LGI Homes, Inc.

3. REAL ESTATE INVENTORY

Our real estate inventory consists of the following (in thousands):

Our real estate not owned relates to land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from our available cash or other financing sources. See “Real Estate Inventory” under Note 2 for more information.

4. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

We build and lease a number of single-family homes in select, existing communities. During the years ended December 31, 2025 and 2024, we transferred $77.1 million and $25.1 million, respectively, of home assets from real estate inventory to rental properties within property and equipment, net. During the year ended December 31, 2025, we had a sale of

103 currently or previously leased single-family homes and realized gains of $4.9 million included in Other Income, net. We are lessors of the homes representing these home assets.

Depreciation expense incurred for the years ended December 31, 2025, 2024, and 2023 was $4.3 million, $3.1 million, and $2.4 million, respectively.

5. ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued and other liabilities consist of the following (in thousands):

Land Banking Financing Arrangements

We have land banking financing arrangements with a third-party land banker to repurchase land that we sold to the land banker as a method of acquiring finished lots in staged takedowns. Principal payments on these financing arrangements will generally coincide with the repurchase of lot takedowns from the land banker. We expect to complete the repurchase of all lots via takedowns associated with these transactions over the course of less than a year.

Inventory Related Obligations

We own lots in certain communities in Florida and Texas that have Community Development Districts or similar utility and infrastructure development special assessment programs that allocate a fixed amount of debt service associated with development activities to each lot. This obligation for infrastructure development is attached to the land, which is typically payable over a 30-year period and is ultimately assumed by the homebuyer when home sales are closed. The obligations assumed by the homebuyer represent a non-cash cost of the lots.

Estimated Warranty Reserve

We generally provide homebuyers with aone-year warranty on the house and a limited warranty for major defects in structural elements, such as framing components and foundation systems, typically ranging fromsix toten years depending on the applicable state.

Changes to our warranty accrual are as follows (in thousands):

6. NOTES PAYABLE

Revolving Credit Agreement

On August 1, 2025, we entered into a Letter Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Letter Agreement Amendment”), which amended the Fifth Amended and Restated Credit Agreement, dated as of April 28, 2021, with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (as amended to date, including the Letter Agreement Amendment, the “Credit Agreement”). The Credit Agreement provides for a $1.1825 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement. The Credit Agreement matures on April 28, 2029 with respect to $972.5 million, or 82.2%, of the $1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8% of the commitments thereunder.

Before each anniversary of the Credit Agreement, we may request a one-year extension of its maturity date. The Credit Agreement is guaranteed by, among others, each of our subsidiaries that have gross assets of at least $0.5 million, other than subsidiaries whose sole purpose is to own and operate single-family rental homes.

The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 7.000% Senior Notes due 2032 (the “2032 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of December 31, 2025, the borrowing base under the Credit Agreement was $1.9 billion, of which the maximum available to borrow was $1.9 billion. As of December 31, 2025, borrowings under the Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.6 billion, $19.5 million of letters of credit were outstanding and $273.6 million was available to borrow under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10,15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At December 31, 2025, the Applicable Margin was 1.85%, and SOFR was 3.72%, subject to the 0.50% SOFR floor as included in the Credit Agreement.

The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a maximum leverage ratio, a minimum liquidity amount and a minimum EBITDA to interest expense ratio. The Credit Agreement contains various covenants that, among other restrictions, (i) limit the amount of our additional debt and our ability to make certain investments and (ii) restrict the repurchase of shares and payment of dividends through December 31, 2026. At December 31, 2025, we were in compliance with all of the covenants contained in the Credit Agreement.

On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living - SFR 1, LLC (“LGI Living SFR”) entered into a Loan Agreement (the “LGI Living Loan Agreement”) with Evergreen Residential Capital, LLC, as lender. The LGI Living Loan Agreement provides for a secured non-recourse loan for up to $50.0 million, which can be increased at the request of LGI Living SFR by up to $75.0 million (for a total of $125.0 million), subject to the terms and conditions of the LGI Living Loan Agreement.

As of December 31, 2025, the total amount of borrowings outstanding under the LGI Living Loan Agreement was $50.0 million. The loan matures on July 8, 2030 and bears interest at a rate of 6.433% per annum, which may be adjusted in connection with an increase in the amount of the loan. The loan is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events. The LGI Living Loan Agreement requires that the Company maintain, as guarantor, (i) liquidity of not less than 15% of the loan amount and (ii) maintain net worth in excess of 50% of the loan amount.

The loan is unconditionally guaranteed as to payment and performance by LGI Living - ER FIN, LLC, as the direct owner of the equity interests in LGI Living SFR, but recourse under such guaranty is limited to LGI Living - ER FIN, LLC’s equity interests in LGI Living SFR, which are pledged as collateral for the loan. The loan is also secured by a security interest in all assets of LGI Living SFR, including a mortgage lien on certain of LGI Living SFR’s real property. The LGI Living Loan Agreement includes certain restrictive covenants that may limit LGI Living SFR’s ability to, among other things, incur additional indebtedness or make certain investments. The LGI Living Loan Agreement contains representations and warranties, affirmative covenants, and events of default, all of which the Company believes are customary for special purpose subsidiary real estate secured loan agreements. If an event of default exists under the LGI Living Loan Agreement, the lender will be able to accelerate the maturity of the loan and exercise other rights and remedies. At December 31, 2025, we were in compliance with all of the covenants contained in the LGI Living Loan Agreement.

Senior Notes Offering

On November 15, 2024, we issued $400.0 million aggregate principal amount of the 2032 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S (“Regulation S”) under the Securities Act. Interest on the 2032 Senior Notes accrues at a rate of 7.000% per annum, payable semi-annually in arrears on May 15 and November 15 of each year. The 2032 Senior Notes mature on November 15, 2032. The terms of the 2032 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fifth Supplemental Indenture thereto, dated as of November 15, 2024, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee.

On November 21, 2023, we issued $400.0 million aggregate principal amount of the 2028 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2028 Senior Notes accrues at a rate of 8.750% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. The 2028 Senior Notes mature on December 15, 2028. The terms of the 2028 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Fourth Supplemental Indenture thereto, dated as of November 21, 2023, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Regions Bank, as trustee.

On June 28, 2021, we issued $300.0 million aggregate principal amount of the 2029 Senior Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S. Interest on the 2029 Senior Notes accrues at a rate of 4.000% per annum, payable semi-annually in arrears on January 15 and July 15 of each year. The 2029 Senior Notes mature on July 15, 2029. The terms of the 2029 Senior Notes are governed by an Indenture, dated as of July 6, 2018, and Third Supplemental Indenture thereto, dated as of June 28, 2021, as may be supplemented from time to time, among us, our subsidiaries that guarantee our obligations under the Credit Agreement and Wilmington Trust, National Association, as trustee.

Notes payable consist of the following (in thousands):

As of December 31, 2025, the annual aggregate maturities of notes payable during each of the next five fiscal years are as follows (in thousands):

Capitalized Interest

Interest activity, including other financing costs, for notes payable and financing arrangements for the periods presented is as follows (in thousands):

Included in interest incurred was amortization of deferred financing costs and applicable discounts for notes payable and financing arrangements of $9.9 million, $14.0 million and $13.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.

7. INCOME TAXES

All of the Company’s operations are domestic. We do not have foreign subsidiaries or foreign operations therefore, no foreign income taxes are incurred or reported.

The provision for income taxes consisted of the following (in thousands):

Income taxes paid (net of refunds) consisted of the following (in thousands):

State taxes for Florida and California did not exceed the 5% threshold for net income taxes paid in 2025 and 2023.

Domestic net income before income taxes and related income tax expense consisted of the following (in thousands):

A reconciliation of the provision for income taxes and the amount computed by applying the statutory federal income tax rate to income before provision for income taxes for the years ended December 31, 2025, 2024, and 2023 (in thousands):

The 2025 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the U.S. Internal Revenue Code, as amended (the “Code”). The 2024 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by the windfalls for share-based payments and benefits associated with the federal energy efficient homes tax credits (the “45L Tax Credits”). The 2023 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings and non-deductible salaries related to Section 162(m) of the Code, partially offset by benefits associated with the 45L Tax Credits and the windfalls for share-based payments.

Income tax expense for 2025, 2024, and 2023 includes a benefit of $0.2 million, $1.8 million and $1.2 million, respectively, associated with the 45L Tax Credits. The 45L Tax Credits provision applies to qualifying homes closed through December 31, 2025.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The components of net deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows (in thousands):

We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. The statute of limitations with regards to our federal income tax filings is three years. The statute of limitations for our state tax jurisdictions is three to four years depending on the jurisdiction. In the normal course of business, we are subject to tax audits in various jurisdictions, and such jurisdictions may assess additional income taxes. We do not expect the outcome of any audit to have a material effect on our consolidated financial statements; however, audit outcomes and the timing of audit adjustments are subject to significant uncertainty.

8. EQUITY

We are authorized to issue 250,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2025 and 2024, no shares of preferred stock were issued or outstanding.

At December 31, 2025, we had 27,789,678 shares of common stock issued and 23,133,086 shares of common stock outstanding, including 4,656,592 treasury shares of our common stock. At December 31, 2024, we had 27,644,413 shares of common stock issued and 23,397,074 shares of common stock outstanding, including 4,247,339 treasury shares of our common stock.

In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three months ended December 31, 2025, we didnot repurchase any shares of our common stock. During the year ended December 31, 2025, we repurchased 409,253 shares of our common stock at a total cost, including commissions and excise taxes, of $23.6 million, to be held as treasury stock. During the three months ended December 31, 2024, we didnot repurchase any shares of our common stock. During the year ended December 31, 2024, we repurchased 307,867 shares of our common stock at a total cost, including commissions and excise taxes, of $30.8 million, to be held as treasury stock. A total of 3,656,592 shares of our common stock has been repurchased since our stock repurchase program commenced in 2018. As of December 31, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program.

Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2025, 2024, and 2023.

9. STOCK-BASED COMPENSATION

Non-performance Based Restricted Stock Units

A total of 2,680,172 shares of our common stock have been reserved for issuance under the LGI Homes, Inc. Amended and Restated 2013 Equity Incentive Plan (the “2013 Incentive Plan”). There were 222,828 restricted stock units (“RSUs”) outstanding at December 31, 2025, issued at a $0.00 exercise price.

The following table summarizes the activity of our time-vested RSUs:

In 2025, we issued 29,063 RSUs to senior management for the time-based portion of our 2025 long-term incentive compensation program and 31,521 RSUs for 2024 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2024, we issued 17,767 RSUs to senior management for the time-based portion of our 2024 long-term incentive compensation program and 30,876 RSUs for 2023 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In 2023, we issued 22,912 RSUs to senior management for the time-based portion of our 2023 long-term incentive compensation program and 8,256 RSUs for 2022 annual bonuses to managers, which generally cliff vest on the third anniversary of the grant date. In addition, during the years ended December 31, 2025, 2024, and 2023, we issued 46,721,56,707 and 17,778 RSUs, respectively, to certain employees, executives and non-employee directors, which vest over periods ranging from one to three years. Under the terms of the grant award agreements, all of the RSUs may only be settled in shares of our common stock.

Performance-Based Restricted Stock Units

The Compensation Committee of the Board has granted awards of performance-based RSUs (“PSUs”) under the 2013 Incentive Plan to certain members of senior management based onthree-year performance cycles. At December 31, 2025, there were 248,122 PSUs outstanding that have been granted to certain members of management at a $0.00 exercise price. The PSUs provide for shares of our common stock to be issued based on the attainment of certain performance metrics over the applicable three-year periods. The number of shares of our common stock that may be issued to the recipients for the PSUs range from 0% to 200% of the target amount depending on actual results as compared to the target performance metrics. The terms of the PSUs provide that the payouts will be capped at 100% of the target number of PSUs granted if absolute total stockholder return is negative during the performance period, regardless of EPS performance; this market condition applies for amounts recorded above target. The compensation expense associated with the PSU grants is determined using the derived grant date fair value, based on a third-party valuation analysis, and expensed over the applicable period. The PSUs vest upon the determination date for the actual results at the end of thethree-year period and require that the recipients continue to be employed by us through the determination date. The PSUs can only be settled in shares of our common stock.

The following table summarizes the activity of our PSUs for the year ended December 31, 2025:

We recognized $(1.6) million, $4.3 million and $2.9 million of total stock-based compensation expense related to outstanding PSUs for the years ended December 31, 2025, 2024, and 2023, respectively. PSUs granted in 2022 were forfeited based on actual results as compared to the target performance metrics. At December 31, 2025, we had unrecognized compensation cost of $0.6 million, based on the probable amount, related to unvested PSUs, which is expected to be recognized over a weighted average period of 0.3 years. PSUs granted in 2025 and 2024 are excluded from the calculation of diluted EPS as they are subject to unsatisfied performance conditions.

Employee Stock Purchase Plan

The LGI Homes, Inc. Employee Stock Purchase Plan (the “ESPP”) provides for employees to make quarterly elections for payroll withholdings to purchase shares of our common stock at a 15% discount from the closing price of our common stock on the purchase date, which is the last business day of each calendar quarter. On April 24, 2025, our stockholders approved and authorized 500,000 additional shares of our common stock that may be sold under the ESPP. The maximum number of shares of our common stock that may be sold under the ESPP is 1,000,000 shares.

During the years ended December 31, 2025, 2024, and 2023, we issued 79,132,54,794 and 53,078 shares of our common stock to the ESPP participants. We received net proceeds of approximately $3.6 million, $4.8 million and $5.3 million related to the ESPP for 2025, 2024, and 2023, respectively. We recognized $0.6 million in stock compensation expense related to the ESPP for 2025 and $0.9 million in stock compensation expense related to the ESPP for each of 2024 and 2023. The ESPP contributions are not refundable (other than in the case of termination of employment) and, therefore, the shares purchasable with the amounts withheld are included in weighted-average shares outstanding for both basic and diluted earnings per share.

As of December 31, 2025,471,927 shares of our common stock remain available for issuance under the ESPP.

10. FAIR VALUE DISCLOSURES

ASC 820, Fair Value Measurements, defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. Fair value is determined based on the principal market for the asset or liability, or, in the absence of a principal market, most advantageous market. The principal market is the market with the greatest volume and level of activity for the assets or liability, regardless of of whether the Company ultimately transacts in that market. As a result, a fair value determined under this exit price concept may differ from the transaction price or quoted market price for the asset or liability.

ASC 820 establishes a framework for measuring fair value under GAAP, expands disclosure requirements for fair value measurements, and establishes a three-level fair value hierarchy that prioritizes the inputs used in valuation techniques. The hierarchy requires the use of observable inputs when available and the minimization of unobservable inputs. The three levels of the fair value hierarchy are as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 - Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company uses fair value measurements to account for certain assets and liabilities in its consolidated financial statements. Fair value measurements are applied on both a recurring basis, such as for certain financial instruments, and on a nonrecurring basis, such as when measuring assets subject to impairment.

Fair value measurements on a nonrecurring basis occur when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, including impairment of long-lived assets and inventory. These nonrecurring fair value measurements are generally classified within Level 3 of the fair value hierarchy due to the use of significant observable inputs.

During the year ended December 31, 2025, the Company recorded impairment charges related to inventory, which were measured at fair value and classified within Level 3 of the fair value hierarchy.

The fair value of the impaired assets was determined using valuation techniques that included discounted cash flow models and other market-based approaches. Significant unobservable inputs used in these valuations included estimated future selling prices, projected costs, absorption rates, expected holding periods and discount rates reflecting market participant assumptions. Changes in these assumptions could have a material impact on the estimated fair value and the amount of impairment recognized.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and certain accrued liabilities, approximate fair value due to the short-term nature of these instruments.

As of December 31, 2025, the carrying value of amounts outstanding under the Credit Agreement approximated fair value due to the variable interest rate, which adjusts based on market interest rates and the Company’s leverage ratio.

The fair value of the 2028 Senior Notes, the 2029 Senior Notes, the 2032 Senior Notes and the LGI Living Loan Agreement was estimated by discounting future contractual cash flows using market rates for similar instruments within the homebuilding industry. The fair value measurements are classified as Level 2 within the fair value hierarchy.

The following table below presents the Company’s liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2025 and December 31, 2024 (in thousands):

(1)See Note 4 for more details regarding the offerings of the 2028 Senior Notes, the 2029 Senior Notes, and the 2032 Senior Notes and the LGI Living Loan Agreement.

11. RETIREMENT BENEFITS

Our employees are eligible to participate in a 401(k) savings plan. Employees are eligible to participate beginning in the quarterly period after completing 30 days of service and attaining the age of 21. Salary deferrals are allowed in amounts up to 100% of an eligible employee’s salary, not to exceed the maximum permitted by law. We may make a discretionary match of up to 100% of the first 4% of an eligible employee’s deferral, not to exceed the maximum allowed by law. For the years ended December 31, 2025, 2024, and 2023, our matching contributions were $4.1 million, $4.5 million and $4.4 million, respectively.

12. RELATED PARTY TRANSACTIONS

The Company has entered into forward purchase commitments with LoanDepot, Inc. Parent, the co-owner of the LGI Mortgage Solutions joint venture in which the Company holds a 50% interest. The commitments relate to mortgage products originated by the LGI Mortgage Solutions joint venture for the Company’s homebuyers and were entered into as part of an interest rate buydown program designed to reduce the effective interest rate for borrowers. Total commitments during 2025 were $173.0 million, with $18.8 million unsettled at December 31, 2025 included in Other Assets. These transactions are considered related-party due to LoanDepot, Inc. Parent’s ownership and influence over the LGI Mortgage Solutions joint venture.

13. COMMITMENTS AND CONTINGENCIES

Contingencies

In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our homebuilding operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows.

We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows.

On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living SFR entered into the LGI Living Loan Agreement with Evergreen Residential Capital, LLC, as lender. The loan under the LGI Living Loan Agreement is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events. The LGI Living Loan Agreement requires that the Company, as guarantor, maintain (i) liquidity of not less than 15% of the loan amount and (ii) maintain net worth in excess of 50% of the loan amount.

The loan under the LGI Living Loan Agreement is secured by certain of LGI Living SFR’s single-family rental properties. The LGI Living Loan Agreement provides for a secured non-recourse loan for up to $50.0 million, which can be increased at the request of LGI Living SFR by up to $75.0 million (for a total of $125.0 million), subject to the terms and conditions of the LGI Living Loan Agreement. As of December 31, 2025, LGI Living SFR had $50.0 million of borrowings outstanding under the LGI Living Loan Agreement.

Land Deposits

We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):

(1)Includes land banking financing arrangements, see Note 2 and Note 3 for more details regarding real estate not owned.

As of December 31, 2025 and December 31, 2024, approximately $8.2 million and $10.4 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

Lease Obligations

We recognize lease obligations and associated ROU assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets, as included inother assets on the consolidated balance sheets, were $4.7 million and $5.6 million as of December 31, 2025 and December 31, 2024, respectively. Lease obligations, as included inaccrued expenses and other liabilities on the consolidated balance sheets, were $5.1 million and $6.1 million as of December 31, 2025 and December 31, 2024, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, totaled $2.0 million, $2.4 million and $2.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases during the years ended December 31, 2025 and 2024 was $2.5 million and $1.9 million, respectively. As of December 31, 2025, the weighted-average discount rate was 5.9% and our weighted-average remaining life was 1.9 years. We do not have any significant lease contracts that have not yet commenced at December 31, 2025.

The table below shows the future minimum payments under non-cancelable operating leases at December 31, 2025 (in thousands):

Bonding and Letters of Credit

We have outstanding letters of credit and performance and surety bonds totaling $392.2 million (including $19.5 million of letters of credit issued under the Credit Agreement) and $377.5 million (including $24.5 million of letters of credit issued under the credit agreement then in effect) at December 31, 2025 and December 31, 2024, respectively, related to our obligations for site improvements at various projects. Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows.

Investment in Unconsolidated Entities

As of December 31, 2025, we had two equity-method real estate joint ventures and four additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers. As of December 31, 2025 and 2024, we have a total of $21.2 million and $28.3 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage services, respectively. Income associated with our investment in unconsolidated entities was $1.9 million, $13.3 million and $12.8 million, within other income, net on the statement of operations for the years ended December 31, 2025, 2024, and 2023, respectively.

14. REVENUES

Revenue Recognition

Revenues from home sales are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues from home sales are recorded at the time each home sale is closed, title and possession are transferred to the customer and we have no significant continuing involvement with the home. Home sales discounts and incentives granted to customers, which are related to the customers’ closing costs that we pay on the customers’ behalf, are recorded as a reduction of revenue in our consolidated financial statements of operations.

The following table presents our home sales revenues disaggregated by revenue stream (in thousands):

Our home sales revenues are disaggregated by geography, based on our determined reportable segments.

The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 15 (in thousands):

Home Sales Revenues

We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our luxury series spec homes sold under our Terrata Homes brand.

Retail homes sold under both our LGI Homes brand and Terrata Homes brand focus on providing move-in ready homes with standardized features within favorable markets that meet certain demographic and economic conditions. Our LGI Homes brand primarily markets to entry-level or first-time homebuyers, while our Terrata Homes brand primarily markets to move-up homebuyers.

Wholesale homes are primarily sold under a bulk sales agreement and focus on providing move-in ready homes with standardized features to real estate investors that will ultimately use the single-family homes as rental properties.

Performance Obligations

Our contracts with customers include a single performance obligation to transfer a completed home to the customer. We generally determine selling price per home on the expected cost plus margin. Our contracts contain no significant financing terms as customers who finance do so through a third party. Performance obligations are satisfied at a moment in time when the home is complete and control of the asset is transferred to the customer at closing. Home sales proceeds are generally received from the title company within a few business days after closing.

Sales and broker commissions are incremental costs incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained. Sales and broker commissions are expensed upon fulfillment of a home closing. Advertising costs are costs to obtain a contract that would have been incurred regardless of whether the contract was obtained and are recognized as an expense when incurred. Sales and broker commissions and advertising costs are recorded within sales and marketing expense presented in our consolidated statements of operations as selling expenses.

15. SEGMENT INFORMATION

We operateone principal homebuilding business that is organized and reports by division. We have seven operating segments (our Central, Midwest, Southeast, Mid-Atlantic, Northwest, West and Florida divisions) that we aggregate into five qualifying reportable segments at December 31, 2025: our Central, Southeast, Northwest, West, and Florida divisions. These segments reflect the way we evaluate our business performance and manage our operations.

For reporting purposes, our homebuilding operations are aggregated into five reportable segments as follows:

Central: Texas, Oklahoma, Minnesota

Southeast: Georgia, Alabama, Tennessee, North Carolina, South Carolina,

West Virginia, Maryland, Pennsylvania, Virginia

Northwest: Colorado, Washington, Oregon

West: Arizona, New Mexico, Nevada, California, Utah

Florida: Florida

In determining the most appropriate reportable segments, we consider operating segments’ economic and other characteristics, including home floor plans, average selling prices, gross margin percentage, geographical proximity, production construction processes, suppliers, subcontractors, regulatory environments, customer type and underlying demand and supply. Each operating segment follows the same accounting policies and is managed by our management team. We haveno inter-segment sales, as all sales are to external customers. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.

Our Chief Executive Officer and Chairman of the Board and our President and Chief Operating Officer have been determined to be our chief operating decision-makers (“CODMs”). The CODMs primarily evaluate the segments’ operating performance and allocate resources for all of our reportable segments based on net income before income taxes. For all of the segments, the CODMs use segment net income before income tax expense in the annual budget and forecasting process. These operating results are reviewed against actual and forecasted figures, with net income before income taxes being the key operating metric used to measure profit or loss.

Financial information relating to our reportable segments was as follows (in thousands):

(1)Other segment items reflects other sources of income and expense, including selling expenses, general and administrative expenses and other income, net.

(2)The Corporate balance consists of general and administrative unallocated costs for various shared service functions and non-strategic other income.

(1)The Corporate balance consists primarily of investments in unconsolidated entities.