The Quick Read: The lender lends against the lower of two numbers: your contract price or the appraiser’s opinion of the finished home’s value. For a home that is not built yet, that opinion comes from plans, specifications and nearby sales. A completion check follows before the loan finalizes. A builder’s price is a starting point, not the value the lender uses.
Key Takeaways
- The loan is sized on the lower of the contract price or the appraised value.
- A home still being built is appraised “subject to completion,” using plans, specs and comparable sales.
- Builder credits and upgrade pricing can push the contract above what the market supports.
- Everything is rechecked at completion, including the value, your credit and your assets.
- Jumbo lenders write their own rules, so confirm details with the lender before you rely on them.
Key Terms Defined
Jumbo loan: A mortgage larger than the conforming limit for the county where the home sits.
Appraisal: A licensed appraiser’s written opinion of what a property is worth.
As-completed value: The appraiser’s estimate of what the home will be worth once it is finished.
Comparable sale (comp): A recent sale of a similar home nearby, used to support the value.
Cost approach: A method that adds land value to the cost of building the home, minus wear.
Concession: Money the seller or builder pays toward your costs, such as a credit at closing.
Completion report: A follow-up document confirming the home was finished as the plans described.
Jumbo payment estimate
The starting figures are an example price in the jumbo range with ten percent down on a thirty-year fixed. 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 jumbo loan quote.
Illustrative starting assumptions: a $1,000,000 price in the jumbo range, ten percent down on the top-leverage lane, a thirty-year fixed structure at the current Freddie Mac conforming benchmark, 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 conforming benchmark, a market reference and not a jumbo loan quote; jumbo rates are set by the lender and the lane at lock and differ from the conforming benchmark. An adjustable-rate scenario is shown at the benchmark for the whole term; the rate after the initial period is unknown. Reserve months and appraisal counts follow the lane sheet for the amount band; the automated finding may require more. Taxes, insurance and dues are editable estimates; closing costs are not included. On most lanes the conforming limit for the county decides whether a loan is jumbo at all; two lanes start at a stated dollar floor instead. Licensed in sixteen states for consumer mortgages.
Jumbo Means Loan Amount, Not Price
A loan is jumbo when the amount you borrow lands above your county’s conforming limit. The price of the home is not the test. The same house can need a jumbo loan in one county and a standard loan in another, depending on that county’s limit. Those limits change yearly, so check the current figure for your county before you plan.
Jumbo lenders set their own guidelines. Nothing federal dictates how a jumbo file is valued. In practice, many jumbo lenders follow appraisal conventions borrowed from the big agencies, then add their own overlays. Treat what follows as the common method, not a universal rule.
Across the wholesale lanes Lendmire places files with, the envelope looks like this. The headline lane starts at a 660 decision score. Leverage reaches 90% on the top lane, and loans run to $5,000,000 on the largest lanes. The ratio ceiling is 50% on the fixed lanes. Reserves and appraisal requirements scale with the loan amount. All of it is subject to lender guidelines and full file review. You can see how those pieces fit together on Lendmire’s jumbo loan programs page.
Which New-Construction Path Are You On?
Your path decides what gets appraised, and when. Most buyers fall into one of three.
| Path | What gets appraised | Leading method | Main risk |
|---|---|---|---|
| Finished or nearly finished builder home | The home as it stands | Sales comparison | Price above nearby sales |
| Builder home under construction | Plans and specs, “as completed” | Sales comparison, cost check | Value changes at completion |
| Custom or ground-up build | Plans, budget, land | Cost approach and comps | Thin comps, budget overruns |
The finished-home case is the most common, and it is the simplest. The lender treats it close to an existing home. The other two add a waiting period, and a waiting period adds risk.
Loan structure differs too. A single-close loan combines the build financing and the permanent mortgage in one transaction. A two-close structure pays off the construction loan with a separate permanent loan. Either way, ask early how your file moves from one phase to the next.
How the Appraiser Values a Home That Isn’t Finished
The appraiser values the finished home, not the dirt and framing on site. That comes from the Fannie Mae Selling Guide. The same section covers how completion is verified.
Here is the usual sequence:
1. The lender collects the contract and all addenda. That includes plans, specifications and a list of upgrades.
2. The appraiser reviews the package. A model home or a similar finished home nearby helps.
3. The appraiser picks comps and adjusts them. Adjustments reflect how the market reacts to differences between homes.
4. The report states an as-completed value. The appraisal is “subject to completion.”
5. Completion is confirmed. Either the appraiser files a completion report, or the lender accepts a builder or borrower attestation, depending on the lender.
The appraiser also reports your contract price. The report has to say whether anyone is paying concessions on your behalf. That is how builder credits reach the valuation.
Sales Comparison vs. Cost Approach
Sales comparison asks what buyers recently paid for similar homes. On a new build, this method usually leads. The cost approach asks what it would cost to rebuild the home, plus the land. It acts as a supporting check.
The cost approach carries more weight when a home is custom or unusual. Few buyers have paid for anything like it, so comps say less. Even then, cost is not the same as value. A builder can spend a lot on a home that nearby buyers would not pay for.
What Happens When Comps Are Thin
Thin comps are common at higher prices. New homes at jumbo size are scarce, and few sold nearby recently. Agency appraisal rules say comps should share similar physical and legal traits and appeal to the same buyers. When nearby sales don’t fit, the appraiser may widen the search area, but has to explain why. The same rules, in the Selling Guide’s comparable-sales section, ask for evidence the market accepts the new homes in a project.
The appraiser typically widens the search in a few steps:
- A wider distance from the subject.
- Older sales, if the market was steady.
- Similar neighborhoods that attract the same buyers.
Each step brings larger adjustments. Large adjustments make a report harder to defend. A jumbo lender may be stricter than an agency on a unique or high-end home. Expect more scrutiny, not less.
One more point. Sales from the builder’s own project matter, but resales matter too. A resale shows what a buyer paid when the builder was not setting the price.
Builder Incentives, Credits and Upgrades
A builder’s incentive can open a gap between price and value. Say a builder offers a large closing credit in exchange for a higher price. The appraiser still has to opine on market value. The credit does not raise what the home is worth.
Agency rules treat the builder as an “interested party.” Their limits on what an interested party can contribute vary by transaction, and amounts above the cap are treated as sales concessions that reduce the value used for the loan. Fannie Mae’s Selling Notice on interested-party contributions explains how those caps work for agency loans. A jumbo lender sets its own limits, so don’t assume the agency numbers apply.
Design-center upgrades work the same way. Granite counters and a finished basement cost the builder less than the buyer pays. They also add less to value than they cost the buyer. Appraisers credit what the market pays for features, not what the builder charges. Hard to love, but true.
Lender-affiliated builder financing adds one wrinkle. Under agency logic, a lender credit funded by premium pricing is treated differently from a direct builder contribution. Ask the loan officer how the lender treats yours.
A Worked Example (Modeled, Not Real Data)
Here is a hypothetical, using only percentages. Assume a buyer signs a contract at 100% of price. The lender sizes the loan at 80% of the lower of price or value. Run it three ways:
| Appraisal result | Value vs. price | Loan vs. price | Cash needed vs. price |
|---|---|---|---|
| Above price | 103% | 80% | 20% |
| Equal to price | 100% | 80% | 20% |
| Below price | 95% | 76% | 24% |
Look at the first row. A higher appraisal does not raise the loan. The lender uses the lower number, which is still the price. Now the last row. A 5% shortfall moves four points of price onto the buyer. The cost of a low appraisal lands on the buyer’s cash, not the lender’s.
These numbers are illustrative only. Actual leverage depends on the lane, the occupancy, the loan amount and your file. Subject to lender guidelines.
When a Second Appraisal Applies
Some jumbo lanes require two appraisals once the loan passes a threshold amount. That threshold varies by lane, so Lendmire doesn’t state a figure here. The second appraiser usually works independently. The lender then relies on the lower value, or reconciles the two. Ask your loan officer at the start whether your amount triggers it, because it affects both cost and scheduling.
If the Value Comes in Low
A low value is a problem you can work. Here is the usual order:
1. Read the report for errors. Check square footage, lot, upgrades and the model type.
2. Gather evidence. Collect recent sales the appraiser missed, especially resales near the home.
3. Ask for a reconsideration of value. Your loan officer submits it to the lender. It is a request, not a right.
4. Renegotiate the price. Some builders adjust, others offer credits instead. A price cut and a credit are not the same in underwriting.
5. Cover the gap. Add cash if your reserves and plans allow it.
Completion, Timing and Your Primary Residence
Occupancy matters here. This article assumes you will live in the home. Primary, second-home and investment occupancy each carry their own leverage on the lanes Lendmire places, so a second-home plan changes the numbers. For a closer look at that, see Lendmire’s piece How Jumbo Loan Rules Work for a New-Construction Second Home. Back to your primary residence.
Everything gets rechecked at completion. Under agency rules for single-close conversions, a completion report showing a value decline triggers a new appraisal and requalification at the updated leverage. Documents that have aged out, such as pay stubs or bank statements, get refreshed. The relevant section is the Selling Guide on construction-to-permanent conversion. Many jumbo lenders do something similar. A job change or a new car loan during a long build can matter.
Two timing risks deserve attention:
- Delays. If the home isn’t done when your lock on loan terms expires, an extension may cost money.
- A loan that doesn’t convert. The CFPB notes that a construction loan that does not convert automatically may require you to reapply.
Because this is a consumer mortgage, you receive a Loan Estimate and a Closing Disclosure. Compare them, and ask whether your terms are set at closing or at conversion.
What the Lender Also Reviews
Valuation is half the file. The lender also looks at:
- The builder and project. License, insurance, plans, budget and schedule.
- Your documentation. Income, assets and credit, measured against the lane’s decision score and ratio ceiling.
- Your reserves. Reserves are counted in months of the full payment, and they rise with the loan amount.
- Property type. Two lanes accept non-warrantable condominiums, which matters if your new build is a condo.
Where the General Rule Breaks
Some situations bend the usual method.
- Builder owns the lot. Many lenders treat it more like an existing-home purchase than a construction loan.
- Postponed improvements. Agency rules generally expect work to be finished when the loan is delivered. Minor items like landscaping or a driveway can be an exception. Jumbo lenders set their own tolerance.
- No recent identical comps. An appraiser can support a new design with other reliable data, but the report has to show it.
- Different county, different limit. The line between conforming and jumbo varies by county. Your county’s limit decides whether you are in jumbo territory at all.
A move-up buyer selling one home to build another faces extra timing questions.
Frequently Asked Questions
Does the lender use the builder’s price as the home’s value?
No. The lender uses the lower of the contract price or the appraised value. If the appraisal comes in higher, the loan is still sized off the price. If it comes in lower, the loan shrinks and your cash need grows.
Is a new-construction jumbo appraisal different from a resale appraisal?
Yes. For a home not yet built, the appraiser values the finished product from plans, specs and comps, then a completion step confirms the work. A finished builder home is appraised much like a resale.
Can builder credits help me qualify?
Sometimes, but they are limited. Credits above a lender’s cap can reduce the value used for the loan, and a credit that is not disclosed can create bigger problems. Ask the lender how it treats yours before signing.
What if the home is not finished when my loan is ready to close?
Delays can affect your lock on loan terms and your documents. A lender may ask for updated paperwork, and the value can be rechecked at completion. Raise it with your loan officer as soon as a delay looks likely.
Do jumbo lenders all follow the same new-construction rules?
No. Jumbo lenders set their own guidelines, though many borrow agency appraisal conventions. Details like the second-appraisal threshold and the concession limit differ by lender, so confirm yours.
Next Step
If you are buying a home and want to see whether a jumbo loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Ask about builder credits and completion rules before you sign a contract. Those two items shape the most surprises. Details for Lendmire’s loans are subject to lender guidelines and full file review, and nothing here is a commitment to lend. For a fuller list of what a lender wants on this kind of purchase, see Lendmire’s guide Jumbo Loan Requirements for Buying New Construction as Your Primary Home.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B4-1.2-05: Verifying Completion and Postponed Improvements
2. Fannie Mae Selling Guide B4-1.3-08: Comparable Sales
3. Fannie Mae Selling Notice on interested-party contributions
4. Selling Guide on construction-to-permanent conversion
5. CFPB
6. FHFA – Conforming Loan Limit Values
This article is part of Lendmire’s jumbo loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a Jumbo Lender Builds the Approval Timeline and What Delays It · New 30-Year vs. 20-Year Jumbo Refinance Above the Conforming Limit · Is a Jumbo Cash-Out Refinance Allowed on a Primary Home?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.