A new home landscaping escrow may allow a purchase to close with exterior work unfinished, if the lender approves the arrangement under the applicable loan rules. A builder’s promise or occupancy document alone does not establish eligibility.

For new-construction purchases, Fannie Mae’s October 7, 2026 Selling Guide sets rules for postponed improvements on new or proposed construction. Existing-home repair provisions are not a substitute. If you are using another loan program, ask the lender which policy applies.

1. Confirm eligibility for a new home landscaping escrow

Fannie Mae permits a lender to sell an eligible loan before completion. That permission does not establish your lender’s approval to close.

Under Selling Guide section B4-1.2-05, postponed work must be part of the sales contract; separate third-party contracts are ineligible. The delay needs a valid reason, such as weather or unavailable materials, and the unfinished work cannot prevent an occupancy permit.

Obtain an itemized list separating sod, planting, irrigation, grading and access work. Ask the lender which items qualify and the building authority whether any prevent occupancy approval. Do not group missing plants and an unresolved drainage problem under “landscaping pending.”

2. Verify the escrow amount and deadline

Fannie Mae’s September 2, 2026 policy supplement and Selling Guide set these requirements for a new construction escrow holdback:

Obtain the written estimate, escrow calculation and calendar deadline. Confirm whether the lender requires an earlier finish and whether inspection fees are included.

Hypothetical example: With a $500,000 as-completed appraised value and a $20,000 completion estimate, the work represents 4% of value. Without the fixed-price exception, the holdback is $24,000. These calculations address only the financial tests.

3. Identify who controls the escrow

The Selling Guide requires the lender to establish a qualifying custodial account for the withheld funds. The lender and borrower must sign an agreement governing how the account is managed and funds are paid out.

Ask the closing team to identify the withheld amount in the settlement accounting. Obtain the custodian’s name, a contact for completion questions and written release instructions. Have the agreement specify:

• Who requests an inspection, pays its fee and authorizes each draw.
• Who covers a shortfall if completing the original scope costs more.
• Who receives unused funds.
• Who handles the holdback if servicing transfers before completion.

Do not assume the buyer can withdraw the money or the builder can authorize its own payment.

4. Agree on completion evidence and release conditions

Have the lender identify the applicable report format before closing. As of October 9, 2026, lenders could be using legacy Uniform Appraisal Dataset (UAD) 2.6 or newer UAD 3.6, which entered optional broad production on January 26, 2026.

For appraiser verification, legacy files use the completion section of Form 1004D; UAD 3.6 uses the separate Completion Report. An appraisal update serves a different purpose and does not replace completion evidence, as Fannie Mae’s September 2025 Appraiser Update explains.

Where permitted, a borrower/builder attestation can provide completion evidence. It must identify the borrower and property, certify conformity with plans and specifications including changes, and include dated signatures from both parties and required interior and exterior photographs. If both signatures cannot be obtained, the UAD 3.6 policy supplement requires appraiser verification. Do not sign while listed work remains unfinished.

Confirm the lender’s inspection and photo requirements and the reporting rules that will apply when the work is complete. The September 30 announcement offered temporary exceptions that sellers must request and obtain; it left the November 2, 2026 mandate in place.

Release also depends on title and insurance conditions. Under the Selling Guide, the lender needs final title evidence without outstanding mechanic’s liens or exceptions for the work or escrow. A title report issued before completion requires a policy endorsement protecting Fannie Mae’s lien priority. Final disbursement follows satisfactory completion evidence and includes surplus funds. The escrow cannot impair title or mortgage insurance.

5. Agree on the response to a missed date

Put a specific completion date and measurable scope in the builder’s signed agreement before closing. Clarify who can approve substitutions, what weather-related extensions require, how contractors obtain access after move-in and what notice starts the default process.

Have a local real estate attorney review the buyer’s remedies, including whether another contractor may finish the job and how that contractor could be paid. Do not assume mortgage policy gives you those rights.

If the builder misses the date, document unfinished items, send the notices your agreements require, and promptly contact the lender and escrow administrator. Request a written plan addressing the remaining work, funds and deadline. Do not treat the builder’s revised schedule as an extension of the lender’s deadline.

Keep warranty claims on their own timetable: check coverage and follow the warranty’s claim instructions. Our guide to separate warranty notice requirements explains the documentation task.

Before agreeing to close

If eligibility, escrow instructions or completion remedies remain unresolved, discuss completing the work first or negotiating a closing extension. Review the contract and financing consequences of either choice as part of your broader buyer preparation.