Building vs. Buying

Choosing to build a new home or purchase an existing property can be a tough decision. Both choices come with advantages and disadvantages that are largely driven by personal preference and the resources available to you, including land, neighborhood preference, your finances, and much more. It is wise to weigh the pros and cons of each option before deciding.

Building a New Home

Before a builder can begin constructing a new home for you, there are several key steps to consider. If you fail to factor in the steps below, the process will likely take longer and will end up being more costly.

  • Educate yourself on the building process: Your local chapter of the National Association of Home Builders should be able to provide helpful advice and information.
  • Set a budget: Factor in all the costs associated with building a home, such as land, labor, materials, plans, permits, inspections, closing costs, down payment, etc.
  • Choose the design: It is best to determine the design style before meeting with an architect.
  • Determine if the land has utility access: Find a real estate agent who specializes in land sales and new home construction.
  • Contact the local building department: Find out which permits you will need and if there are any restrictions.
  • Hire experts: Once you have made it through the steps above, you can start working with an architect, contractor, and any other expert that will be needed to complete the project.
  • Start the design process: Make sure the architect and contractor are on the same page throughout the design process.
  • Finance the home: Work with a lender to finance the construction loan and the mortgage.

Financing the Construction of a Home

The borrowing process associated with building a new home differs from purchasing an existing home. When building a home, you must first take out a construction loan to cover costs such as land, labor, materials, and permits. Throughout the term of the construction loan, borrowers are expected to supply building plans and project timelines to the lending institution. Once the construction of the home is complete and a certificate of occupancy has been issued, the principal remaining balance of the loan is converted to a traditional mortgage.

Pros and Cons of Building

A newly constructed home is a blank slate and offers many advantages compared to an existing home, but it may not be the ideal situation for everyone. Thinking through the pros and cons of a new home will help you determine which option is right for you.


  • Move-in ready: The home is customized to your liking, and if it is built properly, very few repairs should be needed during the first few years of living at the property.
  • Avoid bidding wars: Choosing to build a new home allows you to avoid bidding wars if you live in an area where the real estate market is competitive.
  • Energy efficient: Building an energy-efficient home can help save you money in the long run.


  • Time: It takes much longer to build a new home than it does to purchase an existing home.
  • Cost: In most cases, building a new home is more expensive than purchasing a comparable existing one.
  • Geographic limitations: If land is unavailable in the areas where you would consider living, then you would have to build elsewhere.

Pros and Cons of Buying

There are benefits associated with buying an existing home rather than building a new home, particularly cost and convenience. However, sometimes it is just not possible to find a perfect home on the market, and it is easier to build one to meet your wants and needs. What matters most to you in a home? The answers that come to mind will likely lead you in one direction or another.


  • Cost: Purchasing an existing home is typically less expensive than building a comparable new home.
  • Location options: Unless you live in a remote area, it is more likely to find a home available for purchase in your preferred location than land.
  • Move in quickly: It takes drastically less time to settle on a home than it does to build one.


  • Lack of customization: Existing homes may involve compromise in certain areas.
  • Older systems: You will likely have to repair an existing structure sooner than you would with a new build.
  • Competition: If you live in an area where the real estate market is competitive, you may have to outbid others to get the property you want.

Sometimes the decision that is more financially feasible in the short-term ends up being more expensive in the long-term. Taking the time to examine the pros and cons of each option will help you make the best decision for your specific situation.

Mortgage Calculator

Home Price
Down Payment
Interest Rate
Mortgage Term
Start Date
Add extra payments
To monthly
Extra yearly

The Mortgage Calculator provides estimated payment information. Actual payments may vary. Speak with a Mortgage Consultant to learn more.

Find a Mortgage Professional

Washington, D.C.   |   Maryland   |   Pennsylvania   |   Virginia   |   West Virginia

Contact Us