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New Construction Lending

Planning to purchase a newly built home?

Get started with the nation's #1 lender to buyers of new construction homes

Building a new home is an exciting and challenging experience. When it comes to financing a new build, there are unique challenges and important considerations to keep in mind.

What makes buying a newly built home different from buying an existing home?

  • Options and upgrades. Homes can be customized with options — from floor plans and paint colors to faucets and light fixtures. You might also be able to modify rooms and layouts or include walk-in closets, whirlpool baths, and custom appliances. Use our home wish checklist (PDF) to identify which features are important to you. 
  • Potential builder incentives. Some builders may offer to pay closing costs, points, or provide special interest rate incentives. 
  • A longer wait. Newly built homes typically have lengthier time spans between contract signing and moving day for a variety of reasons. 

What are the benefits of buying a newly built home or condominium?

New homes may offer many advantages:

  • More space. Newly built homes are typically larger than existing homes and offer more closet, garage, and storage space. New homes are also thoughtfully laid out with efficient space planning designed for today's lifestyles. 
  • Improved safety. Today's new homes have hard-wired smoke detectors and alarm systems with battery-powered backup. 
  • Energy efficiency. Improved heating and cooling systems and better insulation techniques offer efficiencies. 
  • Health considerations. New construction materials are free from asbestos, lead, and formaldehyde emissions. New radon control systems are also available.

How can I lock my interest rate range while my new home is under construction?

Our exclusive Builder Best® Extended Rate Lock program can help protect you from changing interest rates. With a required, non-refundable extended lock fee, you can lock down a range of interest rates and focus on what really matters most — building your new home.

What if interest rates rise?

Your interest rate is protected. Lock in your interest rate range anywhere from 5 to 24 months depending on the type of loan you select.

What if interest rates drop?

You have options. You may be qualified for a one-time float down option to a lower rate or a different loan program.

Talk to a home mortgage consultant about this possibility.

Let building your new home be your top priority.

What are the different types of new single-family homes?

Newly built homes

Located in a new community or on a builder's lot, these homes typically come with limited warranties on the house and appliances.

Newly built homes offer features that often are not available in existing homes, including:

  • Energy efficiency from improved heating and cooling systems
  • A variety of home styles and floor plans
  • Options for cabinets, appliances, and lighting

Download our free guide for details on buying and financing newly built homes.

Custom homes

Built from scratch by collaborating with an architect and a builder, these homes enable you to design a home to your specifications.

While custom homes offer the opportunity to create a home optimized to your lifestyle needs and tastes, these projects can require additional consideration:

  • A builder might require that you purchase the lot and secure your own interim construction financing before any work begins.
  • Depending on your builder or the type of financing you obtain, you may be required to make advance deposits.

Factory-built homes

Built and inspected in a factory environment, these homes provide a combination of quality, speedy construction, and lower cost.

  • Quality. Designed to meet or exceed local building codes and virtually indistinguishable from traditional homes, they often allow owner customization.
  • Speed. Factory-built homes have shorter construction periods than site-built homes. The homes are usually up to 90 percent complete when shipped and typically take builders weeks to assemble.
  • Cost. A modular or manufactured home can save on costs. Projects are less likely to go over budget and lower costs can make these homes more competitively priced.

What are the benefits of condo ownership?

  • Condominiums exist in a variety of styles, locations, and prices. 
  • They may provide ownership opportunities for first-time homebuyers. 
  • Usually a homeowner association is responsible to maintain the building exterior, grounds, and common areas. 
  • Some condos provide convenient vacation getaways; others combine the opportunity for homeownership with the convenience of urban living.

What should I consider when purchasing a condo?

  • Monthly fees. Homeowners association dues provide the funds to insure and maintain the common elements.
  • Insurance coverage. A shared insurance policy, known as a master policy, covers the building's common elements. You may be required to purchase insurance for the interior of your unit to cover the replacement of fixtures. 
  • Resale restrictions. Determine any limitations on your ability to sell your unit. 
  • Association rules. Set by the homeowners association, these requirements govern what you are allowed to do with the exterior of your condo unit in order to keep up the project's appearance. For example, the rules may prohibit satellite dishes. The use of common elements may be governed by rules, for example parking spaces may be assigned. 
  • Project approval. Even if you're not applying for government financing, finding out whether a condo is approved by housing agencies such as the FHA and VA can help with resale by ensuring that future buyers can obtain this financing. It also indicates that the community is performing to certain standards set by government housing agencies. If you're thinking of buying a condo and want to find out if the project is approved, ask your home mortgage consultant to submit information about the project for review.

What is the process for financing a newly built home?

Generally, there are six steps for financing a new home from a builder or developer.

  • Initial stage. Now's the time to discuss your financing. You can start by getting prequalified, which provides a rough idea of how much you may be able to borrow based on basic financial data you provide. You can also request a preapproval letter, which tells the builder you're preapproved for a specific loan amount based on a preliminary credit review.
  • Application. When you're ready to sign a purchase contract, complete your mortgage application and explore options with your home mortgage consultant to protect your loan from interest rates changes during construction. Consult our application checklist (PDF) for items you may need when applying.
  • Approvals. Work with a home mortgage consultant to obtain mortgage financing approval so you can enjoy seeing your home being built.
  • Exercise rate-drop options. During construction, extended lock programs may help protect against interest-rate fluctuations. Many rate lock programs protect your interest from increasing and allow you to float down to current rates should market rates decline. Stay in touch with your home mortgage consultant to find the right financing option for you.
  • Completion of construction. A final inspection determines that everything is ready so that you or your builder can get a Certificate of Occupancy (or its equivalent) from your local authorities.
  • Move in. Your construction and financing are now complete. Congratulations and best wishes on your new home.
 

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