What we verified in “Buying a new construction home: incentives and warranties”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to the CFPB, if you are considering a home that is not yet built, the builder may ask for an upfront builder deposit, also called earnest money, and before committing you should ask under what conditions it can be returned; it also recommends getting an informal insurance estimate before committing to a house, because in a high-risk area insurance could be hard to find or cost more than you expect.

   Sources 1 · Find the right home, 'Additional considerations for a new construction home': 'your builder could ask for an upfront builder deposit, also called earnest money'; 'ask the homebuilder under what conditions the builder deposit can be returned'; 'Consider getting an informal insurance estimate before committing to a house'; 'it might cost more than you expect' · Checked October 17, 2026

2. According to the CFPB, homebuilders often have an associated mortgage lender they work with, but you do not have to use that lender and you have the right to shop around for a better deal.

   Sources 1 · Find the right home: 'Homebuilders often have an associated mortgage lender they work with'; 'You don't have to use that lender, and you have the right to shop around for a better deal' · Checked October 17, 2026

3. The CFPB says it is a good idea to make your offer and purchase contract contingent on getting financing and on a satisfactory inspection, so that if you cannot get the loan or the inspection finds serious flaws, you are not contractually required to buy.

   Sources 1 · Find the right home, 'You can make a plan for contingencies': 'contingent on obtaining financing and contingent on a satisfactory inspection'; 'if the inspection turns up serious flaws in the home'; 'you're not contractually required to buy the home' · Checked October 17, 2026

4. According to the CFPB, even if an agent or homebuilder has a preferred lender, you should still look for a better deal: builders are familiar with certain lenders, but you can and should shop around.

   Sources 2 · Contact multiple lenders: 'Even if a real estate agent or homebuilder has a preferred lender, still look for a better deal'; 'you can and should shop around to make sure you're getting the best deal' · Checked October 17, 2026

5. Under Regulation X, an affiliate relationship exists when one company has effective control over another or both are under common control; an affiliated business arrangement does not violate the anti-kickback rules if whoever refers you gives you, in writing, on a separate piece of paper and no later than the referral, a disclosure in the Appendix D format explaining the relationship (the ownership and financial interest) and the provider's estimated charge; if no one requires you to use a particular provider, except that a lender may require its own attorney, credit reporting agency or appraiser to represent its interests; and if the only thing of value received is a return on the ownership interest.

   Sources 3 · 12 CFR §1024.15(b)(1) ('in the format of the Affiliated Business Arrangement Disclosure Statement set forth in appendix D of this part'; 'explaining the ownership and financial interest'; 'an estimated charge or range of charges generally made by such provider'; 'The disclosures must be provided on a separate piece of paper no later than the time of each referral'), (b)(2) ('No person making a referral has required'; 'an attorney, credit reporting agency, or real estate appraiser chosen by the lender to represent the lender's interest'), (b)(3) ('is a return on an ownership interest or franchise relationship') and (c) ('Affiliate relationship means the relationship among business entities where one entity has effective control over the other') · Checked October 17, 2026

6. Under Regulation X, 'required use' means a person must use a particular provider to get access to some other service or property; but offering a package, or discounts for buying several services, is not required use as long as the package or discount is optional, is a true discount below generally available prices and is not made up by higher costs elsewhere in the closing.

   Sources 4 · 12 CFR §1024.2(b), 'Required use': 'must use a particular provider of a settlement service in order to have access to some distinct service or property'; 'the offering of discounts or rebates to consumers for the purchase of multiple settlement services does not constitute a required use'; 'Any package or discount must be optional to the purchaser'; 'The discount must be a true discount below the prices that are otherwise generally available, and must not be made up by higher costs elsewhere in the settlement process' · Checked October 17, 2026

7. The Regulation X Appendix D format tells you that the referring party has a business relationship with the provider and that the referral may give it a financial benefit; that you are not required to use that provider as a condition of your loan or purchase; that there are frequently other providers with similar services; and that you are free to shop around for the best services and rate.

   Sources 5 · 12 CFR Appendix D to Part 1024: 'This is to give you notice that'; 'Because of this relationship, this referral may provide'; 'a financial or other benefit'; 'You are NOT required to use the listed provider(s) as a condition for'; 'THERE ARE FREQUENTLY OTHER SETTLEMENT SERVICE PROVIDERS AVAILABLE WITH SIMILAR SERVICES'; 'YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATE FOR THESE SERVICES' · Checked October 17, 2026

8. Under RESPA, no one may give or accept a fee, kickback or thing of value for referring closing business on a federally related mortgage loan; affiliated business arrangements are allowed if they are disclosed with an estimate of the charge, if the referred person is not required to use a particular provider and if the only thing received is a return on the ownership interest.

   Sources 6 · 12 U.S.C. §2607(a) ('No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding'; 'shall be referred to any person') and (c)(4) ('affiliated business arrangements so long as'; 'such person is not required to use any particular provider of settlement services'; 'is a return on the ownership interest or franchise relationship') · Checked October 17, 2026

9. Under RESPA, a seller of property that will be bought with a federally related mortgage loan may not require, directly or indirectly, as a condition of selling, that the buyer purchase title insurance from a particular title company; a seller who does is liable to the buyer for three times all charges for that title insurance.

   Sources 7 · 12 U.S.C. §2608(a) ('No seller of property that will be purchased with the assistance of a federally related mortgage loan shall require directly or indirectly, as a condition to selling the property, that title insurance covering the property be purchased by the buyer from any particular title company') and (b) ('three times all charges made for such title insurance') · Checked October 17, 2026

10. According to Fannie Mae's Selling Guide, interested party contributions are contributions from third parties with a vested interest in the transaction, including the seller and the builder or developer, toward costs the buyer normally pays; they cannot be used for the down payment; financing concessions (closing costs and prepaids) are capped by loan-to-value ratio: 3% above 90%, 6% from 75.01% to 90% and 9% at 75% or less, for a principal residence or second home; and sales concessions such as furniture, giveaways or decorator allowances are deducted from the sales price.

    Sources 8 · Selling Guide B3-4.1-02, Interested Party Contributions (IPCs) (05/07/2025): 'contributions made by third parties with a vested interest in the transaction'; 'the property seller, the builder or developer'; 'Fannie Mae does not permit IPCs to be used to make the borrower's down payment'; 'Greater than 90% 3%'; '75.01% - 90% 6%'; '75% or less 9%'; 'furniture, automobiles, decorator allowances, moving costs, and other giveaways'; 'Sales concessions must be deducted from the property's sales price' · Checked October 17, 2026

11. According to HUD Handbook 4000.1, on an FHA loan interested parties include sellers, builders and developers; they may contribute up to 6 percent of the sales price toward the buyer's origination fees, other closing costs, prepaids and discount points; that limit includes payments for permanent and temporary rate buydowns; anything above 6 percent or above actual costs is treated as an inducement to purchase which, like decorating allowances or moving costs, is subtracted dollar for dollar from the price when sizing the loan; and these contributions cannot be used for the buyer's minimum required investment.

    Sources 9 · Handbook 4000.1, II.A.4 and II.A.5, Interested Party Contributions and Inducements to Purchase: 'Interested Parties refer to sellers, real estate agents, builders, developers'; 'Interested Parties may contribute up to 6 percent of the sales price toward the Borrower's origination fees, other closing costs, prepaid items, and Discount Points'; 'Interested Party payment for permanent and temporary interest rate buydowns'; 'Interested Party Contributions exceeding 6 percent are considered an inducement to purchase'; 'Interested Party Contributions may not be used for the Borrower's MRI'; 'result in a dollar-for-dollar reduction to the purchase price'; 'decorating allowances'; 'moving costs' · Checked October 17, 2026

12. According to Fannie Mae's Selling Guide, temporary rate buydowns are allowed if the reduction does not exceed 3% and the rate rises no more than 1% per year; the buydown period cannot exceed 3 years; there must be a written agreement; the borrower remains obligated to make the note payments if the buydown funds are not available; the lender must qualify the borrower at the note rate, without considering the bought-down rate; and if the funds come from an interested party, the interested-party contribution limits apply.

    Sources 10 · Selling Guide B2-1.4-04, Temporary Interest Rate Buydowns (08/07/2024): 'provided the rate reduction does not exceed 3%, and the rate increase will not exceed 1% per year'; 'a buydown period not greater than 3 years'; 'The buydown plan must be a written agreement between the party providing the buydown funds and the borrower'; 'the borrower is not relieved of the obligation to make the mortgage payments required by the terms of the mortgage note'; 'the lender must qualify the borrower based on the note rate without consideration of the bought-down rate'; 'Fannie Mae's interested-party contribution limits apply' · Checked October 17, 2026

13. Under Regulation Z, on new construction where the lender reasonably expects closing more than 60 days after giving you the Loan Estimate, it may give you a revised Loan Estimate if the original clearly states that it may do so at any time up to 60 days before consummation; if the original does not say so, it cannot revise for that reason.

    Sources 11 · 12 CFR §1026.19(e)(3)(iv)(F): 'In transactions involving new construction, where the creditor reasonably expects that settlement will occur more than 60 days after the disclosures'; 'state clearly and conspicuously that at any time prior to 60 days before consummation, the creditor may issue revised disclosures'; 'If no such statement is provided, the creditor may not issue revised disclosures' · Checked October 17, 2026

14. Under Regulation Z, on new construction expected to close more than 60 days after the Loan Estimate, the lender may include on page 3, under 'Other Considerations', a clear statement that it may issue a revised Loan Estimate at any time up to 60 days before consummation.

    Sources 12 · 12 CFR §1026.37(m)(8): 'In transactions involving new construction, where the creditor reasonably expects that settlement will occur more than 60 days after the provision of the loan estimate'; 'a clear and conspicuous statement that the creditor may issue a revised disclosure any time prior to 60 days before consummation' · Checked October 17, 2026

15. According to the CFPB, with a rate lock your rate does not change between the offer and closing as long as you close within the time frame and nothing changes in your application; locks are typically available for 30, 45 or 60 days, sometimes longer; and extending one may be expensive if the purchase needs more time.

    Sources 13 · What's a lock-in or a rate lock on a mortgage? (last reviewed May 2, 2023): 'as long as you close within the specified time frame and there are no changes to your application'; 'Rate locks are typically available for 30, 45, or 60 days, and sometimes longer'; 'It may be expensive to extend if your transaction needs more time' · Checked October 17, 2026

16. According to the CFPB, if you do not close before your rate lock expires, even because of the lender's processing time, you might have to pay to extend it; ask whether you can switch to a longer lock now, at what cost and what the lender's extension policy is.

    Sources 14 · Choose a loan offer (page last modified Dec. 12, 2024): 'you might have to pay a fee to extend your rate lock'; 'Can you change to a longer rate lock now? At what cost?'; 'What is the lender's policy on extensions?' · Checked October 17, 2026

17. According to the CFPB, schedule an independent inspection as soon as possible with an inspector who is accountable to you; if the inspector is paid by someone else or not paid until closing, they might underemphasize problems; if your contract is contingent on a satisfactory inspection, you can cancel without penalty if you are not satisfied; attend the inspection if you can; and because inspectors may not need a license in some areas, ask for references and look the inspector up with your state or county licensing authority.

    Sources 15 · Schedule a home inspection (page last modified Dec. 12, 2024): 'You want an independent home inspector who is accountable to you'; 'If the home inspector is being paid by someone else or not paid until closing, the inspector might underemphasize problems with the home'; 'you have the right to cancel the sale without penalty if you are not satisfied with the results of the inspection'; 'Attend the home inspection if you can'; 'home inspectors may not be required to be licensed' · Checked October 17, 2026

18. According to HUD Handbook 4000.1, for FHA new construction includes proposed homes, homes under construction and homes completed less than a year from the certificate of occupancy that have never been occupied; and for properties built or proposed in the last 12 months, the loan file includes the builder's certification of plans, specifications and site (HUD-92541), the warranty of completion of construction (HUD-92544), the certificate of occupancy and building permit or the inspections, and the builder's subterranean termite guarantee.

    Sources 9 · Handbook 4000.1, II.D.3.a.ii, New Construction (02/16/2021): 'Proposed Construction refers to a Property where no concrete or permanent material has been placed'; 'Existing Less than One Year refers to a Property that is 100 percent complete and has been completed less than one year from the date of the issuance of the CO or equivalent'; 'The Property must have never been occupied'; II.A.7, case binder table: 'New Construction Exhibits (for all Properties built or proposed in the last 12 months)'; 'Warranty of Completion of Construction HUD-92544'; 'Certificate of Occupancy (CO) and Building Permit'; '3 FHA Inspections'; 'Subterranean Termite Protection Builder's Guarantee' · Checked October 17, 2026

19. On form HUD-92544 (which is also VA form 26-1859), the builder warrants to the buyer and successors that the home is built in substantial conformity with the plans and specifications, provided the buyer gives written notice within one year of the conveyance of title or initial occupancy, whichever comes first; it also warrants the property against defects in equipment, material or workmanship for one year from conveyance of title and must fix them at its own expense; the warranty is in addition to the buyer's other rights under any other law or instrument; and copies must be given to the buyer and the builder at closing.

    Sources 16 · Form HUD-92544, Warranty of Completion of Construction (4/2023): 'is constructed in substantial conformity with the plans and specifications'; 'shall have given written notice to the Warrantor at any time or times within one year from the date of original conveyance of title'; 'the property against defects in equipment, material, or workmanship'; 'This warranty shall continue for a period of one year from the date of original conveyance of title'; 'The Warrantor shall remedy, at the Warrantor's expense'; 'This warranty shall be in addition to, and not in derogation of, all other rights and privileges'; 'Provide completed copies of this warranty to both the homebuyer and the builder, at closing'; 'VA form 26-1859' · Checked October 17, 2026

20. According to the CFPB, property taxes are set by your local or state government, not by the lender; to avoid surprises later, check now whether the lender estimated them accurately and contact your local tax authority.

    Sources 17 · Loan Estimate Explainer (page last modified Oct. 29, 2025), 'Are the property taxes accurate?': 'Property taxes are set by your local or state government, not by the lender'; 'To avoid surprises later, check now to find out whether the lender has estimated these costs accurately'; 'Contact your local tax authority' · Checked October 17, 2026

21. Under Florida law, real property is assessed at just value on January 1 of each year, and improvements or portions not substantially completed on January 1 receive no value; 'substantially completed' means the improvement can be used for the purpose for which it was built.

    Sources 18 · Florida Statutes §192.042(1) (2026): 'Real property, on January 1 of each year'; 'Improvements or portions not substantially completed on January 1 shall have no value placed thereon'; 'can be used for the purpose for which it was constructed' · Checked October 17, 2026

22. According to the California State Board of Equalization, after a change in ownership or completed new construction, the new assessed value is the market value as of the date of the change or construction; the property is also assessed on the supplemental roll, which puts the reappraisal into effect immediately instead of waiting for the next January 1; and an increase in assessment results in a supplemental tax bill.

    Sources 19 · California Property Tax: An Overview, Publication 29 (March 2025), 'Supplemental Assessments': 'if there has been a change in ownership or completed new construction, the new assessed value will be the market value of the property as of the date that it changed ownership or was newly constructed'; 'That property will also be assessed on the supplemental roll'; 'rather than waiting for the next January 1 lien date'; 'An increase in assessment will result in a supplemental tax bill' · Checked October 17, 2026

23. Under Regulation X, if the annual escrow analysis shows a shortage equal to or greater than one month's escrow payment, the servicer may only leave it or have you repay it in equal monthly payments over at least 12 months.

    Sources 20 · 12 CFR §1024.17(f)(3)(ii): 'a shortage that is greater than or equal to one month's escrow account payment, then the servicer has two possible courses of action'; 'repay the shortage in equal monthly payments over at least a 12-month period' · Checked October 17, 2026

24. HUD-approved housing counselors give independent advice on buying, renting, defaults and credit, often at little or no cost.

    Sources 21 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'they can offer independent advice, often at little or no cost to you' · Checked October 17, 2026