How to Buy a New Construction Home - 2025 Guide

Deciding to buy a new home is an exciting prospect. And after months of saving up and preparing, you are ready to start your house search. 

There are plenty of factors to consider, like location and distance from your job. But the most important choice is what home style is perfect for you.

While some people appreciate the charm of older homes, sometimes, your dream home is the one built around your needs. From millennials to baby boomers, Americans increasingly want turnkey properties, sometimes even in managed communities. 

These brand new homes come complete with almost everything you need. Yet the buying process varies from purchasing a resale home. Many people consider buying a newly built home and do not know where to start. 

Our team at Prevu Real Estate put our heads together to create a guide to buying a new construction home. 

What types of new construction properties are there? 

When considering a newly built property, there are a few styles to choose from. Depending on the developer, they can specialize in fully customized, energy efficient homes or developing multiple properties in a large area. 

Tract developers purchase a large parcel of land to subdivide and sell the individual lots. Sometimes called production home builders, they will build a slew of homes and offer a small variety of floor plans for each home. While there is not much customization, these houses usually are the most cost-effective new constructions to purchase. 

The trade-off is that they are quicker to build than other customized homes. To market the properties, the developer brings interested buyers to a model home. This way, you can get a sense of what each upgrade to kitchen counters, flooring styles, and other amenities would look like in your house. 

The next step up from tract dwellings is speculative home builders. They will erect two or three spec homes and put them up for sale. If you get in touch with one of these builders, you can get a lot of flexibility on customization. This type of home comes at a higher price point than a tract home, but buyers have more ability to personalize their home. 

The middle-of-the-road option for buying a new construction home is finding a semi-custom builder. Unlike a tract or speculative developer, you can choose what lot you want your home on when working with a semi-custom builder. From there, the developer provides you with a few floor plans to pick from. 

When money is not an issue, you will want to go with a home you designed from the bottom up. You will want to contract a custom home builder for a job like this. In addition to choosing a lot, you have complete control over the home's design. 

The sky's the limit with a house like this, although it takes much longer to complete construction. That is why you have to consider your financing and what timeline is available. 

How much time will it take to complete construction?

Even when there are no issues with the supply of construction materials, a new build takes a considerable amount of time. 

Delays due to bad weather, long lead times for materials, and shortage of skilled labor are just a few examples of how delivery of a new home can be delayed. The worst is if there is an issue acquiring the proper permits. The city or town you build a home in has various codes and regulations, which have to be followed to the letter. Without the needed permits, the local government can halt construction at your location. 

So while you may have a target completion date and hope to move into your new home before the summer for example, make sure to set aside a few weeks or even months as a buffer just in case a hang-up puts your building process on hold. 

How to finance your new construction purchase

Just like buying a resale home, most buyers will likely require financing to purchase a new construction property. 

But the process is a bit different since the bank will not lend you money for the project until the developer completes the home. Depending on your life situation, this could create complications if you try to time your move with the seasons or school year. There are several options available to people buying a home that is under construction, and each has pros and cons. 

For instance, a bridge loan could work for you if you already own a home. These loans let you use your current home's equity prior to selling it. Mortgage lenders will advance you cash, giving you six to nine months to sell the property. And that is where using a bridge loan gets tricky; if you don't sell your home within that time frame, you still have the loan and debt on your shoulders. 

For custom-built homes, you will likely want to consider a construction loan. Your lender provides you with short-term funds to pay for construction, although you have to put down 20-25% in a down payment. Plus, you will end up having a higher interest rate too.

The next option available is builder's financing. Developers typically have relationships with lenders as they're constantly taking out lines of credit to fund new projects. Using your builder's lender could be a faster means of financing, but you should proceed with caution. 

Just because the builder likes this lender does not mean they will provide you with the best terms. Even if a builder offers you access to their lender, be sure to interview and meet with other financiers to secure an interest rate that fits your budget. Trying to build a home while selling a property is a trying affair, and that is why you will want an expert buyer's agent to bolster your search.

Find an agent skilled in new construction 

When buying a newly built home, there is a misconception that you do not need an agent. 

It is possible to do, although you miss an opportunity to learn a lot about the construction and home buying process. And just like buying a resale home, your agent can help you negotiate for the best price and upgrades. 

Considering how complicated it is to buy a home under construction, your agent can educate you on each step, from picking a lot to getting the keys to your new home after closing. Your builder will likely have an agent ready and may even offer to pay their commission. 

But it would help if you still vetted your own shortlist of buyer's agents. The real estate agent you work with should have experience and understanding of new construction homes since you are buying a dwelling that doesn't exist yet. You may want to consider having your agent help sell your current home as you await construction to finish on your new one. 

Your best bet is to get an agent before looking for properties, as the developer requires your agent to be present at the first visit. If you get an agent after your first visit, the developer might not let you register them depending on how far into the transaction you are. And as you get closer to the move-in date, you will want your agent there for critical home inspections. 

Plus, getting an agent can help make your purchase more affordable if they offer commission rebates. 

Bolster your budget with a commission rebate 

Buying a new construction home is an expensive endeavor. New homes generally cost more than a comparably sized resale, and the price increases depending on the materials used and the upgrades of the house. 

The higher price might set your budget back, but you can save thousands after closing if you work with the right agent. As you meet with agents, ask them about their experience working with new construction homes and if they offer commission rebates. 

Sometimes called commission refunds, this tool allows your buyer's agent to provide a part of their broker fee back to you at closing. The practice is legal in 40 states and reshapes buyers' work with their brokers. 

Firms like Prevu Real Estate offer one of the largest commission rebates in the nation, providing new homeowners with a portion of their buyer’s agent commission. These funds are handy for owners of new construction, as they can help furnish the property or act as a nest egg to rebuild depleted savings. 

What upgrades should you consider? 

Depending on the type of newly constructed house you buy, a slew of upgrade options are commonly available. 

Make sure to focus your upgrades on high-impact areas of the home like the living room, kitchen, and primary bedroom. Investing in granite countertops, top-of-the-line cabinets, and good flooring will raise the value of your home when it is time to sell. 

But there are some upgrades you can put off, like the bathroom or finishing a basement. And you want to avoid what is colloquially called the builder's special. Since tract builders develop homes in bulk, they purchase cost-effective supplies to offset expenses. 

For instance, you and your agent will want to negotiate upfront that the developer holds off on installing lights. They will likely have a limited range of options, and you can easily upgrade the lights to your liking once you move in. Kitchen appliances are another feature you can hold off on and customize to your liking once construction comes to a close. 

The one thing to avoid is having a patio installed as soon as the home is ready for you to move in. There is a chance that a concrete patio could crack if you do not give the house time to settle.

Interested in buying a new construction home? Browse listings in your favorite neighborhood and see how much you can save with Prevu’s Smart Buyer Rebate.