If you're buying new construction in Frisco, Prosper, Celina, McKinney, Little Elm, Aubrey, Sherman, or anywhere in North Texas, you will be required to pay builder deposits—and those deposits work very differently than earnest money on a resale home.
This is one of the most misunderstood parts of building a home in Texas, and it’s where many buyers get caught off guard.
Let me walk you through exactly how builder deposits work, what’s refundable, what’s not, and how I protect you from losing thousands.
1. Builder Deposits Are NOT the Same as Earnest Money
On resale homes, earnest money is typically:
✔️ 1% of the purchase price
✔️ Refundable if you terminate during the option period
But with builders:
❌ There is no option period
❌ Deposits are larger
❌ Deposits are often non-refundable
❌ Deposits may include multiple components
Builder deposits are designed to commit you to the build.
2. Types of Builder Deposits in Texas
Most builders require more than one deposit. Here are the common ones:
A) Earnest Money / Initial Deposit
Usually paid when you sign the builder contract.
Typical amounts:
✔️ $5,000 to $25,000
✔️ Higher-end builders: $25,000 to $75,000+
This deposit “locks in” the home and the price.
B) Design Center / Upgrade Deposits
If your home is a to-be-built, you’ll choose finishes and structural options.
Many builders require:
✔️ 10%–50% deposit on all upgrades
✔️ Paid at the design appointment
✔️ Non-refundable
Example:
If you add $40,000 of upgrades and the builder requires 20% down, that’s an additional $8,000 deposit.
C) Structural Upgrade Deposits
Structural changes (like adding a media room, sliding doors, or a 3-car garage) sometimes require a higher deposit, often 50%.
These are always non-refundable.
D) Lot Premium Deposits
If you choose a premium lot, some builders require an additional deposit just for the lot.
This may or may not apply toward the final purchase price.
3. Are Builder Deposits Refundable?
Here’s the honest answer:
⭐ Most builder deposits are NOT refundable.
You typically lose your deposit if you:
❌ Change your mind
❌ Find a different home
❌ Don’t like the upgrades
❌ Experience delays
❌ Have buyer’s remorse
❌ Decide to wait on the market
Builders treat deposits as a commitment to the build.
4. When Builder Deposits Are Refundable
There are only a few situations where deposits can be refunded:
1️⃣ Financing Contingency (but only if you follow rules perfectly)
If your loan is denied after fully cooperating with the lender, some builders will refund your initial deposit.
Others will not.
Builder contracts often require:
✔️ Using a preferred lender
✔️ Applying within a set number of days
✔️ Submitting documents promptly
✔️ Not changing jobs
✔️ Not making major purchases
✔️ Maintaining credit score
If you miss any requirement, you lose protection.
2️⃣ Builder Fails to Complete the Home
If the builder cancels the contract due to:
✔️ Material shortages
✔️ Engineering issues
✔️ Permit problems
✔️ Lot conditions
✔️ Corporate decisions
Your deposits are refunded.
3️⃣ Home Fails to Meet Structural Requirements
If a major structural defect occurs before closing, some builders will terminate the contract and refund deposits.
This is rare.
4️⃣ Lot Fails Engineering Requirements
If the lot cannot support the foundation plan, the builder may refund or relocate you to another lot.
5️⃣ Appraisal Comes in Low (Rare)
Most builder contracts do not allow termination for low appraisal.
But some custom builders will refund deposits if the home cannot appraise due to builder changes (rare).
5. When Deposits Are 100% Non-Refundable
❌ You back out voluntarily
❌ You find a better deal
❌ You don’t like your design center total
❌ Your interest rate increases
❌ You decide you want to wait
❌ You don't sell your current home
❌ You miss lender deadlines
❌ You change jobs before closing
❌ You fail to maintain credit requirements
Builder contracts are written to protect the builder—not the buyer.
6. Why Builders Make Deposits Non-Refundable
It’s not a penalty—it’s business.
Builders use deposits to:
✔️ Cover design and architectural planning
✔️ Lock in materials
✔️ Secure trades
✔️ Offset risk of cancellation
✔️ Guarantee the buyer won’t walk
Every cancellation costs the builder time and money.
7. How Much Should You Expect to Pay Upfront?
Typical total deposits in North Texas new construction:
💰 Entry-level builders: $5,000–$15,000
💰 Mid-tier builders: $15,000–$40,000
💰 Luxury builders: $40,000–$100,000+
Custom homes can require 10%–20% of the full purchase price upfront.
8. How I Protect Buyers From Losing Deposits
My job is to reduce your risk from day one by:
✔️ Explaining contract timelines
✔️ Reviewing the builder contract with you
✔️ Confirming deposit rules before you sign
✔️ Making sure financing is secure upfront
✔️ Coordinating with your lender immediately
✔️ Tracking deadlines
✔️ Ensuring you don’t accidentally breach
✔️ Helping avoid job or credit moves that affect approval
✔️ Preparing you for appraisal risks
✔️ Identifying potential builder delays
✔️ Communicating issues early
I’ve saved clients thousands by catching issues before they jeopardized the deposit.
9. My Recommendation Before You Sign Anything
Always get full loan pre-approval before signing a builder contract.
Not a pre-qualification.
Not a soft approval.
A real, underwritten pre-approval.
This is the #1 way to protect your deposit.
10. My Rule of Thumb
If you wouldn’t be okay losing the deposit, don’t sign the contract yet.
This standard protects buyers from making emotional, rushed decisions.
Bottom Line: Builder Deposits Are Serious—But I Make Sure You’re Protected
When I represent you, I make sure:
✔️ You understand the deposit rules
✔️ You know what’s refundable and what’s not
✔️ You’re pre-approved before signing
✔️ You avoid mistakes that cost deposits
✔️ You understand timeline obligations
✔️ You make safe design/upgrades decisions
✔️ Your money is as protected as possible
New construction is amazing—but only if you go into it with clarity and guidance.
Thinking About Building in North Texas?
If you’re considering a new construction home, I’d love to walk you through deposit requirements and help you avoid costly mistakes.
