It depends on which contract you signed and on when the lender said no. Under North Carolina’s new construction contract you can terminate and get your earnest money back if you give notice before the pre-construction evaluation period ends, but after that deadline a loan denial is usually treated as your breach, and the due diligence fee and any building deposit are already out of your hands.
We get this call from buyers who were pre-approved in the spring, picked a lot, then watched the market move underneath them. Rates did move: the 30-year fixed was 7.40 percent in Freddie Mac’s survey for the week ending October 15, 2026, up 74 basis points in eight weeks and the highest since November 2023. A nine-month build gives a lender nine months to change its mind about you.
Nobody at the design center walks you through this part. The answer turns on three separate pots of money and on one date you probably did not circle.
Three pots of money, and they do not behave the same way
The first is the due diligence fee. On North Carolina’s standard Offer to Purchase and Contract, Form 2-T, this is a negotiated amount paid to the seller on the effective date in exchange for your right to terminate for any reason or no reason during the due diligence period. The form states that the fee is non-refundable except in the event of a material breach of the contract by the seller. Treat it as spent the day you sign.
The second is the earnest money deposit, which goes to an escrow agent rather than to the seller and behaves very differently. The official guidelines for the new construction contract, NC Realtors Form 800G, state that on a buyer breach the earnest money is not automatically forfeited and should not be immediately paid to the seller. If the parties cannot agree and the seller proves damages, the earnest money is applied as a credit against those damages and any balance is refunded.
The third is the building deposit, and this is the one buyers misread. Under the New Construction Addendum, Form 2A3-T, the building deposit is expressly not an earnest money deposit. It is paid directly to the seller, who uses it to build, and paragraph 8(b) states it is refundable only in the event of a material breach of the contract by the seller or the nonfulfillment of a condition in paragraph 11. The form carries its own warning in bold: even where a buyer is legally entitled to a refund, actually recovering the money may be difficult, time consuming or costly if the seller is unwilling or unable to hand it back.
- 30-year fixed mortgage rate 7.40 percent, up 74 basis points in eight weeks, the highest since November 2023 Freddie Mac Primary Mortgage Market Survey, week ending October 15, 2026
- Due diligence fee: non-refundable except on a material breach by the seller NC Realtors and NC Bar Association Form 2-T, Offer to Purchase and Contract
- Building deposit: refundable only on a material breach by the seller or nonfulfillment of a paragraph 11 condition Form 2A3-T, New Construction Addendum, paragraph 8(b), revised 7/2022
- Earnest money is not automatically forfeited on a buyer breach; the seller must be able to prove damages NC Realtors Form 800G, guidelines for Form 800-T, draft dated March 14, 2022
- Current builder incentives on eligible homes: a Mungo Homes 2/1 buydown at 3.49 percent in year one, 4.49 in year two and 5.49 thereafter at a 6.237 percent APR through the builder’s lender, or up to $20,000 in savings instead Our mortgage update, October 2026
What Form 800-T gives you while the house is still being built
If a contractor is building on land the contractor owns and the house is not finished, the correct paperwork is the Offer to Purchase and Contract for New Construction, Form 800-T. Its paragraph 2 sets out conditions that apply during the pre-construction evaluation period, and subparagraph 2(a) is the buyer loan condition.
Here is how Form 800G describes it. If you will be obtaining a loan, you must give notice before the end of that period if you are not satisfied the loan will be approved. If you terminate, you get the earnest money deposit back. If you do not terminate and you later cannot close because the lender does not ultimately approve the loan, that may constitute a breach of contract. The guidelines also note that if you let the condition pass without terminating, you are obligated to provide the seller documentary evidence that you can obtain the loan, and that time is of the essence on the deadline.
So the protection is real, and it is short. It is a window for you to decide, not a guarantee that holds to closing. The guidelines are explicit that a buyer often will not know with certainty that the loan is approved before the deadline arrives, and has to decide on whatever the lender will put in writing that day.
One more sentence in Form 800G deserves attention. If the seller’s damages and costs exceed the earnest money deposit and the building deposit combined, the buyer may be liable for the difference. Walking away from a build is not capped at the money you have already put down.
If the house is finished, you are on a different form
Form 2A3-T is for a completed spec dwelling, and it says so on its face: if construction is not complete or extensive additional improvements are planned, the parties should use Form 800-T instead. On a finished house you are on Form 2-T with that addendum attached, which means you have a due diligence period rather than a pre-construction evaluation period.
The practical difference matters. During due diligence you can terminate for any reason, including a loan you no longer like, and you lose the due diligence fee but recover the earnest money. Once the due diligence deadline passes, Form 2-T gives you no financing contingency at all. A lender’s denial in week three of a four-week closing is not an exit, it is a default, and the seller can pursue damages.
This is the most common misunderstanding we correct for buyers from other states. Many states keep a loan contingency alive until closing. North Carolina front-loads the risk into a short window and then expects you to perform. Our post on what to actually do during due diligence lays out the sequence.
What to do before you sign
Ask about the lock before you need it. A 60-day rate lock on a house that delivers in 90 days is an expensive problem, and a more expensive one in a rising market than it was in the spring. Ask your lender in writing for the lock length, the cost of an extension and whether a float down is available, and ask the builder what happens to your deposit if the lock expires before the certificate of occupancy.
Then look hard at the builder’s lender. Two builders we work with are buying rates down this month and those programs usually require their lender. Our mortgage update has the terms, including a Mungo Homes 2/1 buydown at 3.49 percent in year one and 5.49 percent from year three at a 6.237 percent APR, or up to $20,000 in savings instead. An incentive tied to one lender changes who controls your approval, which is exactly the risk here. Our new construction versus resale comparison and our new construction pages cover what each builder is funding now.
Last, expect to be re-qualified near closing. Lenders re-pull credit and re-verify employment, and a new car loan or a job change during a nine-month build is the most common reason an approval from March dies in November.
Everything above describes the North Carolina forms. In our experience with production builders in this market, the contract you are handed in the sales office is often the builder’s own, not Form 800-T or Form 2-T, and the builder’s paper is usually less generous to you: the deposit may be described as non-refundable outright, the loan condition may be shorter or absent, and the dispute terms may require arbitration. Whether such a clause holds up depends on its exact language and on what actually happened, which is a question for an attorney rather than for us. Form 800G itself advises that a North Carolina real estate attorney be consulted any time there is uncertainty about the contract, and we tell buyers the same. We are brokers, not lawyers. Before you sign at a design center, have the deposit language read by a North Carolina real estate attorney, and register your agent with the builder on your first visit so you have representation in the room.
Related questions people also ask
Is the due diligence fee refundable in North Carolina?
Generally no. North Carolina’s standard Offer to Purchase and Contract, Form 2-T, provides that the due diligence fee is non-refundable except in the event of a material breach of the contract by the seller. You are paying the seller for the right to terminate during the due diligence period for any reason, and that right is what the fee buys. If you terminate properly within the period you recover your earnest money but not the due diligence fee.
What is the difference between earnest money and a building deposit?
Earnest money is held by an escrow agent and is not automatically forfeited if you breach, according to the guidelines NC Realtors publishes for the new construction contract. A building deposit under Form 2A3-T goes straight to the seller and is used to build the house, and the form states it is refundable only if the seller materially breaches or a specified condition is not met. In short, one sits in a neutral account and one is already being spent on lumber. Decide how much building deposit you are willing to pay with that difference in mind.
Can a builder keep my deposit if I cannot get a loan?
Sometimes, and it turns on timing and on the document you signed. Under Form 800-T you can terminate during the pre-construction evaluation period and recover your earnest money, but if you let that deadline pass and then fail to close because the lender declines you, the guidelines say that may be a breach of contract. A builder using its own contract may have written the deposit as non-refundable from the start. Ask for the deposit and termination language in writing before you sign, and have an attorney review it.
Before you sign anything, find the two dates that decide this: the end of your pre-construction evaluation or due diligence period, and the expiration date on your rate lock. Write them on the same page, then ask your lender what it will take to extend the lock and ask the builder what happens to your deposit if it expires. If you want a second set of eyes on a builder contract and the deposit terms before you commit, bring it to our team and we will walk through it with you and tell you what to have your attorney look at.
Sources: NC Realtors and NC Bar Association Standard Form 2-T, Offer to Purchase and Contract. Standard Form 2A3-T, New Construction Addendum, revised 7/2022, paragraph 8(b). NC Realtors Form 800G, Guidelines for Completing the Offer to Purchase and Contract for New Construction (Form 800-T), draft dated March 14, 2022. Freddie Mac Primary Mortgage Market Survey, week ending October 15, 2026. Our monthly mortgage update, October 2026, for current builder buydown terms.
