Buy, Build, or Fix Up? Here’s How These Homebuying Options Stack Up Against Each Other

A photo to accompany a story about whether you should buy, build, or fix up your first home purchase Getty Images/Photo Illustration by Next Advisor
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Buying your first home can be an exciting but overwhelming experience. 

Homebuyers often face stiff competition and bidding wars in today’s housing market that continues to favor the seller — especially with “turn-key ready” homes. 

‘Turn-key’ or ‘move-in-ready’ homes need little to no upgrades or repairs before moving in. And home-shoppers tend to gravitate toward move-in-ready homes, according to recent data collected by

The good news is that buying a move-in-ready home isn’t necessarily your only option. You could also consider building a home or buying a fixer-upper. Both require less competition, but they each have some downsides to consider.

“When it comes to buying a home, there are multiple options out there,” said Beatrice de Jong, a real estate broker and consumer trends expert with Opendoor. “Determining which one is the best for you depends on a variety of factors, especially if it’s your first time.”

Pro Tip

Keep an open mind when you start your home buying process. A reputable real estate agent can help educate you about the current market, let you know what you can reasonably expect to afford with your current budget, and even recommend builders or contractors if you decide to explore your other options.

To figure out which one makes the most sense for you, it’s important to weigh the pros and cons of each option. Here’s how to make sense of buying, building, or fixing-up your first home. 

When Buying a Move-In Ready Home Makes Sense

When you’re looking for your first home, the most obvious option — and the most popular — may be to buy a move-in-ready home that’s on the market. These homes are readily available and require the least amount of work on the buyer’s part. Since most lenders offer conventional or government-back mortgages financing a move-in-ready home can be simpler than financing a new build or a fixer-upper. It’s more difficult to find a lender that offers a renovation or construction loan. A move-in ready home usually doesn’t require any major renovations, and an inspection should confirm no major repairs are needed. 

“Buying a turn-key or move-in ready home is ideal for the buyer who wants to take on minimal (if not zero) upgrade projects once they’ve closed on the home,” de Jong said.

On the flipside, move-in-ready buyers will be limited on available customization — meaning you may have to either settle for something you don’t love or wait longer to find the perfect home. 

It’s important to keep price in mind, too. Purchasing a move-in-ready home can be more expensive than buying a fixer-upper. This is especially true in today’s market because of the demand for move-in-ready homes right now. Stiff competition and bidding wars could drive up the home price above the listing price.


  • Shorter move-in time frame

  • Avoids the added costs repair or of building from scratch

  • Financing is typically more straightforward than a new build or renovation loan


  • Limited customization

  • May have to settle for something you don’t love

  • May end up waiting longer to find the perfect home

  • You’ll likely face stiff competition and bidding wars

  • Can be more expensive than buying a fixer-upper

When Buying a New Construction Home Makes Sense

Rather than building a move-in-ready home, you can choose to work with a builder for a new construction home.

“Opting for a new construction home can be an appealing route for those who want to customize a property that perfectly fits their family, lifestyle, and individual needs,” de Jong said. Depending on the builder you work with, you may be able to completely customize your home or simply choose from several available floor plans that your builder offers.

One advantage is that new builds usually come with a warranty or guarantee from the builder to help cover unexpected repairs or problems. De Jong points out there are likely fewer problems with appliances since they are newer and more energy-efficient. 

Buying a new construction home can help buyers “bypass bidding wars, closing schedules, and competitive housing markets,” says de Jong. Even though it’s risky, buyers are more likely to waive contingencies, such as inspections and appraisals, just to make their offer stand out among the competition. Purchasing a new build essentially eliminates that issue, says de Jong.  

As with all financial decisions, there are disadvantages to buying a newly constructed home. Builders are currently facing supply chain issues. Delays and shortages of materials could increase your costs and extend your move-in timeline. Some people find it costly and stressful to find somewhere to rent for an unknown amount of time while awaiting construction.


  • New builds can be customizable

  • Likely to come with a warranty or guarantee from the builder

  • Less likely to face bidding wars

  • No need for contingencies or crafting an offer to stand out


  • Possible supply chain issues, delays, shortages, and increased cost of goods on supplies

  • May require complicated financing

  • Building a home can be a long process

  • Will need a place to live while home is being built

When Buying a Fixer-Upper Makes Sense

The final option available for your first home is to purchase an outdated home or one in need of repairs and complete the renovations, either on your own (DIY) or with the help of a contractor.

This option can be more cost-effective for someone who can fix up the home themselves. “Buying a fixer-upper makes the most sense if you are on a tight budget and have more free time to dedicate to fixing up the home,” said Bill Samuel, a real estate investor and the owner of Blue Ladder Development. “These buyers are typically younger first-time homebuyers that are mechanically inclined.”

Buyers of fixer-uppers can save money by performing a lot of the labor themselves instead of paying a contractor, adds de Jong. “Fixer uppers can empower consumers to create the home of their dreams and explore the worlds of renovation and design on their own terms,” she says.

In addition to being able to customize the home as during the renovation, the appeal to buying a fixer-upper is there’s less competition for these types of homes, which means you won’t have to worry about bidding wars or paying over the asking price. “There is typically less competition for fixer-upper homes, so negotiating a reasonable price is often in the cards,” says de Jong. “A lower list price and down payment requirement is also likely.”

But it’s a bit of a dice roll. You won’t know upfront exactly what it will cost to repair the home since you haven’t seen the extent of the damage or the inner workings of the home. There could be issues that will require considerably more time and money than originally planned. “There are always surprise costs that come into play, which can also make budgeting a bit challenging,” says de Jong. 

Sometimes, though, fixing up a home can be just as expensive as buying a turn-key home, especially if you’re making expensive upgrades and hiring a contractor rather than doing the work yourself. Supply chain disruptions could play a part in suppliers and materials costing you more than expected. 


  • Less competition in the fixer-upper market

  • Bidding wars and paying over the asking price are less common

  • Can be more cost-effective

  • Customizable upgrades


  • Could end up being just as expensive as buying a turn-key home depending on cost to renovate

  • Possible supply chain issues, delays, shortages, and increased cost of goods on supplies

  • Issues can emerge that will require considerably more time and money than expected

Best Home Loan Options 

The type of home purchase you choose will also impact the type of home loans available to you. Buying a move-in-ready home gives you the greatest number of financing options, but there are still plenty of options available for new builds and fixer-uppers.

Loans for Buying

Financing the purchase of a move-in-ready home is fairly simple. You’ll have many different options, both in the type of loan available and the mortgage lender you work with.

“If you can afford a 20% down payment 30-year fixed conventional loan, then that is typically one of the most popular options,” Samuel said. “However, there are several different government-sponsored loan programs that can be a great option as well.”

Loans for Building

The process of financing a new build is a bit different — and more complicated — than getting a mortgage for a move-in-ready home. In general, you’ll have two different options:

  1. Construction loan and permanent loan: Often, you’ll need two different types of loans to build a home. The construction loan will cover your costs with the contract until the home is complete. Then you’ll take out a separate mortgage for the full price of the home when it’s completed. After the home construction is complete, you can either pay off the construction loan or fold the balance into a traditional 15– or 30-year mortgage, either with the same lender or a different one.
  1. Construction-to-permanent loan: With this type of financing, your construction loan and permanent mortgage are wrapped up into one. You’ll have just one approval process and closing, and your loan automatically converts from a construction loan to a permanent mortgage when the home is completed.

Depending on the builder you work with, there may be a more streamlined process available. Some builders only require a deposit to start the work, and then the rest isn’t due until you close on the home when it’s complete, meaning you’ll just need one mortgage. Note that this type of financing isn’t available with all builders, and it may mean you have fewer customization options.

Loans for a Fixer-Upper

Like building a new home, buying a fixer-upper requires a bit more complicated financing process.

“Be aware that if you are purchasing a property that needs a good amount of repair you may be more limited on the financing options if you don’t have a large down payment or the property is in severe disrepair,” Samuel said.

The amount you can get for a mortgage is dependent on the current value of the home. And for a traditional mortgage, an appraiser isn’t going to consider the value after any repairs you have planned. That being said, there are some home loans specifically designed for fixer-uppers.

  • Fannie Mae HomeStyle renovation loan: A HomeStyle renovation loan is a type of conventional loan backed by the government-sponsored enterprise Fannie Mae. With this type of loan, you can include your renovation expenses into your mortgage. The amount you can borrow is based not on the current value of the home but on the value after renovations are done.
  • FHA 203(k): This type of loan, backed by the Federal Housing Administration, allows you to borrow the money to buy and rehabilitate your home. A portion of the loan goes to pay the seller, while the remainder goes into an escrow account to pay for the renovations.
  • VA renovation loan: A VA renovation loan works very similarly to the Fannie Mae and FHA renovation loans but is available only to eligible current and former military service members. Just like a standard VA loan, you won’t need a down payment and won’t have to pay mortgage insurance, but you will have to get quotes from VA-approved contracts upfront.