New Construction · NW Metro Atlanta

On a new construction home, earnest money and deposits work somewhat differently than on a resale purchase. Builders typically require an initial earnest money deposit at contract, plus additional deposits for structural options, design center selections, and sometimes at other milestones through the build. The total deposited can be higher than a typical resale, and portions of it are often nonrefundable once selections are locked in, because the builder is producing a home to your specifications. Understanding what is refundable and what is not, and when each deposit becomes at risk, is essential before signing a builder contract. This overview covers how it generally works and what to ask, so there are no surprises later.

Here is a plain-language guide to earnest money and deposits on a new construction home, and how to protect yourself through the process.

What is earnest money in a new construction contract?

Earnest money is a good-faith deposit you provide when you go under contract on a home. It signals your commitment to the transaction and is held while the contract moves toward closing, typically credited to you at closing as part of your funds. In a resale purchase, earnest money is often a modest percentage of the price, held in escrow, and typically refundable if you exercise contingencies according to the contract's terms.

In a new construction contract, the same basic principle applies, with important differences. The builder writes the contract, and the terms are set by that contract, which tends to favor the builder more than a standard resale form does. That is why understanding a builder contract before signing matters so much, and why having your own representation to walk through it with you is valuable. For more on how representation works in new construction, see my value of an agent page.

What other deposits are common?

Beyond initial earnest money, builders typically require additional deposits during the build for the choices that turn a plan into your specific home. Common categories include:

• Structural options deposit: for changes to the floor plan or structural features you select, often required before those changes are ordered.
• Design center deposit: for the finishes and options you select at the design center, often required when selections are finalized.
• Milestone or progress deposits: some builders require additional deposits at specific construction milestones.
• Lot premium: some builders collect a premium for the specific homesite.

The total across these can meaningfully exceed a typical resale earnest money deposit, since it reflects the builder's investment in producing a home built to your specifications. The exact structure varies by builder, so read the contract carefully.

How much do these deposits typically add up to?

Because deposit amounts vary widely by builder, community, and price point, this is general framing rather than a fixed schedule. Specific dollar figures for your build come from the builder's contract; my role is to help you understand what to expect and how to evaluate it. That said, buyers should generally plan for:

• Initial earnest money at contract: a set dollar amount or percentage of the base price.
• Additional deposits during the build: for structural changes and design center selections, sometimes several thousand to tens of thousands of dollars depending on the choices.
• The rest at closing: the balance of the purchase price is due at closing.

Ask the builder for a written summary of all deposit obligations, when they are due, and their refundability. This is the single most important document to understand before signing.

Which deposits are refundable and when?

This is the heart of what to understand. In a new construction contract, refundability depends on the specific contract's terms, and the general pattern is that money becomes less refundable as the builder acts on your selections and commits resources.

This table is a general orientation, not a substitute for your builder's specific contract. The written terms control, and they vary from builder to builder.

What can put your deposits at risk?

Understanding the scenarios that put deposits at risk helps you avoid them or plan around them. Common triggers:

• Changing your mind: deciding not to proceed after selections are locked in typically forfeits at least the selection deposits.
• Financing failure: depending on how the contract handles the financing contingency, a failed loan may or may not preserve deposits.
• Missing deadlines: some contracts allow the builder to retain deposits if you miss specified deadlines.
• Buyer default: a general breach of the contract typically allows the builder to keep earnest money and possibly additional damages.

The corresponding protections come from the contract's contingency language, deadlines, and dispute terms, all of which are worth walking through carefully before signing. On the other side of the table, builder-caused delays or issues have their own contract terms; understanding both directions matters.

How do you protect yourself?

A few practical steps reduce the risk of surprises:

• Read the contract carefully: every deposit, when it is due, and its refundability should be explicit.
• Ask specific questions: "If X happens, what happens to my deposits?" for the scenarios that concern you.
• Have your own representation: a buyer's agent experienced with new construction can walk through the contract with you and flag terms worth negotiating or understanding.
• Consider an attorney review: for significant purchases, a real estate attorney can review the contract.
• Do not overcommit to selections until you are sure: once locked in, deposits tend to become at risk quickly.
• Keep documentation: written change orders and confirmations of what you selected and paid.

None of this is meant to discourage buying new construction; new homes are wonderful and the deposit structure exists for real reasons. Builders are producing a home specific to your selections, and deposits reflect the resources they commit as your build progresses. It is meant to help you go in informed, so the money conversation is a known one, not a surprise. For a broader overview of the process, see my New Construction Companion.

How does this compare to a resale earnest money deposit?

The differences are meaningful and worth having front of mind. A resale purchase typically involves one earnest money deposit, held in escrow, with refundability governed by contingencies for financing, inspection, and appraisal. A new construction purchase involves multiple deposits over time, some of which lose refundability as selections are made, held under builder-specific terms. Neither is inherently better; they suit different transactions. But new construction rewards more careful upfront reading of the contract, since the money commitment builds through the process. For a plain-language guide to earnest money on a resale purchase, see my post on earnest money explained.

Frequently Asked Questions

What is earnest money on a new construction home?

A good-faith deposit at contract that signals your commitment. In new construction, it is typically followed by additional deposits for structural options and design center selections during the build, with refundability governed by the builder's contract.

Are new construction deposits refundable?

Some are and some are not, depending on the builder's contract. In general, deposits tend to become less refundable as selections are locked in and the builder commits resources to producing your specific home. Read the contract carefully.

How much should I expect to deposit?

Amounts vary widely by builder, community, and the selections you make. Ask the builder for a written summary of all deposit obligations, when they are due, and their refundability, before you sign.

What happens if my financing falls through?

It depends on the contract's financing contingency. Some contracts preserve deposits if financing fails within the contingency, others do not. Understand this specific term before signing.

Do I need my own representation for a new construction purchase?

Having your own agent is valuable, since builder representatives work for the builder. An experienced buyer's agent walks through the contract with you, flags terms to understand or negotiate, and represents your interests through the build.

Buying new construction?

Understanding the deposit structure before you sign is one of the most important steps in a new construction purchase. I help buyers walk through builder contracts and understand what they are committing to at every stage. Read my New Construction Companion, explore new construction resources, or reach out to talk through your build.

Marna Friedman is a licensed REALTOR® with Atlanta Communities Real Estate Brokerage serving NW Metro Atlanta. This article is general guidance, not legal or contract advice; consult a real estate attorney for review of specific contract terms. Information is deemed reliable but not guaranteed and is subject to change. Equal Housing Opportunity.