Buying a New Construction Home in Texas? 7 Costs to Budget for Beyond the Price Tag

 

The price on a new home listing is important, but it is not the number that tells you what buying that home will actually cost.

Your down payment, closing costs, property taxes, homeowners insurance and other expenses can all affect both the amount you need upfront and what you pay each month.

And buyers are paying attention. In the 2026 Homes.com New Construction Home Buyer Trends Report, homeowners insurance, property taxes and closing costs were each cited as concerns by roughly half of surveyed new construction buyers.

So before you decide whether a new construction home fits your budget, look beyond the price tag. Here are seven costs worth understanding before you buy.

1. Your Down Payment

Your down payment is the portion of the home's purchase price that you pay rather than finance.

One of the most persistent homebuying myths is that everyone needs 20% down. That is not necessarily true. Down payment requirements vary based on the mortgage program, lender requirements and the buyer's individual qualifications.

The better question isn't simply, "What's the minimum I can put down?" It is also, "How will my down payment affect the money I need at closing and my total monthly payment?"

A qualified lender can show you different scenarios based on the loan programs for which you may qualify.

2. Closing Costs

Your down payment and closing costs are two different things.

Closing costs are the upfront costs associated with obtaining your loan and completing the real estate transaction. Depending on your loan and transaction, they can include items such as:

• Lender and origination charges
• Appraisal fees
• Title related costs
• Government and recording fees
• Prepaid interest
• Homeowners insurance premiums
• Initial escrow deposits

Once you apply for a mortgage, your lender provides a Loan Estimate. This is one of the most useful documents you will receive because it gives you much more information than an advertised interest rate or estimated principal and interest payment.

The Consumer Financial Protection Bureau's Loan Estimate guide walks buyers through the document and explains estimated closing costs, cash to close and total monthly payment.

3. Property Taxes

Property taxes deserve a place in your budget because your principal and interest payment is not necessarily your entire monthly housing expense.

If your mortgage uses an escrow account, the lender may collect money for estimated property taxes as part of your monthly mortgage payment and hold those funds until the tax bill is due.

For new construction, don't assume a tax amount based on another home or an old estimate. Ask your lender how the estimated property taxes for the home you are considering were calculated and where you can verify the applicable taxing information.

The goal is simple: base your budget on the best available estimate for the actual property you are considering.

4. Homeowners Insurance

If you are financing a home, your lender will generally require homeowners insurance. The premium can vary based on the property, location, coverage limits, deductible, insurer and other factors.

That means a friend's premium, a national average or an online estimate may have very little to do with what your policy will cost.

Get an insurance quote for the actual home you are considering before you finalize your housing budget.

Texas buyers should also understand that homeowners insurance and flood insurance are different. According to the Texas Department of Insurance, home insurance does not cover flood damage, so flood coverage requires separate consideration.

5. Mortgage Insurance, If Applicable

Depending on your mortgage program and down payment, mortgage insurance may be another expense to consider.

Mortgage insurance is not the same thing as homeowners insurance. Homeowners insurance provides coverage for certain losses involving the property. Mortgage insurance generally protects the lender if the borrower stops making payments.

Whether it is required, how much it costs and how long you pay it depend on the type of mortgage and the specifics of your loan.

You can read the CFPB's explanation of mortgage insurance and ask your lender whether it applies to the loan options you are considering.

6. HOA Costs, If Applicable

If the home is located in a homeowners association, find out what assessments and fees apply before deciding what comfortably fits your monthly budget.

Do not assume HOA costs are included in the mortgage payment a lender shows you. Ask whether they are included in the total being discussed or need to be budgeted separately.

This is especially important when comparing homes in different communities. A lower purchase price does not automatically mean a lower overall monthly housing expense.

7. The Expenses That Start After Closing

Closing day is not the finish line for your home budget.

There may also be moving expenses, utility setup costs, window coverings, furniture, lawn equipment and other purchases that come with settling into a home.

You don't necessarily need to buy everything the first weekend. Your house will survive without every empty corner immediately acquiring a decorative basket. Your budget may actually appreciate the restraint.

Keeping some cash available after closing can give you more breathing room as you settle in and learn what you actually need.

The Mortgage Payment Number You Really Want to Know

When buyers hear an estimated "mortgage payment," it is worth asking exactly what that number includes.

Principal and interest alone may be considerably different from the amount that actually leaves your bank account each month.

The CFPB's Loan Estimate guidance tells buyers to review the Estimated Total Monthly Payment. Depending on the loan, that figure can include principal and interest, mortgage insurance and escrowed taxes and insurance.

Don't just ask:
"What's my principal and interest payment?"

Also ask:
"What is my estimated TOTAL monthly housing cost for this home?"

If HOA assessments or another housing expense is not included in that figure, add it separately when evaluating your budget.

How Much Money Will You Actually Need at Closing?

This is where another important number comes in: Estimated Cash to Close.

According to the CFPB, your Estimated Cash to Close generally accounts for your down payment and closing costs, minus applicable deposits, credits and other adjustments.

In other words, don't simply calculate your down payment and assume that's the amount you need available.

Before closing, you will also receive a Closing Disclosure containing final information about your mortgage and closing costs. The CFPB provides a helpful Closing Disclosure explainer showing what buyers should review.

What About New Construction Builder Incentives?

Builder or lender incentives can sometimes affect a buyer's financing or upfront costs, but they should never be treated as automatic.

Offers can change. They may be limited to certain homes, financing arrangements or time periods, and eligibility requirements may apply.

If you see an incentive advertised, confirm:

• Whether it is currently available
• Which homes qualify
• Whether use of a particular lender is required
• What buyer qualifications apply
• Exactly what the incentive can be used toward
• Whether accepting it changes another part of the financing

Then compare the complete financing terms rather than judging an offer by the incentive alone.

One Cost Difference New Construction Buyers Should Consider

The costs of owning a home do not stop at the mortgage, taxes and insurance. Homes also need maintenance and, eventually, repairs.

One factor worth evaluating when comparing new construction with an existing home is that you are beginning with newly constructed systems and materials rather than inheriting the age and maintenance history of an older property.

That does not mean a new home is maintenance free, which is why understanding the builder's warranty matters.

Ultra Homes currently provides a warranty program that includes one year workmanship and materials coverage, two year delivery portion of systems coverage and 10 year major structural defects coverage. Buyers should review the complete warranty documents for terms, limitations, homeowner responsibilities and exclusions.

Review the Ultra Homes warranty program

Save This New Construction Homebuyer Budget Checklist

Before deciding what price range feels comfortable, work through this checklist:

New Construction Homebuyer Budget Checklist

☐ Decide what total monthly housing expense feels comfortable for your household.

☐ Determine how much money you want to use for your down payment.

☐ Leave room in your savings for closing costs.

☐ Get preapproved and review your actual Loan Estimate.

☐ Check the Estimated Cash to Close rather than looking only at your down payment.

☐ Review estimated property taxes for the specific home.

☐ Get a homeowners insurance quote for the property you are considering.

☐ Ask whether mortgage insurance applies to your loan.

☐ Find out whether taxes and insurance will be escrowed.

☐ Check HOA assessments and fees if the community has an HOA.

☐ Confirm current builder or lender incentives and eligibility requirements.

☐ Review the builder's warranty.

☐ Ask your lender for your Estimated Total Monthly Payment.

☐ Budget separately for housing expenses that are not included in that payment.

☐ Keep money available for moving and post closing expenses.

Questions to Ask Your Lender Before You Buy

You don't need to become a mortgage expert. You do need to know which questions to ask.

• What is my Estimated Total Monthly Payment?
• Exactly what is included in that amount?
• How much cash should I expect to need at closing?
• Are property taxes and homeowners insurance being escrowed?
• Does this loan require mortgage insurance?
• How would changing my down payment affect my payment and cash needed at closing?
• Are there lender credits, and if so, how do they affect my interest rate or other loan costs?
• Are there housing expenses I should budget for that are not included in the monthly payment?

If you are comparing lenders, the CFPB also provides a guide to comparing Loan Estimates.

Frequently Asked Questions About New Construction Home Costs

Do you need 20% down to buy a new construction home?

No, not necessarily. Down payment requirements depend on the mortgage program, lender and buyer qualifications. A lender can explain which programs you may qualify for and the down payment requirements for each.

Are closing costs included in the down payment?

No. Your down payment and closing costs are separate. Your Loan Estimate shows estimated closing costs and Estimated Cash to Close so you can see a more complete picture of the money required for the transaction.

Do new construction homes have closing costs?

Yes. Financing and purchasing a newly constructed home can involve many of the same loan and transaction expenses associated with other home purchases. The actual costs depend on your loan, lender, contract and transaction.

Are property taxes included in a mortgage payment?

They may be. If your lender establishes an escrow account, estimated property taxes may be collected as part of your monthly payment. Ask your lender exactly what is included in the payment estimate you receive.

Is homeowners insurance included in a mortgage payment?

It may be included through an escrow account. If it is not escrowed, you will need to budget for it separately. Your Loan Estimate identifies estimated taxes, insurance and assessments and indicates which expenses are expected to be escrowed.

Does a new construction home come with a warranty?

Builder warranties vary, so buyers should review the specific warranty offered by the builder rather than assuming all new homes have the same coverage. You can review Ultra Homes warranty information here.

How do I know what home price I can comfortably afford?

A lender can tell you what you may qualify to borrow, but qualification and personal comfort are not necessarily the same number. Consider your total estimated housing expense alongside your other monthly obligations, savings goals and the amount of financial breathing room you want to maintain.

Ready to Put Those Numbers to Work?

Once you understand your upfront costs and comfortable monthly budget, shopping for a new home becomes much more focused.

Ultra Homes builds new homes in Texas communities including Sanger Circle in Sanger, Story Starter in Whitesboro and Patton's Mill in Hillsboro.

Instead of starting your search with the biggest number someone says you can spend, start with the number that makes sense for the way you actually want to live.

Find Your Ultra Home

Explore Ultra Homes communities, floor plans and available homes, or contact the Ultra Homes team for current pricing, availability and community information.

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Helpful Homebuying Resources

• Understand Your Loan Estimate | Consumer Financial Protection Bureau
• Understand Your Closing Disclosure | Consumer Financial Protection Bureau
• Compare Mortgage Loan Offers | Consumer Financial Protection Bureau
• Texas Flood Insurance Information | Texas Department of Insurance
• Ultra Homes Warranty Information
• Contact Ultra Homes

This article is provided for general educational purposes and is not a loan quote or guarantee of financing. Mortgage programs, rates, insurance costs, taxes, builder incentives and buyer qualifications vary and can change. Buyers should obtain current information for their specific home and financial situation from the appropriate lender, insurer, taxing authority and builder.