repairs. Don’t try to save up a long list of little things to tell the seller to fix — that can quickly turn into a never-ending battle.

Final Walk-Through

When you’re buying a new construction home, the final walk-through is an important step to ensure that everything is as it should be before closing. This will help avoid unpleasant surprises on move-in day, and give you peace of mind that the property is being delivered as expected. It’s a good idea to bring a checklist of items to inspect, a camera or phone to document any problems, as well as the completed home inspection report and final contract.

It’s also a good idea to have an experienced real estate agent on hand who can guide you through the process. The right agent can counsel you on upgrades and even design elements that might increase your home’s value. They can also be a huge asset in the negotiation process.

While it’s not common for buyers to back out of a sale on the basis of issues discovered during a final walk-through, this can happen in extreme cases. If the seller is unwilling to make agreed-on repairs, or if they’ve taken items from the property that weren’t supposed to be included in the sale (like light fixtures or faucets), then it may be time to consider other options.


A new construction home can be a great option for many buyers. They offer advantages such as modern floor plans, reduced maintenance costs and warranties. However, they also take longer to close and can be more expensive than existing homes. It is important to weigh all the pros and cons of buying a new construction home to decide if it is the right option for you.

The first step of any home purchase is to get preapproved by a mortgage lender. This will allow you to see what you can afford and help avoid surprises down the road. While your builder may have a preferred lender, it is always a good idea to shop around. Getting preapproval from multiple lenders can give you more options and flexibility during the negotiation process.

It’s also a good idea to hire a Realtor with experience working with new construction homes. An agent can review contracts and ensure that your best interests are protected. The on-site agent at the builder’s office works for the builder, so it’s important to have your own representative negotiating on your behalf. Your Realtor will be able to negotiate your closing costs, including an earnest money deposit and percent of design upgrades (with tract and spec homes). They can also help you understand the different options for financing your new construction home, such as a rate lock program that protects you from rising rates during the building project.