New Construction
How much is the deposit on a new build, and can I lose it?
By Steve Lockhart
The short answer
A new build deposit is the earnest money that shows the builder you are serious, and it goes toward your purchase price at closing. Builders set the amount, and it can be a flat figure or a percentage that rises with the home's price or the phase.
Full answer
A new build deposit is the earnest money that shows the builder you are serious, and it goes toward your purchase price at closing. Builders set the amount, and it can be a flat figure or a percentage that rises with the home's price or the phase. The sales center states the required amount plainly; what is less plainly stated is what happens to it in every scenario.
The money is not simply refundable because you change your mind. Builder contracts define default and cancellation, and if you cancel outside the allowed terms, the builder can keep a portion or all of the deposit as liquidated damages, which is how they protect their construction schedule. Some contracts also tie additional deposit payments to construction milestones, so ask about the whole payment schedule, not just the first check.
Before you deposit, review the contract's cancellation, default, and refund clauses with someone who reads builder contracts regularly. Know what happens if financing falls through, if the appraisal comes in low, if the build is delayed beyond your limit, and if the builder fails to deliver. The deposit is your risk on the table, so the clauses that govern it deserve the same attention as the price.
Go a little deeper
Frequently asked
Questions people often follow up on
How much earnest money do builders usually ask for?
The amount varies by builder, price point, and phase, and it can be a fixed amount or a percentage of the price, sometimes increasing in later phases or for more expensive product lines. The builder's written price sheet and contract state the exact amount. Budget for it before you sign, not after.
Is my deposit refundable?
Only in the scenarios the contract allows: commonly within a short review period, or when a stated condition such as financing or appraisal fails under the contract's terms, and builders handle each case by the written clause. Outside those scenarios, cancellation typically costs you at least part of the deposit. Ask for the refund rules in writing.
Can I lose the deposit if I cannot get financing?
It depends on whether your contract carries a financing contingency and whether your situation fits its terms. Many builder contracts exclude a financing contingency or condition it on using the builder's lender. If your loan fails outside the contract's protected reasons, the deposit is at risk, which is why understanding this clause before signing matters.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: never put down a deposit without knowing the exit terms. I walk the cancellation, default, and refund clauses with you before you write the check, and I budget the deposit schedule into your cash plan, so the money at risk is an informed choice, not a surprise.
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