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PCS Resources

Buying (and Financing) a Newly Built Home


There are many considerations and personal preferences when it comes to buying or building your “dream” home. While you may prefer an older home in an established neighborhood, other Members might yearn for the latest appliances and amenities being offered with newly built homes.

Benefits of Building

If you choose to buy a lot or land for building your own home, you have lots of options — not only in design but in timing. For example, you may be on active duty now and living on base or stationed overseas. But if you plan on retiring and building that dream home someday, this can be a great option because you’ll be able to reflect on all the places you’ve lived and truly get the right home with the right features for you.

Related: Building a Home? We've Got Options! 

Some Caveats

In general, new construction homes cost more these days, thanks to the rising costs for materials such as lumber, but they also offer many advantages, like choosing a floor plan and finishes. (Note, AAFMAA Mortgage Services LLC (AMS) offers construction loans to help finance buying your lot, build your home, and finance your completed house.) 

But there can be drawbacks, too, especially if you’re considering building on undeveloped land. In remote areas it can be time-consuming and expensive to bring in electricity, sewer, water, or natural gas. Also local zoning ordinances may restrict how you’ll use the land. You’ll need to maintain the land (mow long grass for instance), and you’ll be paying property taxes. 

Related: Where to Find Affordable Land and How to Get a Construction Loan 

If you’re interested in new construction, there are several types of homes you’ll encounter during your search. Here’s what you’ll need to consider:


Tract homes are so named because they’re planned and built on a large tract or parcel of land, often in the suburbs or exburbs. Some of these may be move-in ready, but if they’re still in the planning phase, you may be able to purchase a certain lot and pick a floor plan you prefer. The developer will provide design choices that establish a cohesive look and feel for the community, which often will include clubhouses, pools, tennis and sports courts. 

You can often find competitive prices in these developments if the builder was able to take advantage of volume in buying building materials. However, that can be a double-edged sword so be sure to check on the quality of both materials and construction methods before you commit. 


If you’ve always wanted a large sunroom or wraparound porch or another unique feature, you’ll probably want to team up with a builder to create a custom home built just for you. In this scenario, you’ll buy land and hire an architect builder to help create your vision; or you can enter into a contract with a developer or builder to create a home on land they own. 

Builders will often have basic house designs that you can customize for an additional cost. For instance, you might move the laundry room to the main floor or make your kitchen larger. Builders will typically charge a little extra for changes and let you know how much you’re adding to the total home price. 

While you’ll get a custom-appointed home, you should consider that the buck starts and stops with you. If you’ve chosen flooring and cabinets you don’t like in the end, you’ll need to live with those decisions, for a while anyway. If you don’t have a background in design, you might want to consult with a professional on the floor plan, landscaping, flooring, finishes, paint colors, cabinets and other major decisions. 


Speculative or “spec” homes are single-family homes, townhouses or condos built by a builder or developer before having a buyer in mind. These projects are often undertaken by smaller, newer builders in an area. Because there is no buyer to make decisions on floor plans or room sizes, the home will come with features the builder thinks will appeal to potential buyers as a complete package. However, if the home is still under construction, you may be able to have a say in the style, color and type of counters and cabinets, for example. 

One thing to watch out for: Some spec builders will go with “builder grade” or “contractor grade” materials, which can be inexpensive products made from low-grade materials and low- or mid-range appliances. You’ll want to be sure to choose a builder with quality and longevity in mind to make the most of your investment.

We’re Here to Help

AMS offers two construction loan products. Our Construction Advantage One LoanSM, introduced in 2021, can provide financing to buy your lot, build your home, and finance your house with one easy step. Just like a VA Loan, there’s no down payment required, plus you don’t have to make any payments until the construction is completed. Our Construction Advantage 80 LoanSM requires a down payment and interest only payments right away that will balloon after 12 months. 

One feature of using AMS for a construction loan is that when determining your loan-to-value ratio (LTV), AMS uses the appraised value of the home, including the equity in the lot, whereas other lenders might only use the cost of the home. If the home appraises for more than the cost, that overage can be used by the homeowner as part, or all, of their down payment, reducing their out-of-pocket costs.

If you’d like to learn more about construction loans, contact us today and one of our Military Mortgage Advisors will help you discuss the best mortgage option for you.