On a new construction home, the borrower pays for the appraisal. The fee is part of the loan costs a buyer covers to get financed, and it typically runs higher than an appraisal on an existing home because the appraiser has to value a property that isn’t finished yet. In some deals a builder will offer a closing-cost credit that offsets the charge, but the buyer remains the party responsible in the lender’s records.
Why the Cost Falls on the Buyer
The appraisal protects the lender, but the borrower is the one asking for the loan, so the borrower pays for the valuation. A mortgage lender will not approve financing without confirming that the property is worth at least the loan amount. For a home that hasn’t been built yet, the appraiser works from architectural plans, the construction contract, material specifications, and comparable sales of recently built homes to project the finished value.
This is not optional. Fannie Mae and Freddie Mac both require an independent property valuation before a lender can sell the loan on the secondary market, which is how most residential mortgages are ultimately funded.1Fannie Mae. B4-1.2-04, Appraisal Age and Use Requirements
You do get something concrete for your money beyond the loan approval itself. Under Regulation B, your lender must give you a copy of the completed appraisal report promptly upon completion or at least three business days before closing, whichever comes first, and you’re entitled to that copy whether or not the loan closes.2Consumer Financial Protection Bureau. 1002.14 Rules on Providing Appraisals and Other Valuations
One thing paying doesn’t buy you: the choice of appraiser. Federal law bars anyone with a financial interest in the transaction from influencing the appraiser or steering the value, so the lender orders the appraisal through an Appraisal Management Company that assigns an independent, licensed professional.3Office of the Law Revision Counsel. 15 USC 1639e – Appraisal Independence Requirements Neither you nor the builder picks the person.
What a New Construction Appraisal Costs
A standard appraisal on an existing single-family home typically runs $300 to $600 nationally. New construction runs higher because the work is more involved. Expect roughly $500 to $900 for a conventional new construction appraisal on a single-family home, and more in high-demand or rural markets.
Several factors push the price up:
- Property size and complexity. A 4,000-square-foot custom home with unusual features costs more to appraise than a 1,500-square-foot production build.
- Location. Rural areas with few comparable sales require the appraiser to search a wider radius, adding time and cost.
- Loan type. FHA and VA loans carry additional inspection requirements that can increase the fee.
FHA and VA Loans
Government-backed loans have their own rules that affect the bill.
FHA
FHA appraisals on new construction must be performed by a HUD-approved appraiser and involve documentation that conventional appraisals don’t require. The appraiser must photograph the lot’s grade and drainage, and if the home uses a well or septic system, a separate inspection of those systems may be required. Any cost estimates the appraiser relies on from the builder must be independently verified.4U.S. Department of Housing and Urban Development. Rescission of Outdated and Costly FHA Appraisal Protocols FHA appraisals generally run $300 to $600, though the extra requirements on new construction can push that higher.
VA
The VA publishes maximum allowable appraisal fees by region through its Regional Loan Centers. For a proposed or under-construction home, the appraiser may charge an additional $50 above the standard published fee for that property type.5U.S. Department of Veterans Affairs. VA Appraisal Fee Schedules and Timeliness Requirements The veteran is the party responsible for paying the appraisal fee.6U.S. Department of Veterans Affairs. VA Circular 26-24-19 VA appraisals also enforce minimum property requirements, and if the home doesn’t meet those standards at final inspection, repair and re-inspection costs fall on the borrower or the builder depending on what the purchase agreement says.
Construction-to-Permanent Loans Mean Multiple Bills
If you’re financing a custom build through a construction-to-permanent loan, you’re not paying for one appraisal. You’re paying for several valuations and inspections spread across the project.
It usually starts with two valuations: an as-is appraisal of the land in its current state, and a subject-to-completion appraisal projecting the finished home’s value. The lender needs both, and the borrower pays for both.
As construction moves along, the lender releases funds in stages called draws. Before each draw, an inspector visits the site to confirm the work described has actually been done. These progress inspections typically cost $150 to $250 each, and a project may require four to six of them. The fees add up.
Once the home is finished and a certificate of occupancy is issued, a final inspection confirms the property was built to the original plans.7Fannie Mae. Requirements for Verifying Completion and Postponed Improvements Every one of these charges is the borrower’s responsibility, and skipping any of them can halt the draw process and stall the build.
When the Builder Covers the Appraisal
Builders often offer to cover appraisal costs as part of broader closing cost concessions, especially in slower markets or on inventory homes that have been sitting. The mechanics matter. The builder doesn’t pay the appraiser directly. The builder gives a credit at settlement that offsets the buyer’s closing costs, and the buyer remains the responsible party in the lender’s records.
These concessions usually come with conditions. The most common is that you use the builder’s preferred lender. Builders like that arrangement because it gives them more control over timing. If you go with your own lender, the builder may pull the offer. Whether the preferred lender’s rate and terms are actually competitive is worth checking on your own before you agree.
There’s a ceiling on how much a builder can chip in. Fannie Mae caps interested party contributions based on loan-to-value:
- Down payment under 10% (LTV above 90%): concessions limited to 3% of the sale price or appraised value, whichever is lower.
- Down payment of 10–25% (LTV of 75.01–90%): limit rises to 6%.
- Down payment above 25% (LTV of 75% or less): limit rises to 9%.
Concessions that exceed these limits get deducted from the sale price for underwriting purposes, which can reduce the loan amount you qualify for.8Fannie Mae. Interested Party Contributions (IPCs) A credit covering just the appraisal fee is well within the cap for most transactions. If the builder is also covering title insurance, loan fees, and other items, the total can approach the ceiling on a low-down-payment purchase.
Builder credits show up on the Closing Disclosure as a reduction in the total amount you bring to closing. Federal disclosure rules govern how these credits are itemized so you can see exactly where the money went.9National Credit Union Administration. Real Estate Settlement Procedures Act (Regulation X)
When and How You Actually Pay
The appraisal fee gets collected at one of two points. Many lenders charge your credit card when they order the appraisal, well before closing. In that case the fee appears on your Closing Disclosure under loan costs as a charge already paid.10Consumer Financial Protection Bureau. Guide to the Loan Estimate and Closing Disclosure Forms Other lenders roll it into closing costs, and you pay it as part of your final wire at settlement.
Either way, the Closing Disclosure itemizes the fee, typically under “Services Borrower Did Not Shop For,” since the lender picks the appraisal management company.
Refunds
If you pay upfront and then withdraw your application before the appraiser visits the property, most lenders will refund the fee because the service was never performed. Once the inspection has taken place, the fee is gone. You’re paying for the appraiser’s work, not the result. A low value, a denied loan, or a builder who backs out won’t get you a refund after the inspection is done.
Tax Treatment
Appraisal fees on your primary residence are not tax-deductible and don’t get added to your home’s cost basis. The IRS specifically excludes lender-required appraisal fees from the settlement costs that can increase your basis in the property. The fee is a cost of getting financing, nothing more. For investment or business property, the treatment differs: appraisal fees are capitalized as loan costs and can be deducted over the life of the loan.11Internal Revenue Service. Publication 551 – Basis of Assets