New Build vs Old Home: What First-Time Buyers Must Know (2026)

So, you're thinking about buying your first home. And now you have the first of many, many decisions, maybe the most important one. Are you going to buy a existing home or a new build? An existing home that's already out there in some beautiful neighborhood or a home that's about to be built by a builder. I'm not going to try to talk you out of either one of them. I'm not going to steer you into either side, but I am going to give you the five major points of consideration to be thinking about that'll save you a lot of money, uh, avoid a lot of headaches, and just give you that peace of mind that you made the right choice at the end of the day. and now you can move into that that beautiful new home that you're hoping for. So, if that's of interest to you, share this video, like it, make a lot of comments because there's lots of comments on this kind of subject. And let's kick off this rodeo right now. I'm Kevin Fagan. the mortgage patriot on your side nestled here in the Hill Country above San Antonio, Texas, serving all you proud Texans and all you great folks all around the country. Another great one today because again we're going to talk about buying a home which is either an existing home or a new build and what you should do. So before we do that, if you hit the like and subscribe please, it brings up my content to the forefront. You can see here that's my YouTube channel, The Mortgage Patriot. All kinds of videos very valuable to you on certain loan products that are best for you, on certain negotiation strategies, on how to slash your closing costs at closing, all kinds of videos, just a treasure trove of really good information, especially for first-time home buyers. So, with that in mind, like and subscribe. Let's get into that content right now. Speaking of treasure trove of great information, I forgot to tell you about a Thursday evening webinars that I host. Go to this website, webinar.the the mortgage.com and you'll see when the next scheduling of the webinar is. It's about every second or third Thursday in in a cycle and I take you from start to finish. I take you from pre-approval all the way through getting something under contract and all the way to the finish line where you get your keys. Fantastically informative about 50 minutes to an hour long depending on your questions. It's been highly enjoyable so far and I think you'll gain quite a bit from it. So do that and let's continue on with this video. So let's get into this content. And I mentioned the five considerations that you should have in choosing between existing or new builds. And that the first one is probably the biggest one. And that's the customization. And what what I mean by that is you get to pick obviously in a new build. That's the whole point of a lot of people find it to be the greatest attraction. You get to pick your color schemes and your type of flooring and your what type of cabinetry and your type of countertops. Now, some of those won't be standard. Some of those might be upgrades, but still you have that choice, right? And by the time you move in, everything's to exactly the way you want it. So there is that customization. Normally you get to go to what they call a design center that's usually on site and you get two or three choices as to the colors. It's nicely coordinated between flooring, wall colors, trim colors, cabinetry, and countertop colors. All that blends in very nicely. You pick the right package and again you move in and it's all beautiful. That doesn't happen, of course, in an existing home. You can have funky things going on in an existing home a lot of times. uh you'll walk into a very nice place, but sometimes of course you'll get something that's a little bit strange and you have to paint the walls and you want to immediately change out the cabinets because for whatever reason. So, um you can't really compete with a new build on that basis. But I will say this, you can as an from an existing home uh perspective, you can get what's called a renovation loan. And the renovation loan can have a component. You buy the house and you have on the side you, let's say you're adding $25,000 to your purchase price that goes into a side account that you can use to change out the colors of the cabinets, to paint the walls, change out the carpet, and so forth. So you get the house that you want almost anyway. So just know that there's an alternative to the new build in that respect. The second consideration is what I'm calling lot and house features. So what are we talking about here? Talking about the actual lot. I mean, on new builds, let's just face it, lots getting smaller and smaller. You can almost, you know, pass the sugar, as they say, back and forth between the kitchen windows now with your neighbor. Now, if you like your neighbor, that's great. But sometimes that's not going to work, right? And because these lots are smaller and the builders want to keep the house size relatively, you know, the same, they got to squeeze the square footage in the house from somewhere. They take it from the garage typically. So, the garage sizes, believe it or not, over the last 10 years have shrunk. You go back 20 years and you can actually fit two cars into a twocar garage. Now a twocar garage with a new build, you're you're barely squeezing out of your car if you got both cars in there. That's why you see so many people parking on the curb or parking outside on the on the sidewalk or on the driveway. That's a mess. That's one of the real downsides I think of a new build. Um you don't see that in existing homes. You have, you know, the 23 24T two-car garage is very comfortable for two for two cars and the lot sizes are much bigger. So, one of the big downsides of a new build related to these house features are things like also the deck. Uh, now we're talking again about first-time home buyers and the and the basic plans that go into that. And so, that price point is probably 350, you know, 300 to 350. Okay? So, I'm not talking about customuils. That's you can obviously get fantastic features there. But on the on the first-time home buyer side, the decking, for example, you walk outside and they have what they call a deck, but it's like just an 8 by8 slab of cement. No, no awning, no cover, no screened in anything. Uh, it's just a slab and it's not a very big one. So, uh, good luck there. They usually have a couple of trees in the front maybe that they bought for $100 at Home Depot combined and they have very little, zero landscape. Sometimes the backyard is just all dirt. Oh, you want grass? Well, that's the upgrade. So, just know your package. know what you're stepping into because come on an existing home you have mature trees, mature landscaping, you have a lot of times a deck with a with a with an enclosure on it or at least an overhang. These things are worth tens of thousands of dollars. So again, these are all opinions and so I'd like to hear your comment on this kind of thing, but it's very disappointing, very disappointing for a lot of new builds. The third consideration, and this is a big one, is what I call protection warranties. So what are we talking about here? Well, homeowners want to know that, you know, especially first-time home buyers, they're going to walk into a situation where they're not going to have to come out of pocket much over the next couple of years because something breaks. Now, in an existing home, that's always a threat. Although, you can get what they call a home warranty coverage. We can talk about that in a second, but on the builder side, everything's new, right? So, presumably, you your HVAC, your your roof is going to stay fine. Your water system, your electrical is going to be good. Now, you do get what they call a builder warranty, and that's going to be different across different builders, but generally, let's say the foundation is covered from for about 5 to 10 years. Typically, your electrical and HVAC are covered for 2 to three years, and everything else is usually about a year old uh in terms of warranty anyway. So, you get peace of mind certainly in a in a in a new build over an existing home. Now, like I said, an existing home, you can get what's called a home warranty, which covers your major systems, and that's going to cost anywhere from, say, $500 to $600, depending on, you know, what you're trying to cover. And that'll give you some peace of mind. Now, no, just know this in either situation, existing or the new build. This is what's going to happen. You're going to have a claim because, let's say, the HVAC goes out on either one of these, new builder, existing, uh, these the builder or the home warranties, they're going to try to weasel out of the contract. They always do. It's like insurance company, man. They're always going to try to get out of their obligations. So, you got to really hold their feet to the fire. You have to know what all their exclusions are. Really just have to know all the coverages. I can help you with that. Let's talk about consideration number four. And again, this is a big one as well. This is incentives. New build incentives. What are these? These are the things that they splash across all the headlines in the in their social marketing or in the news. $4.99% $15,000 of closing costs incentives. These are extensions up from the builder to you as a way as a way to incentivize you to buy the home. And so they do that in the form of a package, a financial package in this case where they either lower some combination of lowering the rate. So let's say market rates are at 6% right now and they roughly are on a say an FHA depending on your scores. They can get you instead of 6% they'll get you a 5% or 4.99%. Sounds a lot better than six and it is. Saves you about a hundred bucks a month. Uh, also they can give you closing cost coverage and they might say we'll give you 4.99% and then we'll also throw in $10,000 of closing cost coverage. All sounds great. Just know this, this entire so-called incentive package is a giant negotiation and that's their baseline. Meaning, they extend it to you, but that's not all they can give you. They're not going to show you their best deal up front. That's why you have to have a great negotiator with you. Someone like myself who's had plenty of experience negotiating with new builds. Okay? Don't think that you're going to get these incentives if if you use their in-house lender. And that's fine and dandy as long as you do get these incentives at least and maybe some more. And again, so I will point out to you if I can help you on the negotiation side what to be looking for. Is their deal really as good as it seems? Because in an existing home, you get incentives as well, but they're called seller concessions. On every deal, every deal I do as a representing a buying side or doing the financing for them. As a loan officer, I can do both. I'm do a license. I get seller concessions on a property. So, for instance, on a $300,000 house, I routinely get $9,000, $10,000 worth of seller concessions to help pay for closing costs. So, consider all that. It's not just the the new builds aren't the only ones that can provide so-called incentives. Let's look at this last consideration which I'm calling the closing cost and monthly payment consideration. Well, let's use an example actually because it's easier to show you know numbers. Let's take an $80,000 household. So either yourself or your spouse or both combined are making $80,000 a year. Divide that by 12. That's $6,666 per month. What can that buy you? That can buy you about a $300,000 home at market rates of say 6%. or it can buy you a new build of about $325,000 at 5%. We're assuming, of course, the builder is going to give you an incentive to with a lower rate. So, 300 on the existing home, 325 on the new build. Uh, now what would that look like in terms of monthly payment? Your monthly payment is going to be the same roughly on both of these, about $2,520 roughly to control a $300,000 existing home or $325,000 new build at 5%. What's the closing cost going to look like on the new build? It's going to look like you're going to be writing a check for about $20,000. We're assuming here that the builder's doing two things. They're they're giving you a market rate less than what incentivized rate less on the market uh five 6% and they're giving you $8,000 of seller concessions on top of that. Not bad, but you're writing a check for about $12,000 on the existing side home side on a $300,000 house. Again, with B but with getting negotiating properly for seller concessions and title and other things that the seller can pay for, typically I can get that check normally down to about $8,000. So, in summary, you're buying a $325,000 new build versus $300 existing home. You're getting writing a check for about $12,000 on the new build versus about $8,000 on the existing home. Not bad on either case, but it's going to be your preference. At the end of the day, because this is your first home, you may not be so wired into the actual home and you might because you know, you might have a few more homes to buy before your forever home, in other words, and only viewing this initial purchase as, you know, something you're going to live in for a couple years is all and that's perfectly fine. So, you might have other considerations like how, you know, proximity to work, uh, quality of school systems, elementary schools in the neighborhood, that kind of thing, whether you know that dictate whether you're going to buy a new build or or not, right? Right? And that's perfectly again that's perfectly understandable. So before you go to any sales office of a new bill, please please please contact me. I'm Patrick Kevin Fagan, the mortgage patriot. You can see my number here, 21103176514. Text me or put in the comments what community if you're looking at new builds what that would be and let's talk about it before you walk into their sales office because you're going to want a negotiator. I trust trust me uh on your side here. Now lastly, I want this is very important as well. About every two weeks to 3 weeks, I host a Thursday evening webinar where I talk about how to buy your first home. I take you from start to finish from pre-approval all the way to getting your keys. Doesn't matter if existing home or new builds. You're going to learn a lot. It's about a 50 to an hour long is all. Look at this webinar site. It's called webinar.the mortgage.com. webinar.theort the mortgage patriot.com and see when my next uh webinar is going to be. Sign up for that. It's free, complimentary. You're going to learn quite a bit. You'll be glad you did. And hopefully I'll see you then and we'll learn a lot. Thank you for joining me. I'm Kevin Fagen, the mortgage patriot. END OF TRANSCRIPT