How to Buy a New Construction Home in 9 Steps

Buying a new construction home can sound like a dream for many homebuyers, but it can look different from purchasing an existing property. Whether you’re building from the ground up or buying a move-in-ready new build, there are additional steps, timelines, and decisions to consider.

In this Redfin article, we’ll cover everything you need to know about buying a new construction home. Whether you’re looking at an upcoming development in Sacramento, CA, or looking at land outside of Milwaukee, WI, here’s what to consider before getting started.

Key takeaways 

• New construction homes are built from scratch as part of a planned community or on land you purchase. 
• They’re typically more expensive than existing homes due to higher construction and development costs.
• New-builds can take a few months to a year to build, depending on the size, layout, and location.

1. Determine a budget

The first step of buying a new construction home is to determine a budget. While you’ll need to decide between building a home from the ground up or purchasing a newly built home, knowing how much house you can afford can help guide your decision. 

Building a home is often more expensive due to the price of materials and labor. For example, a 2025 NAHB study, the average sales price for a new single-family home in 2024 was $665,298. In comparison, the US median sale price is $429,129, according to February 2026 Redfin data. It’s a good idea to set a budget early, so you know what’s truly affordable. 

2. Decide between building a home or a move-in-ready home

Knowing your budget can help you decide whether to build a home or buy a move-in-ready property. Here’s what you need to know about each option:

Option 1: Build a home from the ground up

Your first option is to build a home from scratch. There are two ways you can do this – buy land and build a home, or buy a lot in a planned community. Buying land and building a home is typically more complicated. You’ll need to find land that’s suitable to build on, commit to a builder, file permits, establish sewer, water, and electricity lines, and much more. This whole process could take 1 to 2 years.

For many buyers, the easier option is to buy a lot in a planned community that hasn’t started construction yet. In this case, there will already be a builder, permits filed, and utility lines set up, while still giving you the option to choose a layout and finishes. Homes in planned communities typically take several months to complete, but be sure to ask the builder for their projected timeline. 

Option 2: Buy a move-in-ready home

Your second option is to buy a move-in-ready or spec home. These homes are typically in the process of being built or were recently finished. If the home is currently being built, you can likely negotiate finishes like paint color, flooring, and appliance packages. 

You’ll still have some freedom to customize your home, but usually, major structural changes are off the table. Your agent will have a good idea of what to negotiate in a move-in-ready home.

3. Consider what loan is right for you

Once you’ve decided between buying a move-in-ready home or building a home, you’ll need to evaluate the available loan options. 

Here are the most common loan types to consider when buying a new home:

• Construction-only loan: If you decide to buy land to build a home on, a construction loan is an option. These are short-term, high-interest loans that are used to finance the construction process. Typically, these loans only last for a year and cover the cost of land, building materials, permits, and labor. After this ends, you’ll likely need to get a traditional mortgage. 
• Construction-to-permanent loan: These loans cover the construction process, but convert to a traditional mortgage once the home is completed. You’ll need a down payment, but you’ll only pay closing costs once, which can be beneficial.
• Conventional mortgage: A conventional mortgage is one of the most common mortgages. If you’re buying a new home or one that’s located in a planned community, this can be a good option. 

Keep in mind that there are plenty of loan options available, including FHA, VA, and USDA loans. Speaking with a lender can help you decide which loan type fits your goals.

4. Find a real estate agent

Working with a real estate agent is a good plan regardless of the type of home you’re buying. If you’re looking to buy land, finding an agent with experience in land, such as rural, off-grid, or recreational, is key, as they can identify opportunities and potential risks. A real estate agent can also help you buy a home in a planned community, such as making an offer, negotiating on upgrades, and ensuring the closing process goes smoothly. 

5. Choose an area you want to live in

Determining where to build or buy a home affects everything from your daily commute and property taxes to access to amenities and utilities. Typically new construction homes are built farther away from the city center or in suburban areas. If you’re planning to buy land, it’s likely to be in a more remote location.

Many new construction homes are sold as part of a subdivision development, with parcels of land for sale. Depending on the area, you may find these lots are smaller than you expect, with close boundaries to your neighbors.

Buying land requires you to think about everything from electricity, internet reliability, utilities, and access to amenities. Factor in how long it will take you to complete daily errands, commute time, access to major highways and roads, proximity to friends and family, and more. Depending on your goals, the trade-off may be worth it.

6. Compare home builders

Choosing the right home builder is equally important as finding the right real estate agent. The National Association of Home Builders’ (NAHB) directory is a good place to begin your search. Start by reading online reviews, confirming the builder is licensed, and reviewing their floor plans.

With homes in a planned community, there are usually a few floor plans or models to choose from. You’ll want to look at these to see if they align with your needs and wants in a new home. Depending on the builder, they may be open to changing the layout to accommodate your wishes.

There are plenty of important questions to ask potential builders, but some include:

• What are the standard finishes versus the upgraded features?
• What warranty policies do you provide?
• What is the projected timeline for the home to be built?
• How long have you been in business, and are you licensed and insured?
• Do you have any spec homes I can tour?

7. Negotiate changes and sign a contract with a builder

Once you’ve decided on a builder, you’ll get a contract to review outlining the projected completion date, your deposit, building materials, finishes, and more. If your home is part of a planned community, certain interior features such as standard appliances, carpet, base paint colors, and trim may already be included in the price. 

Typically, you’ll have the option to select add-ons such as hardwood floors, upgraded appliances, or crown molding for a higher price. Keep in mind, you can try to negotiate these higher-end features into the existing purchase price.  

Your real estate agent can help you read through the contract, negotiate, and make sure everything you’ve agreed upon is included. They’ll also help you evaluate the builder’s warranties, what occurs if building material prices increase, or how to negotiate changes during the building process. 

8. Have a home inspection and final walkthrough

After the home is built, you’ll still want a professional home inspection. Most new-builds include phase inspections, where a home inspector checks the home at certain stages of the building process. Even if a home has undergone phase inspections, a final inspection can help identify any issues that were missed or developed later. 

If there are issues with wiring, plumbing, or cosmetic mistakes, you can negotiate those repairs with your contractor before officially closing on the home. Home inspections typically cost a few hundred dollars, but this could save you from paying for a major repair in the future.

You’ll also want to have a final walkthrough to make sure everything you agreed upon is finished and cleaned up in the home. Most of the time, you and the builder will create a “punch list,” which is a list of all final repairs that need to be completed before closing day. This includes repairs after the home inspection and minor issues such as floor scratches or paint drips.

9. Close on the house

When you’ve cleared the home inspection and applied for your mortgage, you’ll be in the closing process. Your agent and lender will guide you through the process, such as reviewing the closing disclosure, bringing the right paperwork, and more. On closing day, you’ll receive the keys and be able to move in. 

FAQs about buying a new construction home

How long does it take to build a new construction home?

On average, it takes about 4 to 8 months to build a home in a subdivision. To build a home on land, it can take anywhere from 1 to 2 years. Keep in mind, this varies depending on your location, access to building materials, and the complexity of the project. 

Can I negotiate on a new build?

Yes, but not in the way you may expect. Most builders won’t negotiate on a home’s base price, but you may be able to negotiate on upgrades, a longer warranty, or other concessions. 

What is a new build versus a spec home?

A new-build is a home that you purchased before it was built, giving you the option to pick a layout, paint colors, finishes, and landscaping. A spec home is a new home that was not built for a specific buyer, so it typically just has the baseline features. 

Do I still need a down payment for a new build?

Yes, unless you have a zero-down payment loan like a VA or USDA loan. You’ll also likely need a builder’s deposit, which is a nonrefundable payment of around 10% of the home’s cost. It acts as an earnest money deposit and covers initial building costs.

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