July 20, 2024


Creative meets living

If you want a new construction home, consider these financial factors

Getting a new construction home generally costs more, but it could be worth it in the long run if you’re able to save money on repairs and maintenance. Here are some key financial factors to keep in mind when considering a new construction home. (iStock)

Some people like older homes while others prefer new construction. Luxury homes, single family homes and all other types can come with a variety of surprises and hidden repairs, but a brand new home often means that you can avoid a lot of those costs (at least in the beginning), and the idea of getting a new construction home with the ability to make specific home designs can be appealing.

If you’re considering a new construction home, you’re in good company. According to the U.S. Census Bureau, nearly 1.7 million new construction home projects were started in March 2021. Like every major financial decision, getting a new construction home comes with its pros and cons.


One of the biggest factors to consider in the home buying process is how a brand new home could impact your finances. No matter if you live in North Carolina, San Diego, Kansas City or Puerto Rico, here’s what you need to know. 

As you’re considering your budget, you can head to Credible to use an online mortgage calculator and determine potential monthly mortgage payments.

Pros of a new construction home

1. Brand-new residence

One of the biggest benefits of getting a new construction home is that you and your family will be the first people living there. Your house will be move-in ready with brand-new flooring, systems and fixtures. You won’t need to worry about what the last owner did to the home or repaint walls, change floor plans or knock out walls, for that matter. 

2. Ability to choose your own features and fixtures

Most new home construction projects allow you to customize certain features of your home so you’ll get exactly what you envisioned. Want high ceilings? A specific color for your window shutters? For the most part, you’ll be able to customize the interior and exterior of your dwelling within your contractor’s limits when designing your home. There’s also the option to work with a design center and choose certain fixtures and features that are within your budget vs. lavish upgrades that might drive the price of your new home construction up.

3. Save on repairs and maintenance early on

Another benefit of getting a new construction home is that you can typically save significantly on repairs, maintenance and other types of home improvement during the first few years. The American Housing Survey found that for homes less than four years old, 73% of homeowners spent less than $25 per month on routine maintenance costs. Plus, many new construction homes come with a 12-month builder’s warranty so in the rare event that anything does break or need to be replaced, you’ll have help covering those costs. 

Cons of a new construction home

1. Potential to be more expensive

Building a new construction home might be more expensive than buying a pre-owned home, especially if you are looking to move to a larger city. Zillow estimates that a new real estate construction cost could total 20% more on average.


Most home prices for new construction are based on a starting rate, but will usually increase once you add custom features and fixtures, so it’s important to have a larger budget or flexible price range just in case. You can visit Credible to get prequalified for a mortgage and see how much you can borrow and along with the best interest rates currently available.

2. Construction delays

Another potential drawback is that you might work with a home builder who takes a longer time to finish your home. Each build process is different and some contractors may work slower or encounter unavoidable delays that could disrupt your daily schedule and plans. If you expected to move into your home on a certain day or a quick move-in but find out it might not be ready for another month or two, you may have to make alternative housing arrangements or make other adjustments.

3. Expensive upgrades 

When it comes to building a custom home, you might be given a few options for exterior and interior features but also be limited to only those options. Be sure to request information about customizations beforehand and see what the builder recommends in terms of your budget for this. Another cost you’ll need to consider is landscaping, since you’ll be starting from a blank slate with your home. New landscaping installation costs could range from $3,000 to $15,000.


4. Less room for negotiation

There is generally also less room for home buyers in negotiating with a new construction home. With a pre-owned home, the price is usually set according to the housing market rate and the owner but there is still room to negotiate especially if you need to do work on the property. Builders are also less likely to lower the base price for homes.

If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible’s free online tool to easily compare multiple lenders and see prequalified mortgage rates in just a few minutes.

Should you buy a new construction home?

When you buy a new construction home – whether that’s in San Antonio, South Carolina, Los Angeles or West Virginia, you have the opportunity to make more decisions to create your dream home. However, this can come with a cost. The starting price the builder provides you with will likely increase during the process as you add more customizations.

You’ll still need to qualify for a home loan, make a down payment, and pay insurance and closing costs so keep this in mind. Carefully weigh the pros and cons and then assess your finances and get started by getting prequalified for a mortgage for free with Credible.


Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.