A mortgage for a newly built home is a standard purchase mortgage if the house is finished or will be by closing, and a construction loan if you hold the contract with the builder or are building on your own land. That single distinction decides your loan type, your timeline, and how much cash you need. Rate-lock timing and builder incentives then decide how much the loan costs.
Most buyers get this wrong in one of three ways. They assume the builder’s mortgage company is mandatory, they assume the appraisal will match the contract price, or they assume every upgrade rolls into the loan. None of those is reliably true. Below, I walk through which path applies to you, how the programs differ, and what a real Virginia purchase costs with the math shown. I’m writing this the way I explain it to clients, and you can start a soft credit pull mortgage pre-qualification before you sign anything.
Spec Home, Contract Build, or Custom Build: Which Loan Path Applies
A spec home (also called an inventory or quick-move-in home) is one the builder started without a buyer. If it is finished or nearly finished, you close on a standard purchase mortgage, conventional, FHA, or VA. The gating document is the certificate of occupancy, the municipal sign-off that the home passed final inspection and can legally be lived in. No certificate, no funding.
If you buy a floor plan in a community before construction starts, you usually still use a standard mortgage. The difference is timing: closing happens when the builder finishes, not on a date you pick, so your rate lock has to be planned around a completion window. Section three covers that.
If you own a lot and hire your own contractor, you need a construction loan. There are two structures:
- One-time close (construction-to-permanent): one application, one set of closing costs. The loan funds construction in draws, then converts to a regular mortgage when the home is done.
- Two-time close: a short-term construction loan first, then a separate permanent mortgage once the home is complete. You qualify twice and pay closing costs twice, and you carry the risk that rates or your finances change between the two.
Three questions will place you quickly:
- Is there a certificate of occupancy today? If yes, it is a standard purchase.
- Who holds the construction contract? If the builder sells you a finished product, it is a standard purchase tied to their schedule. If you hold the contract with a builder or contractor, it is a construction loan.
- Do you already own the land? If yes, expect a construction-to-permanent loan, with the land equity often counting toward your down payment.
Mortgage Programs That Work for a Newly Built Home
Each program accepts new construction, but each attaches its own conditions. Confirm current terms before you commit, since agencies update them.
Conventional. Fannie Mae and Freddie Mac both allow new construction purchases, and Fannie Mae publishes construction-to-permanent rules in its Selling Guide. Conventional loans can go as low as 3% down for qualifying buyers as of 2026, and they carry the most flexibility on price and property type.
FHA. HUD sets inspection and warranty conditions for new construction. In general, a home that is under a year old or still under construction needs a builder warranty (commonly a 10-year protection plan) or specific inspections tied to the build stage. The exact requirements live in HUD Handbook 4000.1. FHA allows 3.5% down with a qualifying credit score as of 2026, per HUD.
VA. Eligible veterans and service members can buy with no down payment in many cases. VA appraisal rules apply to proposed and new construction, and the builder typically has to supply a warranty and compliance documentation. Check current requirements on the VA home loans page before you sign a builder contract, because some builders do not participate in VA financing.
Non-QM for self-employed buyers. If your tax returns understate your real income, a standard file can stall. Duane Buziak originates the Champions Funding Ally loan program as a Champions-appointed broker. It is a CDFI-certified, no-ratio product built for self-employed borrowers. It is a separate product from anything offered by Ally Bank, and The Mortgage Ally by Duane Buziak is not affiliated with Ally Bank.
Whichever program you choose, a brand-new home can still carry the usual closing costs, so ask for a written estimate and for no-out-of-pocket closing options where they fit your file.
Timing the Rate Lock When the Closing Date Can Slip
A standard lock runs 30 to 45 days. Builders usually quote a completion window, and weather, permits, inspections, and material delays push dates. If your lock expires first, you either pay to extend it or close at whatever the market offers that day. The CFPB explains how rate locks work, including that locks have an expiration date.
You have three tools:
- Extended lock: a 90, 120, or longer lock set at the start. It usually costs more, either as an upfront fee or a slightly higher rate. Get the price in writing.
- Float-down option: lets you take a lower rate if the market improves before closing. It is not free, and the terms on how much rates must drop vary.
- Builder rate-lock incentive: some builders offer a locked or buy-down rate on specific homes. These can be good deals, but they typically require the builder’s affiliated mortgage company.
That last point matters because builders also offer closing-cost credits tied to their preferred mortgage company. The credit is real money, but it is not automatically the better deal. To judge it, ask for a Loan Estimate from the builder’s company and one from an independent source, then compare the rate, the points, the fees, and the credit as a single net cost over the time you expect to keep the loan. Section five does exactly that with numbers.
An independent mortgage broker can shop hundreds of lenders at once, which gives you a real quote to hold against the builder’s offer. You are never required to use the builder’s company, though the credit may disappear if you decline.
Appraisals, Inspections, and the Certificate of Occupancy
New builds do not always appraise at contract price. A builder’s base price plus premium lot and upgrades can exceed what comparable sales support. If the appraisal comes in low, you have four moves: ask the builder to reduce the price, bring cash to cover the gap, challenge the appraisal with better comparable sales, or walk away if your contract allows it. Builders in a busy community sometimes hold firm because the next buyer will pay full price, so know your contingency terms before you sign.
Before funding, the mortgage company will require a final inspection or completion certificate, and the municipality’s certificate of occupancy. Order your own independent inspection anyway. Municipal inspectors check code compliance, not workmanship. A third-party inspector catches issues like improper grading, missing insulation, and loose fixtures while the builder is still obligated to fix them, ideally at a pre-drywall stage and again before closing.
Upgrades deserve a clear plan. Lenders generally finance only what the appraisal supports, so a $15,000 kitchen and flooring package may add less than $15,000 in appraised value, and you cover the difference in cash. Ask the appraiser’s report, through your loan officer, how upgrades were treated, and budget any shortfall as out-of-pocket.
Finally, read the warranty before closing. A builder warranty usually covers workmanship and systems for a short period, often one to two years. A structural warranty covers major load-bearing components for much longer, commonly up to ten years, and is often issued by a third-party insurer. They are different documents with different claims processes. Confirm who backs each one and what is excluded.
Worked Example: Financing a $450,000 New Build in Virginia
This is an illustration, not a quote. Suppose a $450,000 builder home in Virginia with 10% down ($45,000), giving a $405,000 loan on a 30-year fixed term. At an illustrative 6.50% rate (as of October 2026, for demonstration only), principal and interest is about $2,560 per month.
Now add $15,000 of upgrades the appraisal does not fully support. Cash needed before closing costs rises from $45,000 to $60,000. Closing costs, prepaid taxes and insurance, and earnest money considerations come on top.
Next, compare two paths using the same loan amount:
- Builder path: $8,000 credit with the preferred company at 6.75%. Payment is about $2,627, and over 60 months you pay roughly $157,600, or about $149,600 after the credit.
- Broker path: 6.50% with no credit. Payment is about $2,560, and over 60 months you pay roughly $153,600.
In this scenario the builder credit wins by about $4,000 over five years. The monthly difference is roughly $67, so the break-even is near ten years. If the rate gap were wider, or if you plan to keep the loan longer, the lower rate would win. The credit also only helps if you have eligible closing costs to apply it to. Run your own numbers with real quotes.
For geographic context, the U.S. Census Bureau’s New Residential Construction release publishes monthly state-level permit data, including Virginia. Check the latest month there to see how active new building is in your area, since busy markets tend to mean longer builder timelines.
To see real numbers first, Duane Buziak can run pre-qualification with NoTouch Credit Pull. It is a no credit hit mortgage application step, so the quote reflects your file without an inquiry on your report.
Mortgage Options Compared: Broker, Builder Company, and Large Retail Providers
The comparison below is factual and general. Features vary by market and change often, so confirm specifics directly as of 2026. No competitor figures are stated because none are sourced here.
- The Mortgage Ally by Duane Buziak (independent broker). Loan types: conventional, FHA, VA, construction-to-permanent, non-QM, and HELOC. Access: shops hundreds of lenders at once. Rate-lock flexibility: extended options available through the lenders compared, priced in writing. Incentives: depends on the lender chosen, no builder tie. Credit pull: NoTouch Credit Pull, a soft pull for pre-qualification. New construction: guidance on builder contracts, appraisals, and timelines.
- Builder-affiliated mortgage company (generic). Loan types: usually the common programs for its own communities. Access: one company. Rate-lock flexibility: often tied to the builder’s schedule, sometimes with a rate incentive. Incentives: closing-cost credits, usually requiring you to use them. Credit pull: typically a standard hard inquiry at application. New construction: strong on its own homes.
- Rocket. Loan types: broad retail range including conventional, FHA, and VA. Access: its own products only. Rate-lock flexibility and incentives: vary, confirm as of 2026. Credit pull: confirm at application. New construction: confirm program availability.
- Movement. Loan types: conventional, FHA, and VA. Access: its own products only. Rate-lock flexibility and incentives: vary, confirm as of 2026. Credit pull: confirm at application. New construction: confirm program availability.
- Veterans United (VA specialty). Loan types: centered on VA loans. Access: its own products only. Rate-lock flexibility and incentives: vary, confirm as of 2026. Credit pull: confirm at application. New construction: VA-focused, so check builder VA participation.
- Ally Bank. Not affiliated with The Mortgage Ally by Duane Buziak. It is a separate company, so check with it directly for any current home loan offerings.
Other providers exist, and the same questions apply to each: what loan types, what lock options, what credit pull, and what it costs in writing.
Frequently Asked Questions About New Construction Mortgages
Is The Mortgage Ally the same as Ally Bank?
No. The Mortgage Ally by Duane Buziak is an independent mortgage broker business and is not affiliated with Ally Bank. The similar name is a coincidence.
Can I get a new construction mortgage through Ally Bank or a broker?
You can use a broker, and The Mortgage Ally by Duane Buziak is not affiliated with Ally Bank. For Ally Bank’s own home loan availability, contact Ally Bank directly. A broker can compare many options for a new build in one search.
Who qualifies for the Champions Funding Ally loan program?
It is designed for self-employed buyers whose tax returns do not reflect their true income. Duane Buziak originates it as a Champions-appointed broker. It is a CDFI-certified, no-ratio program, and eligibility depends on your file, so ask for a review rather than assuming.
What is the difference between a construction-to-permanent loan and a standard mortgage?
A construction-to-permanent loan funds the build in draws and converts to a permanent mortgage at completion with one closing. A standard mortgage funds a finished home in a single transaction. The first is for building on your own lot, the second for buying a completed or builder-delivered home.
Can I get mortgage pre approval without a hard pull?
Yes. Duane Buziak can run a no hard inquiry mortgage pre approval through NoTouch Credit Pull, a soft pull. A hard inquiry usually comes later, when you move forward with a specific loan.
Do I have to use the builder’s preferred mortgage company?
No. You can use any mortgage company or broker. The builder may withhold a closing credit if you decline, so compare the credit against an outside quote on the total net cost.
What happens if the appraisal comes in below the contract price?
The loan is based on the lower value, so you must close the gap. Options include renegotiating the price, paying the difference in cash, or disputing the appraisal with stronger comparable sales.
What happens if my closing is delayed past my rate lock?
You may need to pay for a lock extension or accept the current market rate. Ask for an extended lock or float-down option up front, with the cost in writing, if the builder’s schedule is uncertain.
Match the Loan to the House Before You Match the Rate
The right loan depends on two facts: whether the home is finished, and who holds the builder contract. Settle those, and the program, lock strategy, and cash plan follow. Then compare the builder’s incentive against an independent quote on the net cost, not the headline credit.
Your dream home is within reach. Discover what hundreds of lenders can offer you in one simple search with zero impact to your credit score. Get your free mortgage rate quote today and let us shop the market to secure you the best possible terms with our client-first approach. Request your no-credit-hit quote from Duane Buziak at The Mortgage Ally by Duane Buziak.
