New-Construction Financing Guide

How New-Construction Financing Differs from Resale

When you buy a resale home, the house already exists. You get pre-approved, make an offer, and close in 30-45 days. New construction is different because the home may not be built yet. The timeline from contract to closing can be 6-12 months, which creates unique financing challenges — especially around rate locks, appraisals, and keeping your financial profile stable through a much longer pipeline.

The good news: most buyers financing new construction from a production builder (Lennar, D.R. Horton, Pulte, etc.) use standard conventional or government-backed loans — the same types you would use for a resale. True construction loans are typically only needed for custom builds on your own land. Let me break down every option.

Types of Loans for New Construction

Down Payment Comparison at a Glance

Financing Timelines by Home Type

Understanding Rate Locks for New Construction

A rate lock guarantees your interest rate for a specific period. For a resale home, a 30-60 day lock is standard. For new construction that will not close for 6-12 months, you need an extended rate lock — and the strategy around when and how you lock matters more than with any other purchase type.

Extended rate locks are not free. Lenders typically charge for longer lock periods — the longer the lock, the higher the cost. A 6-month lock might cost 0.25-0.50% of the loan amount ($950-$1,900 on a $380,000 loan). A 12-month lock can cost 0.75-1.5% ($2,850-$5,700). Some builder preferred lenders include extended rate locks as part of their incentive package, which can be a genuine advantage worth thousands of dollars.

Float-down provisionslet you lock at today's rate but take a lower rate if rates drop before closing. Not all lenders offer this, and the terms vary significantly. Some float-downs only activate if rates drop 0.25% or more from your locked rate. Others give you the market rate at closing minus a small margin. Always get the float-down terms in writing before you lock.

For more on builder preferred lenders and how to compare, read the truth about builder lender credits.

Deposits, Earnest Money, and Design Center Costs

Builder deposits work differently from resale earnest money. Here is the typical deposit structure for Tampa Bay production builders:

• Initial earnest money deposit (EMD):Typically $5,000-$10,000 due at contract signing. This is usually held in escrow by the builder's title company.
• Additional deposits at milestones: Some builders require additional deposits at design center completion (when you finalize your upgrades), start of construction, or framing completion. Total deposits can range from 1% to 10% of the purchase price.
• Design center deposits:If your upgrade selections at the design center exceed the builder's included allowances, you may need to pay for the overages separately — sometimes as a deposit, sometimes folded into the purchase price. Clarify this before your design center appointment.

Critical:Builder deposits are often non-refundable after specific contingency periods expire. The financing contingency typically gives you 30-60 days to secure loan approval. After that, if you cancel, you may forfeit your deposits. Your buyer's agent reviews all of this in the contract — another reason you need independent representation.

Pro tip: I recommend my clients have at least 3-6 months of reserves beyond the down payment and closing costs. New construction comes with unexpected expenses — design center overruns, landscaping that the builder does not include, window treatments, and moving costs. Being cash-tight at closing creates unnecessary stress.

What Happens at Closing

Closing on a new-construction home is similar to resale with a few differences:

1. Final walkthrough first. Before you go to the closing table, you do a final walkthrough with the builder's superintendent. This is when you verify punch list items have been completed and identify any new issues.
2. Title insurance.You will purchase an owner's title insurance policy (and the lender requires a lender's policy). With new construction, title should be clean since the builder is the first owner — but title insurance protects against liens from unpaid subcontractors or suppliers, which is a real risk in new construction.
3. Closing Disclosure review. You receive the Closing Disclosure (CD) at least 3 business days before closing. Compare it to your Loan Estimate to verify the numbers match. Changes beyond legal tolerances require a new 3-day waiting period.
4. Funds and documents. You bring your down payment and closing costs (minus deposits already paid and any builder credits). The builder provides warranty documents, HOA/CDD documents, and keys. You sign the mortgage, deed, and settlement documents.
5. Recording. The deed and mortgage are recorded with the county. You officially own the home once recording is complete — typically the same day as closing in Florida.

How Appraisals Work for New Construction

The appraisal happens near the end of construction, once the home is substantially complete. New-construction appraisals differ from resale in several important ways:

• Comparable sales may be limited. In a new community with few closings, the appraiser may need to use comparable sales from other nearby communities or adjust for differences in builder, location, and amenities. This can create appraisal challenges in the first phases of a new community.
• Upgrades may not appraise at full cost. That $30,000 you spent at the design center does not necessarily add $30,000 in appraised value. The appraiser values the home based on comparable sales, not your receipt from the design center. This is why I advise being strategic about which upgrades are worth it.
• Subject-to completion.If the home is not 100% complete at appraisal, the appraiser may issue a "subject to completion" appraisal that requires a re-inspection after final items are done. This can delay closing.
• Builder price is not automatic value. Just because the builder is selling the home for $425,000 does not mean the appraiser will value it at $425,000. If comparable sales do not support the price, the appraisal may come in lower.

If the appraisal comes in low:The builder may reduce the price (unlikely unless they are motivated to close), you may need to bring additional cash to cover the gap, you can request a reconsideration of value with additional comparable sales, or the deal may fall through if neither side can bridge the gap. An experienced buyer's agent helps navigate this process.

Tampa Bay-Specific Programs and Considerations

• Florida Housing (FL Housing) down payment assistance: First-time buyers may qualify for down payment assistance programs through Florida Housing Finance Corporation. These programs can be combined with FHA, VA, or conventional loans. Income and purchase price limits apply.
• Hillsborough County down payment assistance: The county periodically offers down payment assistance to qualifying buyers. Availability and terms change — check current program status before counting on it.
• CDD assessments affect affordability. Many new-construction communities in Tampa Bay have a Community Development District (CDD) — a special taxing district that finances community infrastructure. CDD assessments add $2,000-$6,000+ per year to your carrying costs and are factored into your debt-to-income ratio by the lender. This can reduce your buying power. Learn more in the new vs. resale comparison.
• Wind mitigation and insurance. New-construction homes in Florida qualify for wind mitigation insurance discounts (impact windows, modern roof attachments, etc.). These savings can be $1,000-$3,000+ per year compared to older homes — a meaningful reduction in your monthly housing cost that lenders appreciate.
• MacDill AFB and VA loan activity.Tampa Bay's proximity to MacDill Air Force Base means VA loans are common here. Most production builders accept VA loans, and I work with several VA-specialized lenders who understand new-construction requirements.