The Quick Read: Your cash to close is the down payment, plus closing costs and prepaids, plus any extra items the build requires, minus the credits and deposits already counted. Leverage on a conventional new-build purchase mirrors a resale: 97% for qualifying first-time buyers on a fixed rate, 95% otherwise. The real total depends on the loan structure, the appraisal, and what the builder agrees to pay. Your Loan Estimate shows the figure.
Key Takeaways
- Cash to close has three parts: down payment, closing costs and prepaids, and build-related items. Reserves are separate: they are not due at closing and do not appear on the disclosure, but lenders may still require them.
- A finished builder home is an ordinary purchase. A construction-to-permanent loan is a different structure with its own steps.
- Builder credits can cover closing costs and prepaids. They cannot fund your down payment.
- A low appraisal or a late price change can raise the cash you bring.
- Your first estimate may not be your last. Long builds can legitimately re-estimate the number.
What Does “Cash to Close” Include on a New Build?
Cash to close is the money you wire or bring to the closing table. The formula is simple: down payment, plus closing costs, plus prepaids and escrows, minus credits and deposits already paid. A new build adds a few twists to each line.
Conventional payment estimate
The starting figures are an example price at the first-time buyer’s minimum down payment. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a conventional loan quote.
Estimate seeded at the low end of Fannie Mae’s published range (0.58%–1.86% a year); the insurer prices the actual premium on the score and the leverage. Applies only above 80% loan-to-value.
Illustrative starting assumptions: a $350,000 price, the first-time buyer’s minimum down payment, a thirty-year term at the current Freddie Mac benchmark, mortgage insurance at the low end of Fannie Mae’s published range, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a conventional loan quote; your rate is set by the lender at lock. The mortgage insurance figure is an editable estimate seeded from Fannie Mae’s published typical range, not a premium quote; the insurer prices the actual premium, and the cancellation month assumes scheduled payments with no extra principal and no change in value. Taxes, insurance and dues are editable estimates; closing costs are not included. Conforming loan limits apply by county. Licensed in sixteen states for consumer mortgages.
| Item | What it is | New-build twist |
|---|---|---|
| Down payment | Your share of the price | Based on the lower of price or appraised value |
| Closing costs | Lender, title, and third-party charges | Builder credits may offset some |
| Prepaids and escrows | Insurance, taxes, interest set aside up front | Tax bills may reflect land only at first |
| Deposit | Money paid to the builder at contract | Usually credited at closing |
| Build-related items | Inspections, draw fees, extra funds | Show up mainly on construction-to-permanent loans |
| Reserves | Savings left after closing | Not paid at the table, but checked by the lender |
Two of these lines trip people up. The deposit is not extra money. It is part of your total and gets credited. And reserves are not due at closing, yet a file can fail without them.
Which Kind of New-Construction Loan Are You In?
Many buyers blur two different things. A “conventional loan on a new build” and a “construction loan” are not the same product. Your cash timeline depends on which one you have.
| Structure | How it works | When cash comes due |
|---|---|---|
| Finished builder home | You buy a completed or nearly complete home | One closing, like a resale |
| Construction-to-permanent, one closing | One loan covers the build, then converts | One set of closing costs, plus build-stage items |
| Two closings | Separate construction loan, then a new permanent loan | Costs at both closings |
If the home is already built or close to it, you are in the first row. This is the simplest path.
Occupancy also matters. This piece covers a home you will live in. Second homes and rentals carry different leverage limits, and those are a separate conversation.
How the Loan Is Underwritten, Step by Step
Across the wholesale programs Lendmire places files with, conventional new-build files follow the same arc as any purchase, with extra checkpoints. Here is the sequence.
1. Pick the structure. Finished home, one-closing construction loan, or two closings. This choice sets everything after it. Details on conventional options live on Lendmire’s page for conventional loan programs.
2. Set the leverage. For a one-unit home you will live in, the standard purchase limits apply. That means 97% loan-to-value (LTV) with 3% down for a fixed-rate loan where at least one borrower is a first-time buyer, meaning no ownership interest in a residence in the previous three years. Otherwise the limit is 95%, which means 5% down. LTV is the loan amount divided by the home’s value. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
3. Find the value. Lenders use the lesser of the purchase price or the appraised value. On a new build, the appraisal is made “as completed.” If the home appraises below the contract price, the gap becomes cash from you, unless the builder lowers the price.
4. Check credit and ratios. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total debt ratio ceiling of 50%. Manually underwritten files use tighter limits of 36% or 45%, with reserve and score factors that depend on the file.
5. Add mortgage insurance if needed. Above 80% LTV, mortgage insurance applies. You can request cancellation at 80% of the original value with good payment history, no second liens, and no drop in value. The servicer must end it automatically at 78%. Published typical annual premiums run from 0.58% to 1.86% of the balance. That is a range, not a quote. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
6. Review reserves and funds. Lenders look at how much you hold after closing and where the money came from. Deposits paid to the builder show up in this review.
Does a new build need more down payment than a resale? Not by itself. The leverage limits are set by loan purpose and occupancy, not by whether the home is new.
A Walkthrough in Percentages
Take a first-time buyer purchasing a finished builder home at a fixed rate, using the 97% option. The down payment is 3% of the price (or of the appraised value if lower). Closing costs and prepaids sit on top of that. Because LTV is above 80%, mortgage insurance applies.
Now say the builder agrees to pay part of the closing costs. That credit lowers the cash you bring, up to the cap. It does not lower the down payment. Net cash to close is the down payment, plus costs and prepaids, minus the credit, minus your deposit already paid.
Run a second version. The buyer puts down more, say 10% instead of 3%. Credit caps typically rise as your down payment grows, so the same builder offer can cover more. A larger down payment can mean a bigger credit allowance, but it also means more cash from you. Which way the net lands depends on the file.
Your Cash Timeline, Contract to Keys
Cash does not arrive all at once. On a typical new build, it arrives in stages.
| Stage | What you pay | Notes |
|---|---|---|
| Contract | Earnest money or deposit | Credited at closing |
| Design selections | Upgrades and options | Often paid outside the mortgage |
| Pre-closing | Appraisal and any lender-required items | Varies by file |
| Closing | Net cash to close | The Loan Estimate figure, updated |
| After keys | Moving, window coverings, landscaping | Not on the disclosure |
Upgrades deserve a flag. Options you pay for separately may not count toward the appraised value in full. If you finance upgrades through the mortgage and the appraisal does not support them, you cover the difference.
One Closing or Two: How the Construction-to-Permanent Loan Works
A construction-to-permanent loan, also called a single-closing loan, rolls the build and the long-term mortgage into one. The Fannie Mae Selling Guide describes it as one closing, with the construction loan converting automatically to the permanent mortgage once the home is complete. You pay for and attend one closing, not two. That is the main cash advantage.
Fannie Mae’s own eligibility notes say these single-closing loans are processed as purchases or limited cash-out refinances, depending on who owns the lot. Two-closing deals are processed as limited cash-out or cash-out refinances. That detail matters if you already own the land. How the lot equity counts is a file-specific question, so ask your loan officer how your land will be treated.
A few rules shape the cash and the risk:
- Time limits. The guide caps any single construction period at 12 months and the total at 18. A longer build must be done as two closings.
- Requalification. Lenders check that your income, job, and credit documents are fresh when the loan converts. Older documents may require requalifying you.
- Appraisal at completion. The home appraises “as completed,” and a completion report is typical. If value came in lower, expect further steps.
- Limited changes. The only amortization change the guide permits is from adjustable to fixed.
- Eligible homes. Attached condo units and all co-ops are not eligible for construction-to-permanent loans. Detached condos can be, subject to project review.
The practical risk is time. A job change, a new debt, or a lower appraisal during the build can change the outcome at conversion. Keep your finances steady until the loan converts.
Builder Credits: What They Can and Cannot Do
Builder credits are the biggest lever on cash to close, and the most misunderstood. In agency language, the builder is an “interested party.” Under the Fannie Mae interested-party rules, those contributions can go toward closing costs and prepaids. Amounts above the limit are treated as sales concessions. They reduce the sales price for LTV purposes, which can raise the cash you need.
The allowed share of builder credits steps up as your down payment grows. Three points matter in practice:
1. Credits go to closing costs and prepaids. They do not fund your down payment.
2. A credit cannot exceed your actual costs, and you do not get cash back from the excess.
3. A bigger down payment raises the cap tier.
Compare offers on net cash, not on the headline credit. A builder’s preferred lender may offer a large credit tied to using that lender. An outside loan may cost less overall. Ask each side for a Loan Estimate and compare the cash to close line, not the incentive.
New-Build Costs Resale Buyers Rarely See
Some charges are common on new construction and uncommon on a resale. Ask about them early.
- HOA setup. Community associations often collect working capital or prepaid dues at closing.
- Tax escrows. A new home may carry a land-only tax bill at first, so the escrow can change after the home is assessed.
- Survey and completion items. Some builders pass these through.
- Construction draw and inspection fees. On a one-closing construction loan, these are typically part of the closing costs.
- Financing timing. Ask your loan officer how a construction delay could affect your loan terms and closing costs, and get the answer in writing before you sign with the builder.
Is cash to close higher on a new build than a resale? Often it ends up close, since builder credits can offset costs. But the extra line items can push it higher if you do not plan for them.
Reading the Numbers on Your Disclosures
The Loan Estimate lists a line called “Cash to Close.” It is the amount either due from you or paid to you at closing. You get the Loan Estimate early, then a Closing Disclosure before you sign. For new builds the estimate can legitimately move. The CFPB’s mortgage disclosure FAQs say a lender may issue revised disclosures on long new-construction timelines, if the original Loan Estimate clearly says so. So do not treat the first estimate as final.
Construction draw and inspection fees must be disclosed on the lender’s paperwork. Ask the lender how the one-closing loan is being treated on the Loan Estimate.
Cash That Is Not Due at Closing
Plan for the money the disclosure does not show. Lenders look at reserves, meaning the savings you hold after closing. New homeowners also face costs after the keys: moving, window coverings, fencing, landscaping, and sometimes appliances the builder excludes. A file that clears closing but leaves you with an empty account is not a good outcome. Build a cushion for these.
For related detail, see Lendmire’s piece How Much Cash a Low Appraisal Adds on a New Construction Conventional Loan.
Ways to Lower the Cash You Bring
Several moves can shrink the cash to close. None is guaranteed, and each depends on the file.
- Negotiate builder credits, and compare them against an outside lender on net cash.
- Use gift funds, if the program allows and the paperwork is clean.
- Ask the seller to pay costs within the credit cap.
- Time your lock to match the finish date.
- Choose the leverage option that fits your savings. The 97% option lowers the down payment but brings mortgage insurance.
Each of these has trade-offs. A lower down payment can mean a higher monthly cost over time. That is a decision, not a free win.
Questions to Ask Your Builder and Lender
Before you sign, ask these:
1. Is this a finished home, a one-closing build, or two closings?
2. What credit is offered, and does it require a specific lender?
3. What is my deposit, and is it credited in full?
4. Which upgrades are paid outside the mortgage?
5. What happens if the appraisal comes in low?
6. What happens if the build runs late?
7. What HOA and escrow charges are due at closing?
Key Terms Defined
Cash to close: the net money due from you at closing after credits and deposits.
LTV (loan-to-value): the loan amount divided by the lesser of price or appraised value.
Prepaids: insurance, taxes, and interest paid up front and set aside.
Interested-party contribution: a payment toward your costs by the builder, seller, or agent.
Construction-to-permanent loan: one loan that funds the build and then converts to a standard mortgage.
Reserves: savings you hold after closing, which a lender may require you to document.
Frequently Asked Questions
Does my builder deposit count toward cash to close?
Usually yes. The deposit is credited at closing, so it reduces the amount you bring that day. It is still part of your total cash. Your Closing Disclosure shows how the deposit was applied.
Can the builder pay all my closing costs?
Only up to the allowed limit, and never beyond your actual costs. Credits cover closing costs and prepaids, not the down payment. The cap rises as your down payment grows, and amounts over the limit are treated as sales concessions that can raise the cash you need.
What happens if the appraisal comes in low?
LTV is based on the lesser of price or appraised value, so a low appraisal raises the cash you need. You can pay the difference, ask the builder to renegotiate, or revisit the structure. On a one-closing construction loan, a lower “as completed” value can also trigger further steps at conversion.
How firm is the first Loan Estimate?
It is an estimate. On long new-construction builds, a lender may provide revised disclosures if the original estimate clearly says so. Price changes, upgrades, and appraisal results can all move the final figure.
Can I use gift funds?
Some conventional programs allow them, subject to lender guidelines and documentation. The lender will want to see the gift source and transfer. Ask early, because the paperwork can affect your reserve picture.
Next Step
If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Program figures here are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide: Construction-to-Permanent, Single-Closing Transactions
2. Fannie Mae (document 20786)
3. Fannie Mae Selling Guide: Interested Party Contributions
4. CFPB: TILA-RESPA Integrated Disclosure FAQs
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Get From a Conventional Loan Pre-Approval to Clear to Close · How Much Cash a Low Appraisal Adds on a New Construction Conventional Loan · How Much Cash a Low Down Conventional Loan Takes on a 2-4 Unit Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.