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    Buyer Guide

    Who Pays Closing Costs on a New Construction Home?

    Short answer: you do, but the builder will cover $5,000 to $20,000 of them if you use their preferred lender. Here's the full breakdown, line item by line item, and how to negotiate the credit higher.

    Written and reviewed by Carla Goddard, Founder & CEO, Vicinity. Last reviewed September 12, 2026.

    "The builder is paying your closing costs." Sounds pretty simple. But what does that actually mean? Does it mean you don't need money at closing? Does it mean the builder is paying every fee? Does it mean you're getting a discount on the house? Not necessarily. Closing costs are made up of many different expenses, and who pays them can depend on the purchase contract, the builder, the lender, the type of loan and the location of the property. The good news is that you don't need to memorize every closing cost. You do need to understand who is paying what, and how much money you'll actually need to bring to closing.

    First: Closing Costs Are Not the Same as Your Down Payment

    This is an easy distinction to miss. Down payment The portion of the purchase price you're paying rather than borrowing. Closing costs The various costs associated with getting the mortgage and transferring ownership of the home. Cash to close The actual amount of money you need to bring to closing after accounting for your down payment, closing costs, deposits already paid, credits and other adjustments. The CFPB specifically distinguishes total closing costs from cash to close on the Closing Disclosure. So if someone tells you:

    "Your closing costs are $12,000." That does not necessarily mean you'll bring $12,000 to closing. Your actual cash requirement could be higher or lower depending on everything else happening in the transaction.

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    Frequently Asked Questions

    Who pays closing costs on a new construction home, the builder or the buyer?
    By default, the buyer pays closing costs on a new construction home, just like with a resale. However, most national builders (Pulte, Lennar, DR Horton, Toll Brothers, KB Home, Richmond American, etc.) will cover $5,000 to $20,000 of your closing costs if you use their preferred (in-house or affiliated) lender and title company. This is the single biggest negotiating lever in new construction, the builder will almost never reduce the sticker price, but will move on closing-cost credits.
    How much are closing costs on a new construction home?
    Plan on 2% - 5% of the purchase price. On a $450,000 new build that's roughly $9,000 to $22,500 before any builder incentives. New construction adds a few line items resale doesn't have: builder transfer fees, HOA capitalization/initiation fees ($500 to $3,000), first-year HOA prepay, CDD bond payoff or first-year CDD assessment (in Florida), and a builder-required new-home warranty.
    Do I have to use the builder's preferred lender to get the closing cost credit?
    Yes, the incentive is conditional. If you bring an outside lender, you forfeit the credit. That's why you should always compare two numbers, not one: (Builder lender rate + closing-cost credit) vs (Outside lender rate with no credit). A higher rate over 30 years often outweighs a $10K one-time credit. Get a Loan Estimate from both within the same 24 hours so you can compare APR apples-to-apples.
    What closing costs can be negotiated on a new construction home?
    Negotiable: lender credits (via preferred lender), title insurance (in most states the buyer can choose the title company unless it's a builder-affiliated requirement), recording fees, and design-center / upgrade credits applied at closing. Non-negotiable: government transfer taxes, prepaid property taxes and insurance escrows, and any CDD bond assessments tied to the lot.
    When do I actually pay closing costs on new construction?
    You pay closing costs at the closing table, typically 60 - 120 days after you sign the purchase agreement, once the certificate of occupancy is issued. Your earnest money deposit (1% - 10% of purchase price, much higher than resale) is collected at contract signing and applied toward closing. Design center upgrades are usually billed separately and may be due 50% up front.
    Are closing costs higher on new construction than on a resale home?
    Slightly. Resale closing costs run ~2% - 4%; new construction runs ~2% - 5% because of HOA capitalization fees, builder admin/transfer fees, CDD first-year assessments, and new-home warranty premiums. The offset is the builder credit, net out of pocket on a new build with preferred lender is often lower than a comparable resale.

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