The home-building glossary

The standard new-home warranty: 1 year workmanship, 2 years systems (mechanical, electrical, plumbing), 10 years structural.

A 2-1 buydown is a temporary rate subsidy that lowers the mortgage rate by two percentage points in the first year and one point in the second before it returns to the note rate for the remaining term.

The Section 45L tax credit is a federal credit paid to the builder, worth $2,500 for a home certified to ENERGY STAR and $5,000 for one certified to DOE Zero Energy Ready under the Inflation Reduction Act.

Net home sales per community per month - the metric that sets a builder's pricing and homesite-release timing.

ACH50 is the blower-door result expressing how many times a house's full air volume leaks out per hour under a 50-pascal pressure difference, where a lower number means a tighter home.

Accessory Dwelling Unit - a secondary home on a lot; rules and by-right allowances vary sharply by city.

A dollar budget set for a category (flooring, appliances) in a custom contract; overages are billed to the buyer.

Signed but not-yet-closed homes; a leading indicator of a builder's coming revenue.

The advertised starting price of a plan, before options, upgrades and lot premium - almost never what a buyer actually pays.

A measured air-tightness test required by modern energy codes and by ENERGY STAR certification.

The final pre-closing walk, where the buyer flags defects with tape for the punch list.

A production or semi-custom builder erecting one of its stock plans on land the buyer already owns.

Purpose-built single-family rental communities - a fast-growing slice of new construction with its own builder brands.

Concessions used to close a deal - rate buydowns, closing-cost credits, free upgrades - usually tied to using the in-house lender.

The insulated, air-sealed shell that governs comfort and energy use.

The municipal sign-off that a home is legally habitable, issued after final inspections pass.

A written, priced modification to the contracted scope after the contract is signed.

A construction-to-permanent, or one-time-close, loan funds the build in draws and then converts to a standard mortgage at completion with a single closing and one set of closing costs.

A contingency is a reserve, often set as a percentage of the build cost, held back to absorb overruns, change orders and surprises during construction.

The headline metric buyers compare; varies widely by finish, plan efficiency and region, and excludes land and lot prep.

Custom-build pricing: the actual cost of the work plus a builder fee or percentage - transparent but open-ended.

Builds a one-off home to the buyer's own design, usually on the buyer's lot and typically on a cost-plus contract.

Days from foundation start to completion - a core efficiency metric volume builders manage relentlessly.

The showroom where buyers choose finishes and add upgrades; a profit center production builders manage carefully.

How a construction loan releases funds to the builder as milestones (foundation, framing, dry-in, finish) are completed.

A home is dried-in once the roof, exterior sheathing, windows and house wrap are in place and the interior is protected from weather, the milestone that lets interior trades start.

The buyer's up-front deposit; on new construction it is often larger and partly non-refundable.

An easement is a recorded right for a utility, drainage or access use across part of a lot, on which the owner generally may not build.

The exterior style (A/B/C) offered for a single floor plan; it changes the facade, not the interior layout.

Federal performance certifications many builders now market as proof of an efficient, tight, well-built home.

The unincorporated ring outside a Texas city's limits where the city still controls subdivision platting. Much of the Austin metro's new-home volume is built in an ETJ or inside a suburban city rather than in Austin proper, so which rules apply - and which utility, school district, MUD or PID a home sits in - is a per-community question, never a metro-wide one.

Starting a steady number of homes per period to smooth trades and purchasing, instead of building in bursts.

A finished lot is a homesite with its streets, utilities and drainage already installed and ready to build on, as distinct from raw or 'paper' land still awaiting development.

A single contracted price for a defined scope; the production-builder norm.

The interior layout sold under a model name, usually offered in several square-footage and elevation variants.

A forward commitment is a block of below-market mortgage money a builder buys in advance from a lender so it can offer buyers a permanently reduced rate, funded from the same budget as a price cut.

Hard costs are the physical construction - materials, labor and the lot - while soft costs are the surrounding fees for design, permits, financing, insurance and surveys.

Home Energy Rating System score - lower is more efficient, with 0 being a net-zero home.

The homeowners association governing a community, its dues and its rules.

The individual parcel. New-home pricing is always plan + homesite, never a single number.

The HUD Code is the federal construction and safety standard (24 CFR Part 3280) governing manufactured homes built entirely in a factory on a permanent chassis, and it preempts local building codes for that housing type.

The IECC is the model energy code adopted by reference in most jurisdictions, setting the minimum insulation, air-sealing and equipment-efficiency requirements a new home must meet.

An impact fee is a one-time charge a city or county levies on a new home to help fund the roads, water, sewer and parks that new growth requires, usually collected at permitting and passed into the price.

The share of a lot that may be covered by roof, driveway and paving. Austin caps it by zoning district and tightens it sharply over the Barton Springs and Edwards Aquifer recharge and contributing zones, constraining footprint, driveway and ADU plans on infill and western lots long before a plan is drawn. Percentages vary by district and watershed - read the Land Development Code for the site, never quote a single number.

Finishes bundled into base price. Lennar's 'Everything's Included' and KB Home's 'Built-to-Order' are the two opposing industry philosophies.

An insulated concrete form is a hollow foam block that is stacked and filled with reinforced concrete to create an insulated, storm-resistant wall.

Controlling homesites through option contracts instead of owning the land; pioneered by NVR and now industry-wide.

A lien waiver is a signed release in which a contractor or supplier gives up the right to file a lien for work already paid for, collected at each draw so paid work cannot become a later claim against the home.

An added charge for a more desirable homesite - greenbelt, corner, cul-de-sac or water.

A Manual J is the ACCA-standard calculation that sizes a home's heating and cooling equipment to the measured heat gain and loss of its envelope rather than a rule of thumb.

A large developed community with shared amenities, multiple builders and phased release of homesites.

A mechanic's lien is a claim a contractor or supplier can file against a property for unpaid work, which is why lenders and title companies require releases before advancing funds or closing.

The professionally decorated, fully upgraded plan a community sells from - rarely priced like what a buyer actually builds.

A Texas financing district that funds a community's water and sewer infrastructure and adds a line to the property-tax bill.

Under the Residential Construction Liability Act (Texas Property Code Chapter 27), a homeowner must give the builder written notice of a claimed construction defect and a chance to inspect and make a written offer of repair before filing suit. It is the operative Texas new-home defect process now that the Texas Residential Construction Commission - the state builder-registration and inspection body - was abolished in 2009, which left warranty terms to the builder's own contract and to any third-party warranty the builder buys. Check the statute for the current deadlines before quoting them.

An on-site sewage facility, or septic system, treats wastewater on the lot where no public sewer exists, and its design and size depend on a soil percolation ('perc') test.

Priced changes to the base home, from structural options to finish selections; a major source of builder margin.

Builders release homesites in batches, raising prices as each batch sells through.

A Texas assessment district a city or county creates to fund a development's infrastructure, repaid through an annual assessment levied on each lot. Distinct from a MUD, sometimes layered with one, and a real addition to a Central Texas buyer's yearly cost that the base price never shows. Texas law requires the assessment be disclosed to a purchaser - confirm the current form and code section before publishing specifics.

A plat is the recorded survey map that legally divides land into lots, blocks, streets and easements, and Texas cities control platting even within their extraterritorial jurisdiction.

The buyer walkthrough before insulation and drywall, when framing, wiring and plumbing are still visible.

The builder's affiliated mortgage arm (DHI Mortgage, Lennar Mortgage); the best incentives usually require using it.

Builds a fixed library of plans at volume on land it controls; the model behind nearly every national builder.

The list of items a builder must correct before or just after closing.

A spec home already under construction or finished, sold as move-in ready.

A builder-paid mortgage subsidy (a 2-1 buydown, or a permanent forward commitment) - the dominant new-home incentive in a high-rate market.

Retainage is a portion of each construction payment, commonly around ten percent, withheld by the owner or lender until the work is complete to guard against unfinished or defective work.

The rough-in is the stage when plumbing, electrical and HVAC lines are run through the open framing before insulation and drywall, and it is inspected before it is covered.

Starts from a set plan library but allows structural and finish changes; the middle ground between production and custom.

A setback is the minimum distance a structure must sit from a property line under zoning and deed restrictions, limiting where a home, garage or addition can be placed on a lot.

A concrete slab foundation, often post-tensioned in expansive-clay markets like Central Texas to resist movement.

A home a builder starts without a buyer under contract, betting it sells during or after construction.

Standing inventory is a completed, unsold spec home a builder is already carrying, and because holding it costs money it usually draws the deepest incentives and the quickest closing.

On-site framing, vs. factory-built modules assembled on site, vs. HUD-code homes built entirely in a plant.

A structural insulated panel is a factory-made building panel of rigid foam bonded between two structural skins, used for fast, highly insulated walls and roofs.

A tap or connection fee is a one-time charge to physically connect a new home to municipal water and sewer service, billed separately from impact fees and utility deposits.

A temporary certificate of occupancy is a conditional municipal sign-off that allows a buyer to move in while minor items are finished, short of the full certificate of occupancy.

Backed coverage from a provider like 2-10 Home Buyers Warranty or StrucSure, rather than the builder standing alone.

The framing, concrete, plumbing, HVAC and other crews a builder contracts rather than employs directly.

A two-time-close arrangement uses a short-term construction loan that is separately refinanced into a permanent mortgage at completion, requiring two closings and two sets of costs.

Value engineering is the process of adjusting materials, methods or scope to bring a design back to a target budget without sacrificing the home's essential function.