Buying a House in a New Development

How the incentive is usually framed

It generally arrives as a closing cost credit, often several thousand dollars, available only if you finance through the builder's lending arm. Sometimes it's bundled with upgrades, a design centre allowance, or a rate buydown.

The sales office presents it as free money, and it isn't nothing. But the credit is a known, advertised number and the cost of the loan is spread across fees, pricing and terms that nobody puts on the same page.

The question is never "is the credit real." It's "does the credit exceed what the loan costs more." Sometimes yes. Sometimes not. You cannot know without the second quote.

What to compare, and on what document

Ask both lenders for a Loan Estimate. It's a standardized form, which is exactly the point: the same boxes in the same places, so the comparison is honest.

Line up the two offers on these

What to compare	Why it matters
Total cash to close	The single number the incentive is supposed to improve
Origination and lender fees	A credit given back in fees charged is not a credit
Monthly payment including taxes and insurance	You'll live with this for years. The credit is once
Mortgage insurance structure	Differs by program and changes the payment materially
Rate lock length and extension cost	On new construction this is the one that bites
Who underwrites and who you call	Delays cost real money on a build contract

If the builder's offer wins on that comparison, take it. That's a good outcome and you'll know it's good.

New construction against a resale, on the parts that affect your loan

What changes when the house doesn't exist yet

	Resale home	New construction
Time to closing	Weeks	Months, and the date can move
Rate lock	Standard lock covers it	Extended lock, usually at a cost
Deposit	Escrowed, protected by contingencies	Often non-refundable
Appraisal comparables	Nearby resales	Often other homes by the same builder
Condition repairs	Negotiated with the seller	Builder warranty and punch list
Who suggests the lender	Sometimes the agent	Almost always the builder, with money attached

None of that makes new construction a worse purchase. It makes it a different one, and the differences all sit on the financing side rather than the house.

The rate lock problem nobody mentions at the sales office

An existing home closes in weeks. A new build can be six, nine, twelve months out, and the completion date moves.

Most standard rate locks don't stretch that far. Extended locks exist, they usually cost something, and the terms vary a great deal between lenders. Some allow a one-time float down if the market improves, some don't.

This is worth settling in writing at contract signing rather than discovering at month seven. A buyer who signed with no lock strategy is exposed to whatever the market does between now and a completion date the builder controls.

Your deposit is usually at risk in a way you're not used to

On a resale, earnest money sits in escrow and comes back if a contingency fails. On new construction, builder contracts frequently make deposits non-refundable, and upgrade money is often gone the moment it's ordered.

That changes the arithmetic of the whole transaction. If your financing falls apart at month eight, the loss may not be limited to the appraisal fee. Read the deposit and default clauses before signing, and understand what happens if the home isn't finished on time.

Upgrades and lot premiums don't always appraise

The design centre is where budgets go to die, and not every dollar spent there comes back as value.

An appraiser values the completed home against comparable sales, which in a new community are frequently other homes by the same builder. A $60,000 upgrade package on a lot that sold for a premium can appraise below what you agreed to pay, and the gap becomes cash you have to bring.

Base price plus lot premium plus upgrades is one number to you and three different questions to an appraiser. Knowing that before you spend an afternoon choosing finishes is useful.

Does FHA work on new construction?

Yes. FHA finances new construction, and the usual terms apply: a 580 middle score with 3.5 percent down, debt-to-income considered as high as 57 percent, and a down payment that may be 100 percent verified gift funds. A builder may contribute up to 6 percent of the price toward closing costs on an FHA purchase, which is often where the incentive can be pointed.

VA works on new construction too, with zero down and no monthly mortgage insurance. Florida's Hometown Heroes assistance can pair with an FHA first for eligible Florida workers.

What differs on a new build is documentation and timing rather than eligibility. Certificate of occupancy, final inspection and the appraisal all have to land in the right order.

What to do before you sign the builder contract

1. Get a second Loan Estimate from an outside lender before you accept the incentive. The comparison is free and it's the only way the number means anything.
2. Ask, in writing, what happens to the incentive if you finance elsewhere. Sometimes part of it survives.
3. Settle the rate lock strategy against the real completion date, not the optimistic one.
4. Read the deposit clause and the delay clause before you spend anything at the design centre.
5. Ask what happens if the appraisal comes in below base plus premium plus upgrades.

Common questions about buying new construction in Florida

Do I have to use the builder's preferred lender?

No. A builder may offer an incentive for using its affiliated lender, and where an affiliation exists it has to be disclosed to you. It cannot make using that lender a condition of selling you the home. You're free to finance wherever you choose, and free to take the incentive if it genuinely wins on a like-for-like comparison.

Is the builder's closing cost credit worth taking?

Sometimes. Compare it against an outside Loan Estimate on total cash to close, lender fees, monthly payment and lock terms. A credit handed back through higher fees or pricing isn't a credit. When the builder's offer wins that comparison, take it with confidence.

Can I use an FHA loan on new construction?

Yes. The standard FHA terms apply: 580 middle score with 3.5 percent down, debt-to-income considered to 57 percent, and a down payment that may be entirely gift funds. The builder may contribute up to 6 percent toward closing costs. The differences on a new build are timing and documentation, not eligibility.

What happens if my new home isn't finished before my rate lock expires?

That depends on the lock you agreed. Standard locks often don't cover a long build. Extended locks are available, usually at a cost, and some include a one-time float down. Settling this at contract signing rather than at month seven is what keeps the choice yours.

Is my deposit refundable on a new construction contract?

Frequently not. Builder contracts commonly make deposits non-refundable, and upgrade selections are often non-cancellable once ordered. This is materially different from a resale purchase, and it's worth reading closely before you sign.

What if the appraisal comes in below the contract price?

The lender lends against the appraised value. On new construction the gap is often created by lot premiums and upgrades, which don't automatically appraise dollar for dollar. The difference becomes cash you bring, or something you renegotiate. Knowing this before the design centre visit tends to change how people spend there.

Jason J. Sarji, President and Owner, NMLS #374700. AAA Capital Funding, Inc., NMLS #374739. Serving all 67 Florida counties since 1997. Equal Housing Opportunity.