Do new construction homes pay closing costs?
April 28, 2025
When buying a new construction home, one of the most common questions we hear is: Do builders cover the closing costs? The short answer? Sometimes. The long answer depends on your builder, your lender, and your willingness to negotiate.
Understanding how closing costs work in new home construction can help you make smarter financial decisions and potentially save thousands. In this post, we’ll break down what closing costs include, who usually pays them, and how builders may (or may not) help cover them.
What Are Closing Costs?
Closing costs are the fees and expenses due at the end of the homebuying process, typically totaling 2% to 5% of the home’s purchase price. These costs include:
- Loan origination fees
- Title insurance
- Appraisal fees
- Recording fees
- Attorney fees (if applicable)
- Prepaid property taxes and homeowner's insurance
For example, on a $450,000 home, closing costs might range from $9,000 to $22,500.
Who Usually Pays Closing Costs?
In most real estate transactions, buyers are responsible for the bulk of closing costs. However, in a resale transaction, sellers may agree to contribute to closing costs as part of the deal.
In new construction, the builder is essentially the seller—and they may offer similar incentives, especially when they're motivated to close quickly or move inventory.
Do Builders Pay Closing Costs?
Builders can and often do offer to pay some or all of the buyer’s closing costs—but typically under certain conditions.
When Builders May Cover Closing Costs:
- The home is already completed and sitting unsold.
- The builder is running seasonal promotions or sales.
- You agree to use the builder’s preferred lender and/or title company.
- The local real estate market favors buyers.
What Builders Might Cover:
- Title services
- Appraisal costs
- Lender fees
- Escrow or settlement fees
Keep in mind: Some builders may raise the base price of the home slightly to offset these incentives. It’s always wise to review the full financial picture.
Pros and Cons of Builder-Paid Closing Costs
Pros:
- Lowers your immediate out-of-pocket costs
- Frees up your budget for upgrades or moving expenses
- Can make the deal more affordable for first-time buyers
Cons:
- May limit your choice of lender or title company
- Incentives could be built into the home’s pricing
- Less room for negotiating other upgrades or features
Tips for Negotiating Closing Costs with a Builder
- Ask About Current Incentives
Many builders in Overland Park and the greater Kansas City area run monthly or seasonal promos. Don’t be afraid to ask. - Use Their Preferred Lender Strategically
If the builder offers closing cost coverage through their lender, compare that loan’s terms with others to ensure you’re not overpaying in the long run. - Hire Representation
Whether it's a real estate agent or working directly with a builder like Nova Homes, having an expert in your corner ensures you're asking the right questions. - Be Willing to Walk Away
Like any negotiation, you have more power when you're not afraid to explore other options.
Why Choose Nova Homes for Your New Build?
At Nova Homes, we believe in transparency, flexibility, and helping our clients understand the full financial picture of building a new home. We walk you through everything—including closing costs—so there are no surprises at the closing table.
Whether you're building your dream kitchen, choosing finishes, or navigating builder incentives, our team ensures you get the most value without compromising your vision.
Let’s Talk About Your Dream Home
Thinking about building a new home in Overland Park or the Kansas City Metro? Let’s talk about your goals, your vision, and your budget. Contact Nova Homes today for a free consultation.
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