The excitement level reaches on top when you walk into a new construction home. Everything feels fresh and clean. The living room is bright and open — you already started picturing game-day gatherings, movie nights with friends, cozy coffee mornings, and quiet evenings curled up with a good book. A kitchen with sparkling countertops, pristine cabinets, and brand-new appliances gleaming as the sunlight pours in. The Walk-in closet’s ready to be organized just the way you like it, and the entire space feels like a calm place at the end of a long day.
Along with the joy of new beginnings comes one important question:
“When do I need to make the down payment?”
To help you head on this journey, let’s walk through the typical timeline of buying a new construction home, so you’ll know exactly when that first big payment comes into play.
Knowing when payments are schedule, can help you plan and manage your funds. To make this house truly yours and secure your spot, the journey usually starts with an initial deposit when you sign the contract.
• Milestone Payments: Smaller payments can be made at the time of the completion of significant milestones. For example, pouring of the foundation or the completion of the framing.
• Final Payment at Closing: The remaining entire portion of the total payment is generally due at the closing stage, which coincides with the legal transfer of ownership to you.
When you finalize the home and sign the purchase agreement, builders usually ask for an initial deposit. This amount is typically calculated between 1% and 10% of the total price, depending on the home builder policy, location, and type of home. This deposit secures your home and gives the builder confidence to move forward with your purchase.
So, if you’re eyeing that $1,000,000 new construction home for sale and the builder asks for a 10% deposit, that would be $100,000 to get the ball rolling and secure your place. It’s that initial investment that really starts the process of making the home officially yours.
However, actual deposit amounts vary based on builder policies, financing terms, and local regulations. Buyers should feel free to discuss these policies and verify these costs with their lender and builder.
At different phases of construction, some builders might ask for additional payments. Before signing a contract, it is essential to discuss with the builder about payment installment.
In construction phase:
• As soon as construction starts, a portion of the down payment might be needed.
• At significant points, such as the completion of the foundation or the framing, additional payments are expected.
When you have done the payments with progress, your lender might provide funds in phases if you are financing the project with a construction loan.
Let’s review the schedule so you know what to anticipate and when to get ready for your first big move in homebuying.
At Closing: Finally, we arrive at the closing!
This is the big moment when your new construction home is all finished, and you officially become the owner. The entire amount of your down payment is generally asked at closing when the home is complete. The amount at this phase considers based on:
• The total down payment required by your lender.
• Any deposits paid during construction.
• Additional construction loan closing costs, including lender fees, title charges, and prepaid expenses.
Let’s say you’re buying a $1,000,000 home and your lender requires a 20% down payment. That’s a total of $200,000. If you’ve already paid 5% (which is $50,000) by the signing day, then at closing, you’ll owe the remaining 15%, which comes out to $150,000.
Amount needed for a Down Payment?
Different factors will decide your down payment number, such as your type of loan, lender policies, and credit score. The star player of the entire process is your credit score, as it’s a clear reflection of how good you are at handling your finances. A strong credit score can lead to easy loan terms, such as lower interest rates and possibly a reduced down payment. But consider lender policies as they differ. It’s always best to consult with a mortgage expert.
Let’s review some of the typical loan options and what you would likely need for a down payment:
Conventional Loans: Conventional loans typically ask for a down payment of between 3% to 20%,. It actually just depends on the lender’s requirements, how well your credit is, and the specific loan program you’re looking at. Homebuyers can check with their lender to ensure eligibility. A better credit score can provide the opportunity to avail lower interest rates and could lower the requirement for a down payment.
FHA Loans: Demanded among first-time buyers, they have a minimum down payment requirement of 3.5%, for those who qualify. Although available to those with less-than-perfect credit, having a stronger credit history can also result in improved loan terms in the future.
VA and USDA loans: If you qualify (based on such factors as military service for VA loans or rural residence for USDA loans) it can provide 0% down payment terms, pending lender requirements and qualification standards. Even if you don’t require an initial deposit, your credit score will still be a consideration in determining your eligibility and the interest rate you’ll receive.
Builder Financing Programs: Some builders partner with preferred lenders who may offer special financing options. If you’re considering financing a new construction home, feel free to ask your builder about potential lender recommendations. Even with this unique program, your creditworthiness plays a significant role in what’s available to you.
The type of loan you choose significantly impacts your down payment. First-time home builder loans may vary based on lender terms, with some offering a one-time close option that combines construction and mortgage financing, while others require separate loans for each phase.
Buyers should consult lenders to explore their best options.
• A one-time close loan covers both construction and mortgage financing, streamlining the process.
• A two-close loan, on the other hand, requires you to qualify for a separate mortgage once construction is complete.
Construction loan rates aren’t always the same as regular mortgage rates—they can change depending on the market. Checking with different lenders early can help you find the best deal.
Key Steps in Securing a Construction Loan
• Pre-Approval: Understand your loan eligibility and how your credit score affects available options.
• Builder Selection: Choose a reputable builder and finalize your floor plan.
• Loan Application: Submit documentation and lock in loan terms.
• Construction Phase: Funds are disbursed in phases as construction progresses.
• Final Inspection & Closing: Once the home is complete, the loan transitions into a standard mortgage, and you officially take ownership.
By preparing ahead of time, saving for a down payment, you can streamline the process and move into your new construction home with confidence.
Finding the right home is an exciting step, and securing the right financing is just as important. While MSR Communities does not provide mortgage lending services, we encourage buyers to work with a trusted mortgage professional to explore financing options. Once you’re ready to take the next step, explore our selection of beautifully designed single-family homes and modern townhomes, built to fit your lifestyle.
📅 Schedule a Tour Today. Discover our stunning new construction homes with confidence.
Disclaimer: This article is for informational purposes only and not financial or mortgage advice. Please consult a licensed mortgage professional for personalized guidance.
