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Pros and Cons of Buying a New Build Home


If you’re shopping for homes, townhomes, or condos, you may be comparing buying new vs. used homes. There are pros and cons of both. In this article, we’ll discuss what they are.

Build New or Buy Existing Home

Whether you buy a newly built home or an existing one, embrace the journey. Home shopping and moving into your new place is an adventure. Take the time to enjoy it!

Your decision will probably be based on location and design. There’s a charm that older neighborhoods have with their mature trees and landscape that a newer community can’t compete with.

On the other hand, with new homes, especially in gated communities, there’s a symmetry of design that many homeowners appreciate.  

Benefits of Buying a New Build Home

The biggest benefit of purchasing a brand-new home is that no one else has ever lived there. So, you and your family will be the first to use everything.

Customization is another major advantage of buying a new vs. used home. Unless the home is already completely built, you will most likely be able to choose the flooring, wall color, cabinetry, lighting, and fixtures.

Most new homes are energy-efficient, so your utility bills will be lower than those of an older home. Standard energy-efficient features include higher quality insulation in the crawl space, attic, and walls. And many new homes are made energy-efficient with energy-star appliances and solar.

New homes have the most modern and up-to-date floorplans and designs. And closets are often larger, and there’s more storage throughout the home. Additionally, there can be smart home features built-in that existing homes don’t have and would be costly to add.

Although new homes may cost more initially, you’ll also have fewer repairs and won’t need to worry about major renovation costs, replacing expensive HVAC systems, or putting on a new roof. So, you not only need to look at the initial cost but also upkeep costs when compared to an existing home.

Hidden Costs of Buying a New Build Home

Property taxes of a newly built home are typically higher than a comparable existing home. Higher taxes mean a bigger house payment. And taxes hardly ever go down, but they do increase.

The cost of upgrades can be quite high too. And if your lender has preapproved you for a certain amount, it’s important to stay within that limit. Keep in mind that the base price of the house is the base price — any upgrades will add to the sales price. Those upgrades could make the home price too high for you to qualify for.  

Many new build homes are in gated communities with homeowner association fees. These fees can run from $100 to $700. The average is around $200. So, make sure you’re taking those HOA fees into account when you get prequalified.

Window treatments are often not included in a new home. Getting blinds, shades, and curtains for an entire house can be costly.

Landscaping may or may not be included. If your lot is a bare piece of dirt, expect to pay for:

  • A lawn
  • Sprinkler system
  • Bushes
  • Trees
  • Decking
  • Overhang

Although you don’t have to do everything at once, getting a lawn put in is a top priority, so dirt isn’t tracked inside. There are many pros and cons of buying a new build home —­ but the most important thing to keep in mind is your budget. Make sure whatever you purchase is affordable now and in the future.

Cons of Buying New Build Home


Property taxes of a new build home are generally higher than an existing comparable home. Plus, sometimes, the taxes are estimated before the home is complete. After completion, the property could be reassessed, and taxes could increase.


It’s a pretty common occurrence to find spiders in new build homes. There can also be other pests like mice. That’s because often, the lot the home was built on was recently cleared. So many pests and bugs had to find a new home. The best solution is to call a reputable pest control company. Many now use organic, non-toxic ingredients and essential oils.

Down Payment

In many cases, builders require a larger down payment than if you purchased an existing home. It’s important to read the sales contract to see what happens with your deposit if the deal falls through. You don’t want to lose your money.


Most lenders won’t lock in rates longer than 60 days. And interest rates can rise during the construction process, and that can be an issue. If rates get too high, you may not be able to qualify.


If the house is completed, many builders won’t accept an offer contingent on you selling your current home. So, getting the deal closed, selling your current home, and moving in can be a balancing act.


Many realtors don’t have very much experience dealing with builders. And that could lead to problems during the process — especially when it comes to negotiating.

Empty Lots

In a new community, there may be empty lots just waiting to be built on. That means — when you move in, you won’t have any idea who your neighbors will be.


Construction delays are not uncommon when buying a newly built home. This can be a problem if you’re selling your current home and then your new one isn’t ready yet. That means you’ll need to store your stuff, stay with friends or relatives, or find a place to rent.

More Expensive

Lumber prices are rising, and so is the cost of labor. That means it costs more to build. New build homes can be higher-priced and require a jumbo loan. That means you’ll need to be able to meet the higher guidelines that come with jumbo loans. However, if you’re a service member, veteran, or eligible spouse, make sure to check out VA mortgages since there is no loan limit as long as you can qualify.

Benefits of Buying an Existing Home

Existing homes have withstood the test of time, whereas a newly built home hasn’t. That’s why it’s extremely important to know what the quality and grade are of the building materials when buying new.

An existing home, although it isn’t brand-new, does have the advantage of seeing how it will fair in all seasons through the years. Oftentimes one contractor builds many homes in a neighborhood. By asking other owners in these established neighborhoods if they’ve had any issues with their homes, you’ll be able to get some good information.

In established neighborhoods with existing homes, any issues with the property itself will most likely be known. That includes drainage issues and soil conditions.

In a nutshell, you may have a better idea of what you’re getting as far as the lot with an existing home — especially if there’s been a long-documented history, including site surveys and engineering reports.

Cons of Buying an Existing Home

The biggest disadvantage to buying an existing home is that 99.9% of the time, there will be repairs to make. Plus, there will likely be renovations you’ll want to have done.

Buying an existing home means many of the appliances and HVAC (unless new) have already been used.  If the previous owner didn't take good care of the home, you just inherited deferred maintenance and a long to-do list.

That’s why it’s essential to get a thorough home inspection when you’re in escrow. That way, you’ll know what needs repairs and how long some of the home's major components, like the roof and HVAC system, will last. Additionally, consider getting a home warranty to cover anything that goes wrong over the next few years.

The Choice is Yours — Build New or Buy Existing Home

The deciding factor between buying a new vs. a used home may come down to the location, especially if you have friends and family you want to be close to. Weigh your options, visit many new homes for sale — both new build and existing, and realistically look at your budget. Once you do those things, your decision should be clearer.

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After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5


1Rates are updated daily at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.