Buying New Construction in Florida: Builder Contracts, Upgrades, and What Agents Won't Tell You

Central Florida is one of the most active new construction markets in the country — builders like D.R. Horton, Lennar, Pulte, Toll Brothers, and Meritage are building throughout Orange, Osceola, Lake, Seminole, and Brevard counties. The appeal is obvious: modern design, energy efficiency, builder warranty, and the ability to customize.

The risks are less obvious — and builder sales reps aren't paid to explain them.

The builder contract: what you're actually signing

Florida's standard AS IS residential contract protects buyers in specific ways (inspection period, cancellation rights, disclosure requirements). Builder contracts are not the Florida AS IS contract — they are custom-written contracts created by the builder's legal team with the builder's interests as the priority.

Common builder-contract terms that surprise buyers:

Extended closing timelines: Builders set closing at completion — which can slip 3–12 months. During this time, your locked interest rate may expire, requiring a new lock at then-current rates. Some builder contracts allow interest rate locks to expire and require buyers to lock at closing-week rates.

Deposit at risk during construction: Builder contracts typically hold your deposit (2–10% of purchase price) throughout the build period. If you need to cancel — job loss, divorce, relocation — the builder's contract may allow them to keep the deposit. Review exactly what triggers deposit forfeiture.

Change order restrictions: Once production begins on your home, structural changes (moving walls, changing floor plan) are typically locked. Even design center selections may have windows after which changes are not permitted and deposits are forfeited.

Limited warranty terms: Builder warranties cover workmanship (1 year), mechanical systems (2 years), and structural (10 years) — but the specific warranty coverage, claim process, and builder responsiveness varies significantly. Review the warranty documents before signing, not after.

HOA and CDD control: New communities' HOAs are controlled by the builder during development — boards are appointed, not elected, until the community reaches a threshold of homeowners. Rules can change during this period.

The design center: where builders capture margin

The design center appointment — where you select flooring, cabinetry, fixtures, countertops, lighting, and hundreds of other options — is where builders capture significant margin above the base price.

Why design center pricing runs high:

Builders negotiate bulk purchasing agreements with suppliers, then mark up selections dramatically. A kitchen countertop upgrade that costs $3,500 through the builder's design center may cost $1,500–$2,000 if done post-closing by a countertop company. Flooring upgrades follow a similar pattern.

The design center psychology: You're excited about your new home. The sales consultant is walking you through appealing options. The temptation to "upgrade everything" is strong — and builders know this. The incremental costs feel small per item but add up to $30,000–$80,000+ in aggregate for buyers who don't manage the process.

Strategy:

1. Before your design center appointment, research which upgrades are most visible/valuable and which can be added inexpensively post-closing.
2. The items hardest to change post-closing (plumbing rough-in locations, structural options like extra windows, elevated ceilings) are worth paying for at the design center because they require construction-phase work.
3. Items easy to change post-closing (light fixtures, hardware, paint, countertops in bathrooms, exterior landscaping) are generally better done independently after closing.
4. Flooring is builder-margin-heavy but also post-closing-disruptive. Evaluate on a room-by-room basis.

What to prioritize at the design center:

• Structural options (extra windows, ceiling height, room additions) — must be done during construction
• Rough-in plumbing for future outdoor kitchen, water softener, future bath
• Whole-home upgrades that are logistically disruptive (full flooring replacement post-closing requires moving furniture)
• Anything behind drywall: wiring pre-runs for speakers, security cameras, EV charging in garage

Incentives: what's actually negotiable in 2026

The 2021–2022 seller's market in new construction is over in most Central Florida communities. In 2026, with more inventory and longer absorption rates, builders are offering meaningful incentives — particularly through their preferred lenders.

Common 2026 builder incentives:

Closing cost credits: 2–5% of purchase price in closing cost credits, typically tied to using the builder's preferred lender. Evaluate whether the preferred lender's rate is competitive — sometimes closing cost credits don't offset a higher interest rate over the loan life.

Permanent rate buydowns: Builders may offer to buy down your interest rate by 0.5–1.5 percentage points permanently, funded by builder concessions. A permanent rate buydown of 1 point on a $500,000 loan is worth approximately $30,000+ over 30 years — a genuinely significant benefit.

Temporary buydowns (2-1 buydown): Builder pays to reduce your rate 2% in year 1, 1% in year 2, then full rate in year 3+. This reduces early payments but doesn't affect the long-term rate.

Design center allowances: Some builders offer $10,000–$25,000 in design center credits as an incentive — better than cash because you're spending it anyway.

Lot premium reductions: Builders assign lot premiums based on location within the community (corner lots, cul-de-sac, backing to preserve vs. backing to road). In slow-moving communities, lot premium reductions are negotiable.

What's less negotiable: Base price in actively selling communities, structural option pricing.

CDD fees: the hidden carrying cost

Community Development Districts (CDDs) are used extensively in Central Florida's master-planned communities to fund infrastructure. The annual CDD fee appears on your property tax bill and is separate from your HOA dues.

Current CDD examples in Central Florida communities:

• Horizon West communities: $2,000–$5,000/year depending on specific community and lot
• ChampionsGate: $2,500–$4,500/year
• Celebration: $1,500–$3,000/year (older, partially paid down)
• Reunion Resort: $3,000–$6,000/year
• Many Kissimmee/Davenport STR communities: $2,000–$5,000/year

CDDs are not paid off through your mortgage — they're an annual operating expense that continues until the bond matures. On a $500,000 home, a $3,500/year CDD adds $290/month to your effective carrying cost. This affects affordability calculations significantly.

Always ask the builder sales rep for the specific CDD amount (not a range), the projected payoff timeline, and whether the CDD fee is expected to change in coming years.

New construction inspections

Many buyers skip inspection on new construction, assuming a brand-new home is defect-free. This is a mistake. Builder-related issues are common:

• Insulation gaps and HVAC duct leaks (affecting energy efficiency and comfort)
• Plumbing connections with leaks that haven't yet manifested
• Grade and drainage issues around the foundation
• Incomplete flashing around windows and doors
• Code compliance issues that slipped past local inspectors

Two inspections for new construction:

Phase inspection (pre-drywall): Hire an inspector before drywall is installed to review framing, insulation, plumbing rough-ins, and electrical. This is the only time you can see these systems before walls cover them.

Final inspection (before closing): Standard full home inspection at completion. In Florida, this is your last opportunity to document issues and request builder remediation before closing.

Choosing a community and builder

Central Florida has dozens of builders active in 2026 — from national volume builders (D.R. Horton, Lennar, KB Home) to semi-custom and luxury builders (Toll Brothers, Taylor Morrison, Arthur Rutenberg, ICI Homes). Key distinctions:

Volume builders (D.R. Horton, Lennar, KB): production homes, limited customization, aggressive pricing, fastest build times. Best for buyers who want new construction at accessible prices without premium customization.

Semi-custom builders (Pulte, Taylor Morrison, Meritage): more floor plan flexibility, broader design center options, mid-tier pricing.

Luxury/custom builders (Toll Brothers, ICI, Fidelity): highest customization, longer build times, premium pricing, more responsive to buyer preferences.

---

Ryan Solberg has guided buyers through new construction transactions with D.R. Horton, Lennar, Toll Brothers, Taylor Morrison, and independent custom builders throughout Central Florida. Builder contracts require an experienced buyer's agent who understands the terms — connect before your first model home visit.