Sometimes you can, and the window is usually much narrower than buyers expect. A Texas new construction contract is written on the builder's own form, not the TREC promulgated contract, and it typically replaces the standard option period with a short financing contingency. Once that window closes and the builder pulls a permit, earnest money is generally at risk. The answer to whether you can back out lives in the addendum, not in state law.
That distinction is the whole post. Buyers who have purchased resale homes in Texas arrive at a builder's design center carrying a mental model that does not apply, and the gap between the two documents is where the money is lost.
What contract are you actually signing?
Resale transactions in Texas run on forms promulgated by the Texas Real Estate Commission. Those forms are standardized, publicly available, and read the same way from Preston Hollow to Prosper. New construction does not work that way. Production builders and custom builders both draft their own purchase agreements, and each one is a separate document with its own termination logic.
At The Agency Dallas, reviewing a new construction contract in Texas begins with locating four provisions before anything else is discussed:
- The termination or contingency clause — what event, if any, lets the buyer walk with earnest money returned
- The earnest money schedule — how much, when it is deposited, and at what point it becomes non-refundable
- The completion and delay language — what happens when the home is not finished on the projected date
- The dispute resolution clause — whether disputes go to binding arbitration and who selects the arbitrator
Not one of those four reads the same across builders. Some are negotiable before signing. Almost none are negotiable afterward.
Does a Texas new construction contract have an option period?
Usually not in the form buyers are expecting. The TREC option period — the paid, unrestricted right to terminate for any reason within a set number of days — is a resale mechanism. Builder contracts frequently omit it entirely and substitute a financing contingency: the buyer may terminate if loan approval is not obtained within a defined period, and only for that reason.
The practical consequence is that "I changed my mind" and "I found a house I like better" are not termination grounds in most builder agreements. Neither is a slow market. Neither, in many contracts, is a home inspection result, because the builder's warranty is positioned as the remedy instead.
How much earnest money is at risk?
More than in a resale transaction, and it is often staged. Builders commonly ask for deposits in the range of three to five percent of the purchase price on custom and semi-custom work, and it is standard for that money to be structured in tranches tied to construction milestones — one amount at contract, another at slab, another at framing. Each tranche typically becomes non-refundable as the corresponding milestone is reached.
On a resale purchase, earnest money is a modest sum held briefly. On a build, it can be a five-figure commitment that hardens progressively over eight to fourteen months. Buyers should know, at signing, exactly which dollars are still recoverable at which stage.
Is this a good moment to be negotiating with a DFW builder?
The market context matters, and it currently favors buyers more than it did two years ago. North Texas builders started 11,290 homes in the second quarter of 2026, down 6.5 percent from the second quarter of 2025, according to Residential Strategies Inc. Full-year 2025 starts totaled 41,222, a 12.3 percent drop from 46,991 in 2024.
Softer absorption means standing inventory, and standing inventory changes the conversation. A builder carrying finished spec homes has more reason to discuss contract terms, incentive structure, and rate buydowns than one selling out a phase before it breaks ground. That leverage is real, but it expires the moment the contract is signed. Terms are negotiated before signature or not at all.
What should you do before you sign?
The sequence that protects buyers is unglamorous and it works:
- Bring representation to the first visit, not the second. Builder registration policies frequently turn on when an agent first appeared on site, not on what the buyer intended.
- Read the addendum stack, not the summary sheet. The one-page term sheet at the design center is a marketing document. The obligations are in the addenda.
- Ask the earnest money question in dollars and dates. Not "is it refundable" — "on what date does which portion stop being refundable."
- Confirm the delay remedy. If the home is ninety days late, what does the buyer receive? In many contracts, nothing.
- Check the arbitration clause. It determines what recourse exists if the relationship goes wrong.
- Get financing pre-approval that survives a long build. Rate locks and approvals expire; construction timelines outlast them.
Buyers who work with The Agency Dallas on a new construction contract in Texas get that review before earnest money moves, because that is the only point at which the review can change anything.
What if you are already under contract and want out?
Then the analysis narrows to three questions. First, has the specific termination event in your contract occurred — most often, has financing been denied within the contingency window? Second, has the builder breached a stated obligation, such as a hard completion deadline with a defined remedy? Third, is the builder willing to negotiate a release, which happens more often than buyers assume when the builder believes the home will resell quickly at a similar price.
If none of those apply, the remaining questions are legal ones, and they belong with a Texas real estate attorney rather than with a brokerage. We say that plainly because the line matters: contract interpretation and enforceability are legal questions, and a brokerage that blurs that boundary is not helping.
Frequently asked questions
Can I use the TREC option period on a new construction home?
Only if the builder's contract grants one. TREC forms govern resale transactions. Builders write their own agreements and are not required to include an option period. Some offer a short termination window as a courtesy or a negotiated term, but it is not automatic and should never be assumed.
Is my earnest money refundable if my loan is denied?
In most builder contracts, yes — but only within the financing contingency window and only if the denial is documented as the contract requires. After that window closes, loan denial typically does not restore the deposit. The exact window length varies by builder and should be confirmed in writing before signing.
What happens if the builder finishes late?
That depends entirely on the completion clause. Many builder contracts state a projected completion date with broad excusable-delay language and no buyer remedy attached. Others provide a per-diem credit or a termination right after a defined overrun. Read this clause before signing; it is rarely negotiable afterward.
Can I cancel because the appraisal came in low?
Usually not automatically. Builder contracts often omit an appraisal contingency, which means a low appraisal becomes the buyer's problem to solve with additional cash rather than a route out of the contract. Where an appraisal contingency exists, it is generally a negotiated addition.
Do I need my own agent for new construction?
The on-site sales representative works for the builder. Buyers who want independent review of the contract, the incentive structure, and the delay language need their own representation, engaged before the first site visit. See our post on whether builders pay agent commissions on new construction in DFW.
Should I have an attorney review a builder contract?
For a custom build, or any contract with staged non-refundable deposits and binding arbitration, yes. A brokerage can identify what to look at and what the market terms are. Enforceability and interpretation are legal questions.
Related reading
- Do builders pay agent commissions on new construction in DFW?
- What are the risks of buying investment property in Texas right now?
- How does a 1031 exchange work when selling an investment property in Texas?
Our door is open if you want a contract read before you sign it.
