When budgeting for a new construction home, one of the most important — and often misunderstood — expenses to plan for is closing costs. Understanding what closing costs are, who pays them, and how builder-paid closing cost incentives work can help you make smarter financial decisions when buying a new home.
Closing costs are the fees and expenses required to finalize the purchase of a home. These costs are paid at closing, when ownership of the property transfers from the seller (the builder) to the buyer.
Most closing costs are not related to the construction of the home. Instead, they are tied to:
Your mortgage loan
Lender services
Title and settlement services
Government recording requirements
“At the most basic level, it costs money to borrow money. Closing costs allow the lender and title company to do their jobs.”
— Mikaela Vaughn, New Home Sales Agent
Typical closing costs may include:
Mortgage origination fees
Appraisal fees
Prepaid items and lender fees
Escrow or settlement fees
Prorated property taxes
Survey fees
Owner’s Title Policy (OTP)
Title search and title company fees
Recording and government fees
These fees do not go to the home builder, and they are not caused by buying a new construction home.
Yes. In addition to standard closing costs, buyers may also be responsible for:
HOA dues
HOA enrollment and transfer fees
These costs vary by community and are separate from lender-related fees.
In most transactions, buyers pay the majority of closing costs, because they are directly associated with the mortgage loan.
However, federal lending guidelines allow sellers (including builders) to contribute a limited amount toward closing costs, depending on loan type:
FHA loans: Seller may contribute up to 3.5%
Conventional loans: Seller may contribute up to 3%
Your lender determines the exact allowable amount based on your loan program.
Builder-paid closing costs are often offered as a Builder Concession — an incentive that helps reduce a buyer’s upfront expenses.
More common in balanced or buyer-friendly markets
Less common in highly competitive markets with low inventory
If available, your New Home Sales Agent can help you apply the concession toward:
Closing costs
Options and upgrades
Keeping the loan amount lower overall
Your new home contract will typically state seller-paid closing costs as:
“Up to and not exceeding $X”
This wording protects both buyer and seller. For example:
If the contract states “up to $2,000”
And allowable seller contributions total $1,997.42
The contract does not need to be amended
Any small variance is already accounted for in the overall concession — no value is lost.
Buyers may qualify for additional savings by using one of the builder’s preferred lenders.
Survey fee paid by Omega (approximately $350)
Owner’s Title Policy paid by Omega
Savings typically range from $1,000–$3,000, depending on sales price
Using an Omega Builders preferred lender can significantly reduce your out-of-pocket costs at closing.
Discover why you need title insurance and what it covers from CentraLand Title Company.
Closing costs typically range between:
2%–5% of the home’s purchase price
The exact amount depends on:
Loan type
Purchase price
Local taxes and fees
Before closing, your lender will provide a Closing Disclosure, which outlines:
Every fee
Total cash due at closing
Online tools, such as the NerdWallet Closing Cost Calculator, can help you estimate costs early in the buying process and understand how different loan options affect your total.
Closing Cost Calculator as shown on Nerdwallet.com
Closing costs are mostly lender and title-related fees
Builders do not collect closing costs
Seller contributions are limited by loan type
Builder concessions can reduce upfront expenses
Preferred lenders may offer additional savings
Builder-paid closing costs are seller concessions offered by a home builder to help cover a buyer’s allowable closing costs. These incentives reduce the buyer’s out-of-pocket expenses at closing but are limited by loan type and federal lending guidelines.
No. Builder-paid closing costs are not guaranteed. Availability depends on market conditions, inventory levels, and current incentives. In highly competitive markets, builder concessions may be limited or unavailable.
No. Closing costs for new construction homes are generally the same as resale homes. Most closing costs are related to the mortgage loan, title services, and government fees—not the age of the home.
Builder contributions are capped based on loan type:
FHA loans: Up to 3.5% of the purchase price
Conventional loans: Up to 3% of the purchase price
Your lender determines the exact allowable amount.
Yes. Builder concessions may be applied toward options and upgrades, which can help keep your loan amount lower and reduce long-term interest costs. Your New Home Sales Agent can help determine the best use of available concessions.
This language means the builder will pay no more than the stated amount toward allowable closing costs. If the final total is slightly less than the maximum, the contract does not need to be amended, and no benefit is lost.
They can. Using concessions for upgrades or prepaid costs can reduce the amount you need to borrow, which may lower your monthly payment and overall interest paid over time.
Yes. Buyers who choose a builder’s preferred lender may receive additional incentives, such as:
Paid survey fees
Paid Owner’s Title Policy
These savings can total $1,000–$3,000 or more, depending on the home’s price.
Closing cost fees are paid to third parties, including lenders, title companies, appraisers, and government agencies. Builders do not collect these fees.
Your lender will provide a Closing Disclosure prior to closing that lists:
All final fees
Seller contributions
Total cash due at closing
This document allows you to review and confirm all costs before signing.
In most cases, closing costs cannot be rolled into a purchase loan unless allowed by specific loan programs or covered by seller concessions. Your lender can explain your available options.
This article is provided for informational purposes only. Omega does not warrant or guarantee the accuracy of the information provided and makes no representations associated with the use of this information as it is not intended to constitute financial, legal, tax, or mortgage lending advice. Omega Builders encourages you to seek the advice of professionals in making any determination regarding, financial, legal, tax, or mortgage decisions as only an informed professional can appropriately advise you based upon the circumstances unique to your situation.
