Home Builder Contract Types

Home Builder Contract Types: Understanding the Different Agreements

Building your dream home is a big and exciting project. However, with the excitement comes the responsibility of handling the legal aspects of the construction. One of the most significant parts of the legal process is signing a home builder contract with your chosen contractor. This agreement will outline the terms, conditions, and expectations for the construction project.

As a homeowner, it is essential to understand the different types of home builder contracts available to ensure you choose the best one for your needs. In this article, we will cover the most common types of builder contracts.

1. Fixed-Price Contract

The fixed-price contract is the most common type of home builder contract. It is a straightforward agreement that outlines the exact amount of money you will pay for the entire construction project. This type of contract can be beneficial if you have a strict budget, as it ensures that you won`t have any unexpected costs or financial surprises.

2. Cost-Plus Contract

The cost-plus contract is another type of home builder contract in which you agree to pay the builder for the cost of building your home, plus a predetermined percentage of that cost as their profit. This type of contract is usually flexible and allows for changes and modifications during the construction phase. The downside of this type of contract is that it could lead to unexpected costs if the project goes over budget.

3. Time and Materials Contract

A time and materials contract is an agreement where the builder charges you for the actual time they spend working on your project, plus the cost of any materials used. This type of contract is most commonly used for smaller projects or repairs and is not usually recommended for larger projects due to the potential for cost overruns.

4. Design-Build Contract

In a design-build contract, the builder is responsible for both the design and construction of the project. This type of contract can be an efficient way to build a home as the builder can work seamlessly from design to completion. However, the downside of a design-build contract is that there is less control over the design process and may result in fewer design options.

5. Construction Management Contract

In a construction management contract, the builder acts as a consultant throughout the project, overseeing the subcontractors and ensuring that the project stays on track. This type of contract is most commonly used for large and complex projects, such as commercial buildings.


A home builder contract is a legal agreement that outlines the terms, conditions, and expectations for building your dream home. Choosing the right type of contract is vital to ensure that your project runs smoothly, stays within budget, and meets your expectations. By considering the different types of builder contracts, you can make an informed decision that will lead to a successful construction project.