Financing a new build

Builder lenders and incentives

Most Omaha builders name one or more preferred lenders, and D.R. Horton owns its own mortgage company. Builders can tie an incentive to using their lender. That's legal. You can still use any lender you like, but you may give up that incentive.

How to compare fairly: get a Loan Estimate from the builder's lender and from at least one outside lender on the same day, for the same loan type and lock length. Then compare the total cost: the incentive's dollar value against the difference in rate, points and lender fees over the years you expect to keep the loan. A big incentive with a higher rate can cost more than a smaller one with a better rate.

Rate locks while your home is built

A standard rate lock is short, usually long enough for a resale closing. A to-be-built home can take six to nine months, so you have three choices:

• Extended lock: lock now for the whole build. It usually costs more, either as a fee or a slightly higher rate, and is often easiest through the builder's lender.
• Float, then lock: lock 30 to 60 days before completion. You take the risk that rates rise during the build.
• Lock with a float-down: some lenders let you lock and then take a lower rate once if rates fall. Ask what it costs and when you can use it.

Quick move-in homes avoid most of this. They close in 30 to 60 days, so a normal lock works. That's one reason spec homes often carry the best financing incentives.

Rate buydowns

Many builder incentives are offered as a buydown: the builder pays money up front to lower your rate.

• Permanent buydown: lowers the rate for the life of the loan. Best if you expect to keep the loan for years.
• Temporary buydown (such as a 2-1): lowers the payment for the first year or two, then it rises to the full payment. You must qualify at the full payment.
• Price cut or closing costs instead: sometimes the same dollars do more as a lower price (which also lowers your property tax) or as paid closing costs. Ask whether you can choose.

Use the payment calculator to see how a buydown or a lower price changes your monthly payment.

Loan types for new construction

If you need to sell your current home

Builders rarely accept a contract that depends on selling your current home. Common ways around it:

• Time the sale to the build: list your home when the new one is a few months from done, and negotiate a rent-back if you sell early.
• Bridge loan or home equity line: borrow against your current home's equity to cover the down payment, then pay it off when it sells.
• Qualify for both payments: some buyers can carry both homes for a short time. Your lender will tell you whether you qualify.

Details that catch new-build buyers

• Appraisals: upgrades and lot premiums don't always appraise dollar for dollar. If the appraisal comes in low, you may need to cover the gap in cash.
• Winter closings: sod, sprinkler systems, driveways and landscaping can't always be finished in an Omaha winter. Some loans allow an escrow holdback so you can still close, and some don't. Ask your lender before you set the date.
• The first full tax bill: your first tax bill may cover only the lot, so the payment jumps when the house is taxed. Budget for the full amount. See tax levies.
• Deposits: earnest money and upgrade deposits are often non-refundable. Make sure your loan approval is solid before you pay them.

Questions to ask any lender

This page lists lenders that the builders themselves name. No lender paid to appear here. It doesn't quote rates or loan terms, which change daily. For current pricing and to see whether you qualify, talk with a licensed loan officer. Katie is happy to sit in on the call.