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Buying a New Construction Home FAQs: Down Payments, Appraisals, Taxes, and More

New Home Construction FAQ

August 1, 2022

Purchasing a new construction home can sound intimidating, and in fact, a lot of people think it’s out of reach for them and their family. You might be surprised to know that purchasing a new construction home through StyleCraft Homes isn’t more difficult than purchasing a resale home. In fact, in many ways, it can be easier because the seller is a builder, rather than a private party, and the home is brand-new, so unexpected issues coming up during the home inspection is less common.

Now that you know that purchasing a new construction home is within reach, you might immediately have some follow up questions. When is the down payment due on a new construction home? When do you close on a new construction home? Who pays closing costs on a new construction home? What is the property tax on new construction homes?

We get it. Our New Home Sales Consultants can answer all these questions when you visit a community, and we work to be as transparent as possible about the process from day one. In the meantime, we’ve put together the answers to some of the frequently asked questions we get about purchasing new construction homes below!

When is the deposit due on a new construction home?

The answer to when is the down payment due on a new construction home is that it’s due when you officially close on your home. This is the same for both resale homes and new construction homes. The difference between the two purchases is more so in the way the deposit is handled. In the case of purchasing a resale home, homebuyers put down an Earnest Money Deposit (EMD) when their offer is accepted to assure the seller that they’re serious about going through with the sale. When purchasing a new construction home, homebuyers are required to put down a builder deposit for the same reason, but it’s often a higher percentage than the amount you would put down as an EMD. To hold a home for you, the builder will require a percentage of the home price up front before you’ll be under contract. This percentage varies but is typically between 5-10% of the sale price of the home. Fortunately, this builder deposit can be applied to your down payment once you’re ready to close on the home.

Your personal finances will dictate the down payment amount that is required to secure your loan, but it ranges between 3 – 20% of the purchase price. By working with an experienced lender and our New Home Sales Consultant, you should know going into the initial sales contract the amount you’ll owe up front as a builder deposit, and any additional amount you’ll need to contribute at closing to fully fund your down payment when the down payment is due on a new construction home.

When do you close on a new construction home?

You’ll have an idea of the answer to when do you close on a new construction home when you first sign a purchase agreement with StyleCraft Homes because we’ll provide an estimated completion date. You’ll close, or complete the purchase of your new construction home, once construction is finished and it is ready for you to move in. When construction is complete, you’ll attend a final walk-through with our team and then you’re all set to close on your new home!

If you’ve purchased any home before, the closing process is very similar. In advance of your closing date, you’ll receive the final mortgage loan documents to review. You should become familiar with the terms of your loan, any conditions, what closing costs will be due on closing day, and what you can expect to pay each month as your monthly mortgage payment. If you work with one of our Preferred Lenders, none of the information you receive in the final days leading up to closing should be a surprise. You’ll also be well informed of when do you close on a new construction home, especially as we get closer to the home being finished, because we’ll have you save the date for signing all of the loan documents and getting the keys.

How are property taxes assessed in a new construction home?


Property taxes vary from one county or city to the next and are a tax rate that is applied to the assessed value of your home. It’s important to keep in mind, property taxes can and do change from year to year. If the assessed value of your home increases, it can increase the amount you owe annually. In addition, if it’s decided by the local government that property taxes need to be increased, it will impact every homeowner in the city or county.

Property tax on new construction is calculated in the same way as for resale homes. The answer to how are property taxes assessed on a new construction home, depends on the final assessed value which won’t be determined until the home is built and assessed. However, your New Home Sales Consultant will be able to give you an idea of what to anticipate for the property tax on your new construction based on the assessed value of other comparable homes in the community. The estimated assessed value, multiplied by your locality’s property tax rate, is what you’ll pay in property taxes annually.

Fortunately, property tax on new construction, and all homes, aren’t usually paid as a lump sum by the homeowner. Instead, the amount is often added to your monthly mortgage payment by your mortgage lender, so that you pay it incrementally during the year. The mortgage company will then disperse money from your escrow account periodically to pay your property taxes on your behalf.

Who pays closing costs on a new construction home?

As a rule, the answer to who pays closing costs on a new construction home is the same as for resale homes: the homebuyer. Most of the closing costs are tied to the mortgage loan process, and include loan processing fees, title company fees, recording of the deed, insurance costs, homeowners’ association fees, and taxes. Many of these costs are required by the lender you work with to finance the loan. When you initiate the loan process, your lender should be able to give you an idea of what to expect in closing costs so that you can set aside some additional funds in advance of closing.

In some cases, for new construction homes, there are incentives available for working with a builder’s in-house lender. At StyleCraft, we have Preferred Lenders that we recommend, and in some communities can offer extremely competitive financing options because we’ve negotiated some of these fees with a lender assigned to the community.  

How should I prepare for the closing process for my new construction home?

We always recommend working with a lender early in the home buying or building process. The sooner you start to get your financial ducks in a row for the closing process, the less stressful the process will be. Once you have funds reserved for closing, you know not to take out new lines of credit, or do anything else that might jeopardize the process, you have to go with the flow a bit. In the new construction industry, and in any industry, delays and curve balls happen. If you go into the process, ready to handle at least a couple of unexpected challenges, you’ll be better prepared when it inevitably happens. People get stuck in traffic or get sick, documents are hard to track down, typos happen — remaining calm and keeping a positive attitude will go a long way! Your home builder, your New Home Sales Consultant, and your loan officer will all be by your side to help make sure that your sale goes through as planned and you can lean on their expertise throughout the process.

We know these are just a few of the frequently asked questions that buyers have about the new construction process. With feedback from homebuyers, we’ve made our process at StyleCraft Homes as streamlined and stress-free as possible so that you can enjoy all the perks of new construction, without the headache. Get in touch with our team today, we’re happy to answer any questions you have!