Buying A New Construction Home: A Quick Guide

Carla Ayers

6 - Minute Read

PUBLISHED: May 10, 2024

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Whether you can’t find an existing home that suits your needs or you want a completely fresh start, buying a new construction home could be the answer you’re searching for. While pursuing this option may be the right move, it’s important to understand the process of purchasing a new construction home and how it differs from most home purchases.

Let’s explore what you should know about buying a new construction home so you’ll have all the tools and information you’ll need to decide if this is the best home buying route for you.

What Is A New Construction Home?

If you’re looking to buy a home that no one has ever lived in, that’s by definition a new construction home. Depending on the situation, you might buy a completed new construction house or work with a contractor to bring your vision for a newly constructed home to life.

Types Of New Construction Houses

Not all new construction homes are created equally. Below is a close-up look at some different types of newly built homes you might consider.

Custom Home

Buyers get to pick out all of the details on a custom home. For example, you can choose the layout, the light fixtures and pretty much everything in between. Homeowners who want control over every detail will appreciate what a custom home has to offer.

Semi-Custom Home

A semi-custom home involves fewer choices than a custom home. While some parts of the home’s design are set in stone, other features are up to you. For example, you might get to select floor and lighting options or opt for upgrades but have no say on the layout.

Spec Home

Spec homes are newly constructed homes you can purchase, but you won’t typically have any say in the design process. However, if the house is already built, this can expedite the process for closing on and moving into a brand new home.

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Pros And Cons Of Buying A New Construction Home

Every type of home purchase has advantages and disadvantages to consider. Before you get started on your house-hunting journey, carefully weigh both the pros and cons of a new construction.

Pros

Buying a new construction home comes with many advantages. For example:

  • You control the design, in many cases. If you want to build the home of your dreams, a new construction home will afford you greater control over the layout and other design features.
  • You score greater energy efficiency. Most newer homes are built with more energy-efficient materials, which can help you save on utility bills.
  • You avoid maintenance costs, for now. With a new home, you can expect fewer major maintenance issues for the foreseeable future. But keep in mind, some repairs will most likely be necessary down the road.

Cons

Now for the disadvantages of purchasing a new construction home:

  • You’ll likely face a longer home buying process. If the home you want to buy isn’t built yet or is in the process of being built, you should expect a longer timeline for closing. It could take a number of months or even longer to move in.
  • You could face unexpected home issues. If the builder takes shortcuts in their process, you could be dealing with unanticipated home maintenance issues. That’s why it’s important to still have a new house inspected by a licensed home inspector.
  • You’ll likely pay more upfront. In general, a new construction home costs more money upfront than an existing home. You may need to pay for household items that new homes don’t have, such as window treatments, fences and landscaping.

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How To Buy A New Construction Home

If you’ve weighed the pros and cons and are still interested in buying a new construction home, use the following steps to get to closing.

1. Become preapproved. If preapproved, you’ll have a better idea of what a mortgage lender is willing to loan you. With that number in mind, you can start your journey to homeownership with realistic expectations.

2. Find a real estate agent. If possible, try to work with a real estate agent who doesn’t represent the builder. It’s important to find a real estate agent you trust and who will keep your best interests top of mind.

3. Select the right location. As you start looking for a place to call home, scope out neighborhoods and communities that suit your needs. If you want to live in a new development, be on the lookout for opportunities. If you want to build on your own land, you’ll need to keep an eye out for the perfect plot. 

4. Consider your timeline. If you know you want to move into the home within a certain time frame, it’s critical to set those expectations upfront. A quick turnaround time is often difficult. If you need to move quickly, you might have to find another place to live while the home is under construction.

5. Explore home construction companies. In general, you’ll need to find a local home builder that offers the type of build you’re looking for. While some buyers might find a builder through a particular development, others might seek out a builder willing to work on their chosen plot.

6. Understand the construction contract. If you’re working with a builder to design the home from scratch, it’s critical to understand the construction contract. Pay special attention to the pricing, payment schedule and estimated timeline.

7. Design the home. Depending on the type of new construction home you want, you might need to commit time to making decisions about the home’s design. If you’re shopping for a spec home, however, you can skip this step.

8. Wait for the builder. If you’re waiting for the home to be built, it can take a significant amount of time. Make sure to factor this into your plans.

9. Finalize a home loan. When it’s almost time to purchase the home, you’ll need to formally apply for approval on a home loan. Be prepared to provide extensive documentation about your financial situation.

10. Inspect the home. Although you’re getting a new construction home, it’s still a good idea to have the home inspected. Make sure everything passes muster before you reach the closing table.

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Buying A New House: FAQs

If you still have questions about buying a new construction home, it’s likely you’ll find the answers below.

Should I buy a new construction home?

If you want to move into a brand new home with the option to customize certain features to your liking, a new construction home might be the right fit. In general, these homes also tend to be more energy efficient and easier to maintain.

How do I buy a new construction house?

If you want to buy a new construction home, getting preapproved by a mortgage lender is the first big step. From there, you can work with a real estate agent to find a new construction home builder. And, as you look for homes to build, be prepared for a longer move-in timeline than you’d have with a home that’s already built.

Should I get a new construction home inspected?

If you’re purchasing a home of any kind, including a new construction house, it’s important to get it inspected. Although the inspection can cost a few hundred dollars, it’s worth it to know about any issues with the home before closing.

Is it better to build a home or buy a new one?

In general, buying a new construction home is more affordable than building one from the ground up. But purchasing a home that isn’t brand new is typically even more affordable. According to the National Association of Home Builders, the average cost of a newly built single-family home was $644,750 in 2022. In contrast, the average sales price of a home in the fourth quarter of 2022 was $552,600.

Who pays the closing costs on a new construction home?

Buyers are responsible for paying the closing costs associated with a new construction home. However, you might be able to negotiate with the builder to tap into a lower closing cost obligation.

How long does it take to buy a new construction house?

The timeline for buying a new construction home varies based on the builder. If you’re waiting for someone to build the house, it could take 6 months or longer. If you’re buying an already-built spec home, you could have a much shorter timeline.

What type of mortgage do I need for a newly built home?

If you’re purchasing a newly built home, a variety of loan programs may be available. These include conventional loans, FHA loans, USDA loans and VA loans. But if you’re working with a builder to construct a house on land you own, you’ll need a construction loan.

The Bottom Line

Buying a new construction home is a journey, which may be well worth taking if you’re building the home of your dreams. Just make sure you fully consider both the advantages and disadvantages of buying this type of house before you sign the paperwork.

If you’re ready to move forward with a new construction home purchase, apply for a home loan today with Rocket Mortgage®.

Headshot of Carey Chesney, commercial real estate expert and writer for Rocket Mortgage.

Carla Ayers

Carla is Section Editor for Rocket Homes and is a Realtor® with a background in commercial and residential property management, leasing and arts management. She has a Bachelors in Arts Marketing and Masters in Integrated Marketing & Communications from Eastern Michigan University.