The same categories as any Indiana purchase: lender fees, prepaid interest and escrow, title insurance and settlement fees, recording. The differences on a new build are where the money comes from and how the taxes work: builder lender credits often cover part of it, the property-tax proration is based on a bill for the lot rather than the house, and builders often add their own items like an HOA capital contribution and larger, sometimes nonrefundable deposits.
12 questions to ask the sales rep, eight builder-contract red flags, and a pre-drywall checklist you can print and take to the site.
I'm Wes Johnston, a Realtor with Trueblood Real Estate in Fishers. Before real estate I spent about ten years designing homes and managing their construction for a custom builder in Hamilton County. I drew the blueprints and ran the jobs, so I know what goes on behind the drywall and what to check before it's covered up.
I keep a page on Indiana closing costs with what the fees actually ran on real closings. This page is what changes when the seller is a builder.
Nearly all of it. Your lender's origination and underwriting fees, the appraisal, prepaid interest and the escrow deposit for taxes and insurance, lender's and owner's title insurance, the settlement fee, and recording. Indiana sets some of these by law and the rest are set by your lender and title company. The Indiana closing costs page walks through each one with the amounts from recent closings.
Usually a stated dollar amount or a percentage of the price, applied to your closing costs and prepaids, and almost always conditioned on using the builder's affiliated or preferred lender. It can cover a lot of the lender and title side. It generally can't be taken as cash, and lenders cap how much seller or builder credit can be applied, so a big credit on a small closing may leave money on the table. Compare the whole package against an outside lender; see the lender-incentive catch.
Indiana taxes are paid a year behind, and the bill is based on what existed on January 1. On a new house, the current bill usually reflects the lot or a partly built house, so the proration at closing is small. The catch comes later: your lender sets your escrow on that small bill, and when the finished house is assessed the bill jumps and your escrow has to catch up. I wrote up how property taxes work on new construction, including how to estimate the real number before you buy.
Many new communities charge a one-time HOA initiation or capital contribution at closing, on top of regular dues, which fund the association's reserves. Builders may also charge for a home orientation, a warranty program or a document fee. None of these are set by law; they're in the builder's contract and HOA documents, which is why we read both before you sign.
If your loan is a federally related mortgage, which nearly all are, federal law says a seller can't require you to buy title insurance from a particular company as a condition of the sale (12 U.S.C. 2608). Builders often use an affiliated title company and sometimes tie an incentive to it, which is allowed as long as it's disclosed and you can walk away from the incentive. Compare the fees; title and settlement charges vary more than people expect.
Different from a resale. Builders commonly ask for a larger earnest money deposit, plus separate deposits for options and upgrades as you select them, and the contract often makes some or all of those nonrefundable once the builder has started the work or ordered the materials. Your earnest money on a resale is usually refundable if a contingency fails; how earnest money works in Indiana covers that. On a build, know exactly which dollars come back under which conditions before you write the check.
Run the buyer net sheet with the builder's price, your down payment and the builder credit, then ask me to check it against the builder's own estimate and the lender's loan estimate. Those three numbers should line up; when they don't, it's usually the taxes or a deposit the builder is holding.
More new construction answers: How Do Property Taxes Work on New Construction in Indiana?, Can You Negotiate With a Home Builder?, Closing costs in Indiana, Buyer net sheet. Everything I've written on buying new is on the Resources page, and every builder's available homes are on New Home Builds.
Send me the builder's price sheet and incentive and I'll put together an estimate of your cash to close, with the tax catch-up built in.
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This page is general information, not legal or financial advice. Fees, credits and deposits are set by your builder, lender and title company and vary by transaction.