New Home 101: Buying Your New Home

What’s ahead: A step-by-step guide to navigating your new build purchase

Start smart

Before buying a new home, you should already know whether you're going custom or production. You’ve toured builders, scoped model homes, and prepped your finances. Now comes the real decision-making.

Typical for buying a new home

While every builder varies, the process usually looks like this:

• Pick a community

• Pick a builder (if applicable)

• Pick your floor plan

• Pick your lot

• Sign the contract

• Finalize structural options (within 10 days)

• Finalize design choices (within 30 days)

Choose your community first

Think lifestyle, not just layout. Are you retired or raising a family? Want tennis courts or walking trails? Amenities come with costs – make sure the vibe and budget match.

Know your location types Most new homes are built in:

• Master-planned communities

• Urban condo developments

• Infill lots in older neighborhoods

Large communities often include a mix of housing types and prices, which makes it easier to move up or down without moving out of the community of your choice. From a villa to a future single-family home, it’s within range. Empty nesters can do the reverse keeping you close to friends and family.

Shopping tips

Touring model homes is the fun part, but be strategic:

• Ask local residents about their experience.

• The community sales representative knows the builders.

• Check online reviews.

• Visit older communities built by the same builder.

Sales consultants can walk you through available lots, floor plan options, and move-in timelines. They can also flag any incentives.

What can you buy?

You usually have three choices:

• Buildable plan: You pick the lot and customize finishes. Takes 4–6+ months.

• Quick move-in: Partially built, limited customization. Usually 30–60 days out.

• Model home: Fully upgraded and furnished. May require a lease-back or delayed move-in.

Securing financing your new home Time to turn your preapproval into a solid loan. Your options depend on your credit, down payment, and goals.

Loan types

There are several loan options for your new home:

• Conventional: Best with 5%+ down. PMI drops at 78% loan-to-value.

• FHA: 3.5% down, more flexible on credit. Mortgage insurance required.

• VA: No down payment or mortgage insurance for eligible veterans and service members.

• USDA: For rural buyers with moderate income. No down payment.

• Jumbo: For high-cost homes. Requires stronger credit and larger down payments.

• Reverse for Purchase: For buyers 62+, using a large down payment and reverse mortgage.

Loan terms

• Fixed-rate: Stable payments.

• ARM: Lower initial rate, adjusts later.

• Shorter terms (10–20 years): Higher payments, less interest overall.

PMI & discount points

Less than 20% down? You’ll likely pay PMI – monthly, upfront, or rolled into your rate. Want a lower interest rate? Consider buying discount points upfront. A discount point is equal to 1 percent of the loan amount, or $2,000 on a $200,000 loan.

Cash needed

Have funds ready for:

• Earnest money deposit

• Down payment

• Closing costs and fees

• Moving expenses

• Cash reserves

  (3–6 months recommended)

Down payment tips

• Gifts are allowed for FHA and some conventional loans

• Retirement account loans are an option but come with tax risks

• Look into local down payment assistance programs

Understand the base price

Builders often separate the lot and home price – and models are loaded with upgrades. Ask for:

• A standard features list

• An upgrade list with pricing

• Premiums for specific lots and locations within community

Use these to compare builders and communities.

Negotiation strategy

Builders rarely budge on base price unlike offers and counteroffers for resale homes. Instead, negotiate on:

• Closing costs

• Design upgrades

• Premium lots

• Quick move-in discounts

You may get the best deal early (when the community is brand new) or late (when the builder wants to close out the final homes).

Finalizing your contract

Before you sign:

• Confirm the floor plan and features including interior and exterior specifications.

• Understand the base price. Options can be added to final price.

• Get an estimate of timeline for completion date.

• Review what happens if the builder or buyer defaults by not fulfilling their end of contract.

• Know how disputes and changes will be handled and how to officially communicate with builder.

Ask to review a sample contract and get legal help if needed. Once signed, it’s time for the fun part: designing your new home.

Why it matters

Buying a newly built home isn’t just about the house – it’s about choosing the right builder, neighborhood, loan, and long-term fit. Know your options, ask questions, and plan your path.

Bottom line

The new home process can feel complex, but with the right plan and support, you’ll be ready to build smart, buy with confidence, and settle into a space that truly fits.

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