Deposits on a Texas Builder Contract: What You Pay and When It Stops Being Refundable

Q: What is a design center deposit?

A payment made when selections and upgrades are finalised, frequently governed by terms separate from the main purchase agreement. It commonly becomes non-refundable earlier than the primary deposit, because the builder orders materials specific to your home.

Q: Does earnest money go toward my down payment on a new construction home?

Deposits are usually credited to the amount owed at closing, but whether every payment in a layered structure is credited, or whether some are fees, is a contract term. Confirm it rather than assume it.

Q: What happens to my deposit if my loan is denied?

Most builder contracts address this and distinguish a buyer who could not obtain approval despite meeting the contract's requirements from one who did not meet them. The requirements, deadlines and required notice are all set out in the document.

This is the question new construction buyers ask most anxiously and get answered most vaguely, and the vagueness is not evasion. The accurate answer genuinely is specific to your builder, your community, and the stage you are at, because there is no promulgated form governing it.

What can be said usefully is what the structure looks like, where the refundability lines typically sit, and which questions to ask before you write the first cheque rather than after.

Why resale instincts do not carry over

A Texas resale buyer has a mental model built on the promulgated contract: one earnest money deposit, an option fee, a defined option period during which they can walk for any reason, and a familiar framework for getting the deposit back if financing fails.

A builder contract typically has none of that. There is usually no option period in the form resale buyers expect. Termination, inspection, and default are handled by the builder's own provisions, and those provisions differ by builder. The full picture of what the document contains is in what is in a Texas builder contract.

Deposits are often layered, not single

Resale buyers expect one deposit. New construction frequently involves several, paid at different moments, governed by different terms, and becoming non-refundable at different points.

The initial deposit at contract

Paid when you sign, to take the home or lot off the market. This is the one most similar to resale earnest money, and it is often the only one buyers are thinking about when they ask whether their money is refundable.

Additional or milestone deposits

Some builders require further amounts as the build progresses or as thresholds are reached. Whether these exist, and when they fall due, is a contract term.

Selections and design centre deposits

Frequently a separate payment governed by separate terms, and frequently non-refundable earlier than the main deposit, because the builder is ordering materials specific to your choices. Upgrades ordered for your home cannot be resold with the house to the next buyer in the same way the house itself can.

Lot premium or reservation payments

Where a community uses them, these may sit outside the purchase agreement entirely and carry their own terms.

The practical consequence is that "is my deposit refundable" is often four questions rather than one, and the layers can have different answers on the same day.

Where refundability typically changes

Builder contracts commonly define points beyond which some or all of a deposit stops being refundable. Common trigger points include the start of construction on your home, the close of structural selections, and the ordering of custom materials. Which triggers apply, and what each one releases, varies by builder, by community, and by where a section sits in its build-out.

Two things are worth understanding regardless of builder:

Financing failure is usually treated separately from changing your mind. Most contracts distinguish between a buyer who cannot obtain approval despite acting in good faith and a buyer who walks away. The terms that define good faith, and the deadlines attached, are in the document.

The builder's delay is a separate question from your default. A missed completion date does not automatically release your deposit, and what remedy attaches to a late delivery depends entirely on how the contract characterises the date. That is covered in your DFW builder missed the completion date.

What to ask before you sign

These are questions with contract answers. Ask for them in writing, and ask before the first payment rather than at the point you want it back.

How many separate deposits are there, and when is each due?
For each one, at what point does it stop being refundable?
Who holds the funds until closing, and where are they held?
Is each deposit applied to the purchase price at closing, or is any of it a separate fee?
What happens if my loan is denied despite meeting the contract's approval requirements?
What happens if I need to terminate for a reason the contract does not address?
Are selections deposits governed by the purchase agreement or by a separate document?
What written notice does the contract require from me, and by when?

An agent can tell you which of these questions matters and help you get answers on the record. Reading the specific language and advising on its legal effect is work for a Texas attorney, and this is a category of provision where many buyers reasonably engage one.

Questions buyers ask

How much earnest money does a builder require in Texas?

It is generally set by the builder rather than negotiated the way a resale deposit might be, and it varies by builder, plan, and community. Because homes are typically offered on a first-come basis rather than through competing offers, buyers are not usually raising a deposit to win a home. Ask the builder for the figure and for the full schedule of payments, not just the first one.

Is earnest money refundable on a new construction home?

It depends on the structure and the stage. Builder contracts commonly define points beyond which some or all of a deposit stops being refundable, and layered deposits can have different points for different layers. What is still refundable and what is not varies by builder, by community, and by where a section sits in its build-out.

Can I get my earnest money back from a builder?

Sometimes, and it turns on the contract and the circumstances. Most contracts treat a good-faith financing failure differently from a change of mind, and both differently from a builder default. The answer is in the provisions rather than in general practice, which is why the question is worth asking before you sign.

Is there an option period on a builder contract?

Not usually in the form Texas resale buyers expect. Builder contracts handle inspection, termination, and default through their own provisions, which differ by builder. Do not assume you have a period in which you can walk for any reason.

What is a design centre deposit?

A payment made when you finalise selections and upgrades, frequently governed by terms separate from the main purchase agreement. It commonly becomes non-refundable earlier than the primary deposit, because the builder orders materials specific to your home.

Does earnest money go toward my down payment?

Deposits are usually credited to the amount you owe at closing, but whether every payment in a layered structure is credited, or whether some are fees, is a contract term. Confirm it rather than assume it.

What happens to my deposit if my loan is denied?

Most builder contracts address this, and most distinguish a buyer who could not obtain approval despite meeting the contract's requirements from one who did not meet them. The requirements, the deadlines, and the notice you must give are all in the document.

Who holds the deposit on a builder contract?

It varies. Some builders deposit funds with a title company, others hold them directly, and the arrangement is stated in the contract. It is a reasonable question to ask in the sales office and a reasonable thing to want in writing.

Can my agent negotiate the deposit terms?

Deposit amounts and refundability triggers are usually standard to the builder's form and are among the least frequently altered terms. What representation contributes is knowing which questions to ask, getting the answers on the record before you sign, and making sure the schedule of payments is understood in advance rather than discovered.

About the author

Nitin Gupta, Broker Associate, Competitive Edge Realty LLC. CRS, GRI, CLHMS, ALHS, PSA, ABR, SRS, SRES, e-PRO, MRP, TRLS, TRPM. TREC License #0668540. More than 480 closed transactions and more than 300 new construction closings across 50 or more DFW builders. Named D Magazine Best REALTOR in 2020, 2023, and 2024. Service in English, Hindi, Punjabi, Urdu, and Gujarati. Designations held and what each one covers.

Ask what happens to the money before you hand it over

Every question on this page has an answer in a document you can read before you sign. Get in touch or call 469-269-6541.

General information about deposit structures commonly used in Texas new construction. Not legal advice and not an interpretation of any specific contract. Deposit amounts, refundability triggers, and termination provisions are set by each builder and vary by community. Consult a licensed Texas attorney about the document you are asked to sign.