How To Evaluate A Decorating Allowance

One of the more common incentives in new-home purchases is the “decorating allowance.”  This is an offer to upgrade some aspect of the home before closing, such as carpeting, flooring, or appliances.  Since builders are buying such things “at scale” for multiple homes, the perceived value of the incentive may be higher than their actual cost.

If you are considering a decorating allowance, ask these questions about the allowance offer:

  • Is the allowance credited at closing, and can it be applied to your closing costs?
  • What purchase terms must your accepted offer meet to qualify for the allowance?

Check with the lender you have selected to make sure the terms the buyer is offering are allowed in your loan arrangement.

At closing, make sure the allowance addendum is included on loan disclosures.


And make the allowance/upgrade is valuable enough to you to tip the balance in such an important decision.

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