<PAGE>

                                                                     EXHIBIT 4.1

                          FIRST SUPPLEMENTAL INDENTURE
                             (Senior Debt Indenture)

         This FIRST SUPPLEMENTAL INDENTURE, dated as of December 18, 2003, (this
"First Supplemental Indenture"), by and between KB Home, a Delaware corporation
(the "Issuer"), SunTrust Bank (successor to SunTrust Bank, Atlanta), as trustee
under the Indenture referred to below (the "Trustee"), and each of the
Guarantors (as defined below).

                              W I T N E S S E T H:

         WHEREAS, the Issuer and the Trustee have heretofore executed and
delivered a Senior Debt Indenture, dated as of October 14, 1997 (the "Original
Indenture," which term shall include the form and terms of each series of
Securities (as defined in the Original Indenture) established as contemplated
under the Original Indenture; the Original Indenture, as amended and
supplemented by this First Supplemental Indenture, is hereinafter called the
"Indenture"), providing for the issuance from time to time of the Issuer's
Securities;

         WHEREAS, pursuant to Article Two of the Original Indenture, the Issuer
has established by an Officers' Certificate, dated as of October 14, 1997, the
form and terms of a series of the Issuer's Securities designated the "7 3/4%
Senior Notes due October 15, 2004" (the "Senior Notes");

         WHEREAS, the Issuer and the Guarantors wish to supplement the Original
Indenture to provide for the guaranty by the Guarantors of the obligations of
the Issuer under the Senior Notes and, solely insofar as relates to the Senior
Notes, under the Original Indenture, and otherwise to modify the Original
Indenture on the terms set forth in this First Supplemental Indenture; and

         WHEREAS, the Issuer has requested that the Trustee execute and deliver
this First Supplemental Indenture pursuant to Section 8.1 of the Original
Indenture, and all requirements necessary to make this First Supplemental
Indenture a valid instrument in accordance with its terms have been performed
and the execution and delivery of this First Supplemental Indenture have been
duly authorized in all respects by the Issuer and each of the Guarantors.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Issuer, the Guarantors and the Trustee mutually covenant and
agree for the equal and proportionate benefit of the Holders (as defined in the
Original Indenture) from time to time of the Senior Notes as follows:

                                   ARTICLE ONE
                         GUARANTY AND RELATED PROVISIONS

         SECTION 1.1. Additional Event of Default. Pursuant to Section 24(a) of
the 7 3/4% Officers' Certificate (as defined in Section 13.1 of the Indenture),
Section 5.1 of the Original Indenture was amended and restated, but only insofar
as it relates to the Senior Notes, to read in full as set forth in such Section
24(a), and Section 5.1 as set forth in Section 24(a) of such 7 3/4% Officers'
Certificate is hereby further amended, but only insofar as relates to the Senior
Notes,

<PAGE>

by replacing the period following clause (f) with "; or" and adding the
following new clause (g) thereto, such clause to read in full as follows:

                  "(g) the Guaranty (as defined in Section 13.1 of this
         Indenture) of any Guarantor (as defined in Section 13.1 of this
         Indenture) ceases to be in full force and effect (other than by reason
         of the release of such Guarantor in accordance with the terms of
         Article Thirteen of this Indenture) or is declared to be null and void
         or unenforceable or the Guaranty of any Guarantor is found to be
         invalid or a Guarantor denies its liability under its Guaranty (other
         than by reason of the release of such Guarantor in accordance with the
         terms of Article Thirteen of this Indenture)."

         SECTION 1.2. Amendment of Section 5.7 of the Indenture. Section 5.7 of
the Original Indenture is hereby amended and restated, but only insofar as
relates to the Senior Notes, to read in full as follows:

                  "SECTION 5.7 Unconditional Right of the Securityholders to
         Institute Certain Suits. Notwithstanding any other provisions of this
         Indenture and any provision of any Senior Note or Guaranty, the right
         of any Holder of any Senior Note to receive payment of the principal of
         and interest on such Senior Note on or after the respective due dates
         expressed in this Indenture or such Senior Note (and to receive such
         payment pursuant to any Guaranty of such Senior Note), or to institute
         suit for the enforcement of any such payment on or after such
         respective dates, shall not be impaired or affected without the consent
         of such Holder."

         SECTION 1.3 Guaranty. The Original Indenture is hereby amended, but
only insofar as it relates to the Senior Notes, to add the following new Article
Thirteen, such Article to read in full as follows:

                                "ARTICLE THIRTEEN
                                    GUARANTY

                  "SECTION 13.1 Defined Terms. Capitalized terms used in this
         Article Thirteen have the meanings given them in this Section 13.1 and
         the 7 3/4% Officers' Certificate (as defined below) or, if not defined
         in this Section 13.1 or the 7 3/4% Officers' Certificate, in Section
         1.1 of this Indenture.

                  "As used in this Article Thirteen, the following terms have
the respective meanings set forth below:

                          "Guaranty" and "Guaranties" mean the guaranty set
                  forth in Section 13.2 of this Indenture and any guaranties
                  that are executed and delivered pursuant to Section 13.14 of
                  this Indenture, collectively, or all or any such guaranties,
                  as the context shall require.

                          "Guarantors" means (i) the Persons whose names appear
                  under the caption "Guarantors" on the signature pages of the
                  First Supplemental Indenture dated as of December 18, 2003
                  between the Issuer, the Trustee and the Guarantors named
                  therein and (ii) any Person that becomes a Guarantor after the
                  date of such First

                                      -2-

<PAGE>

                  Supplemental Indenture in accordance with the provisions of
                  this Article Thirteen, but excluding in each case any Person
                  whose Guaranty has been released pursuant to the terms of this
                  Article Thirteen.

                          "Loan Agreement" means that certain Revolving Loan
                  Agreement, dated as of October 24, 2003, between the Issuer,
                  the banks party thereto and Bank of America, N.A., as
                  Administrative Agent, Bank One, N.A., as Syndication Agent,
                  Fleet National Bank, Credit Lyonnais New York Branch, Wachovia
                  Bank, National Association, KeyBank National Association and
                  SunTrust Bank, as Documentation Agents, and Banc of America
                  Securities LLC, as Sole Lead Arranger and Sole Book Manager,
                  as the same may be amended, supplemented or modified from time
                  to time and including any increase in the amount of credit
                  available thereunder.

                          "7 3/4% Officers' Certificate" means the Officers'
                  Certificate dated October 14, 1997 establishing the form and
                  terms of the Senior Notes pursuant to Article Two of this
                  Indenture.

                          "Senior Notes" means that series of the Issuer's
                  Securities designated as the "Senior Notes due October 15,
                  2004."

                          "Substitute Loan Agreement" means any credit facility
                  (as the same may be amended, supplemented or modified from
                  time to time) of the Issuer which is created subsequent to
                  December 18, 2003 and which replaces all or part of the Loan
                  Agreement or a Substitute Loan Agreement (and which may
                  provide for an increase in the amount of credit available
                  thereunder), so long as the Issuer is a borrower under such
                  Substitute Loan Agreement.

                  "SECTION 13.2 Unconditional Guaranty. In recognition of the
         benefits that the issuance of the Senior Notes has conferred and will
         continue to confer, and the benefits that the issuance of the
         Guaranties will confer, upon the Issuer and the Guarantors and for
         other good and valuable consideration, the receipt and sufficiency of
         which are hereby acknowledged, each Guarantor hereby absolutely and
         unconditionally guaranties, jointly and severally, to each Holder of
         any Senior Notes and to the Trustee on behalf of each such Holder
         prompt payment when due, whether at stated maturity, upon acceleration,
         upon repurchase at the option of the Holder or otherwise, and at all
         times thereafter, of the principal of and premium, if any, and interest
         on the Senior Notes and of any and all other existing and future
         indebtedness and liabilities of every kind, nature and character,
         direct or indirect, absolute or contingent, liquidated or unliquidated,
         voluntary or involuntary, of the Issuer to the Holders of the Senior
         Notes arising under this Indenture or the Senior Notes (collectively,
         the "Guarantied Obligations"). The Trustee's books and records showing
         the amount of the Guarantied Obligations shall be admissible in
         evidence in any action or proceeding, and shall be binding upon the
         Guarantors and conclusive for the purpose of establishing the amount of
         the Guarantied Obligations, absent manifest error. The Guaranties shall
         not be affected by the validity, regularity or enforceability of the
         Guarantied Obligations or of the Senior Notes, this Indenture or any
         other instrument or agreement evidencing any Guarantied Obligations, or
         any question as

                                     - 3 -

<PAGE>

         to the authenticity of any of the Senior Notes, this Indenture or any
         other such instrument or agreement, or by the existence, validity,
         enforceability, perfection or extent of any collateral therefor, or by
         any fact or circumstance relating to the Guarantied Obligations which
         might otherwise constitute a defense to the obligations of any
         Guarantor under its Guaranty, other than payment in full by the Issuer
         or any other Person.

                  "SECTION 13.3 Limitation of the Guarantors' Liability. Each
         Guarantor and, by its acceptance and ownership of a Senior Note and by
         its acceptance of any benefits under any Guaranty, each Holder of a
         Senior Note hereby confirms that it is the intention of all parties
         that the obligations of the Guarantors under their Guaranties shall not
         constitute a fraudulent conveyance or fraudulent transfer under any
         applicable fraudulent conveyance, fraudulent transfer, bankruptcy,
         insolvency or other similar law of any applicable jurisdiction. To
         effectuate the foregoing intention, each Holder of the Senior Notes, by
         its acceptance and ownership of Senior Notes and by its acceptance of
         any benefits under any Guaranty, and each Guarantor hereby agree that
         the obligations of such Guarantor under its Guaranty are limited to the
         maximum amount as will, after giving effect to all other contingent and
         fixed liabilities of such Guarantor, result in the obligations of such
         Guarantor under its Guaranty not constituting a fraudulent conveyance
         or fraudulent transfer under applicable law. Subject to the preceding
         limitation, the obligations of each Guarantor under its Guaranty
         constitute a guaranty of payment in full when due and not merely a
         guaranty of collectability.

                  "SECTION 13.4 No Termination. Each Guaranty is a continuing
         and irrevocable guaranty of all Guarantied Obligations now or hereafter
         existing and shall remain in full force and effect until all of the
         Guarantied Obligations are paid in full or, in the case of the Guaranty
         of any Guarantor, until such time, if any, as such Guarantor is
         released from its Guaranty in accordance with this Article Thirteen.
         All payments under any Guaranty shall be made to the Trustee on behalf
         of the Holders of the Senior Notes.

                  "SECTION 13.5 Waiver of Notices. Each Guarantor waives, to the
         fullest extent permitted by law, notice of the acceptance of its
         Guaranty and of the extension or continuation of the Guarantied
         Obligations or any part thereof. Each Guarantor further waives, to the
         fullest extent permitted by law, presentment, protest, notice, dishonor
         or default, demand for payment and any other notices to which such
         Guarantor might otherwise be entitled.

                  "SECTION 13.6 Subrogation. The Guarantors shall exercise no
         right of subrogation, contribution or similar rights against the Issuer
         or any other Guarantor with respect to any payments on the Guarantied
         Obligations made under any Guaranty until all of the Guarantied
         Obligations are paid in full. If any amounts are paid to a Guarantor in
         violation of the foregoing limitation, then such amounts shall be held
         in trust for the benefit of the Holders of the Senior Notes, and shall
         forthwith be paid to the Trustee, on behalf of such Holders.

                  "SECTION 13.7 Waiver of Suretyship Defenses. Each Guarantor
         agrees, to the fullest extent permitted by law, that the Trustee or,
         subject to Sections 5.6 and 5.7 of this Indenture, the Holders of the
         Senior Notes may, at any time and from time to time, and

                                     - 4 -

<PAGE>

         without notice to such Guarantor, make any agreement with the Issuer or
         with any other Person liable on any of the Guarantied Obligations or
         providing collateral as security for the Guarantied Obligations, for
         the extension, renewal, payment, compromise, discharge or release of
         the Guarantied Obligations or any collateral (in whole or in part), or
         for any modification or amendment of the terms thereof or of any
         instrument or agreement evidencing the Guarantied Obligations or the
         provision of collateral, all without in any way impairing, releasing,
         discharging or otherwise affecting the obligations of such Guarantor
         under its Guaranty. To the fullest extent permitted by law, each
         Guarantor waives any defense arising by reason of any disability or
         other defense of the Issuer or any other Guarantor, or the cessation
         from any cause whatsoever of the liability of the Issuer (other than by
         payment in full of the Guarantied Obligations), or any claim that such
         Guarantor's obligations exceed or are more burdensome than those of the
         Issuer and waives the benefit of any statute of limitations affecting
         the liability of such Guarantor hereunder. To the fullest extent
         permitted by law, each Guarantor waives any right to enforce any remedy
         which the Trustee or any Holder of the Senior Notes now has or may
         hereafter have against the Issuer and waives any benefit of and any
         right to participate in any security now or hereafter held by the
         Trustee or any Holder of the Senior Notes until all of the Guarantied
         Obligations are paid in full. Further, each Guarantor consents, to the
         fullest extent permitted by law, to the Trustee's or any Holder's
         taking of, or failure to take, any action which might in any manner or
         to any extent vary the risks of the Guarantors under their Guaranties
         or which, but for this provision, might operate as a discharge of any
         Guarantor.

                  "SECTION 13.8 Exhaustion of Other Remedies Not Required. The
         obligations of each Guarantor under this Indenture and its Guaranty are
         those of primary obligor, and not merely as surety, and are independent
         of the Guarantied Obligations. Each Guarantor waives, to the fullest
         extent permitted by law, diligence by the Trustee or the Holders and
         action on delinquency in respect of the Guarantied Obligations or any
         part thereof, including, without limitation any provisions of law
         requiring any party to exhaust any right or remedy or to take any
         action against the Issuer, any other Guarantor or any other Person or
         property before enforcing the Guaranty against such Guarantor.

                  "SECTION 13.9 Reinstatement. Notwithstanding anything in this
         Indenture or any Guaranty delivered pursuant to Section 13.14 of this
         Indenture to the contrary, the provisions of this Article Thirteen and
         of the Guaranties delivered pursuant to Section 13.14 of this Indenture
         shall continue to be effective or be reinstated, as the case may be, if
         at any time any payment of any portion of the Guarantied Obligations is
         revoked, terminated, rescinded or reduced or must otherwise be restored
         or returned upon the insolvency, bankruptcy or reorganization of the
         Issuer or any other Person or otherwise, as if such payment had not
         been made and whether or not the Trustee or any Holder of Senior Notes
         is in possession of or has released any Guarantor from its Guaranty and
         regardless of any prior revocation, rescission, termination or
         reduction.

                  "SECTION 13.10 Subordination. While an Event of Default under
         the Senior Notes has occurred and is continuing, each Guarantor hereby
         subordinates the payment of all obligations and indebtedness of the
         Issuer owing to such Guarantor, whether now existing or hereafter
         arising, including but not limited to any obligation of the Issuer to

                                     - 5 -

<PAGE>

         such Guarantor as subrogee of the Trustee or any Holder of Senior Notes
         or resulting from such Guarantor's performance under its Guaranty,
         until such time as all Guarantied Obligations have been paid in full.
         If the Trustee so requests or, subject to Sections 5.6 and 5.7 of this
         Indenture, the Holders of at least 25% in aggregate principal amount of
         the outstanding Senior Notes so request, any such obligation or
         indebtedness of the Issuer to such Guarantor shall be enforced and
         performance received by such Guarantor as trustee for the Trustee and
         the proceeds thereof shall be paid over to the Trustee on behalf of the
         Holders of the Senior Notes on account of the Guarantied Obligations,
         but without reducing or affecting in any manner the liability of any of
         the Guarantors under their Guaranties.

                  "SECTION 13.11 Information. While an Event of Default under
         the Senior Notes has occurred and is continuing, each Guarantor shall
         furnish promptly to the Trustee any and all financial or other
         information regarding such Guarantor or its property as the Trustee may
         reasonably request in writing.

                  "SECTION 13.12 Stay of Acceleration. In the event that
         acceleration of the time for payment of any of the Guarantied
         Obligations is stayed, upon the insolvency, bankruptcy or
         reorganization of the Issuer or any other Person, or otherwise, all
         such Guarantied Obligations shall nonetheless be payable by the
         Guarantors immediately upon demand by the Trustee or the Holders of at
         least 25% of the outstanding principal amount of the Senior Notes, as
         the case may be.

                  "SECTION 13.13 Condition of the Issuer. Each Guarantor
         acknowledges and agrees that it has the sole responsibility for, and
         has adequate means of, obtaining from the Issuer such information
         concerning the financial condition, business and operations of the
         Issuer as such Guarantor requires, and that neither the Trustee nor any
         Holder has any duty, and such Guarantor is not relying on the Trustee
         or any Holder at any time, to disclose to such Guarantor any
         information relating to the business, operations or financial condition
         of the Issuer.

                  "SECTION 13.14 Execution of Guaranty. To further evidence the
         Guaranty set forth in Section 13.2 hereof, each Guarantor hereby agrees
         to execute a Guaranty, in substantially the form set forth below:

                               "[FORM OF GUARANTY]

                                    "GUARANTY

                          "For value received, each of the undersigned (the
         "Guarantors") hereby absolutely and unconditionally guaranties, jointly
         and severally, to each Holder of any of the Issuer's 7 3/4% Senior
         Notes due October 15, 2004 (the "Senior Notes") and to the Trustee on
         behalf of each such Holder prompt payment when due, whether at stated
         maturity, upon acceleration, upon repurchase at the option of the
         Holder or otherwise, and at all times thereafter, of the principal of
         and premium, if any, and interest on any of the Senior Notes and of any
         and all other existing and future indebtedness and liabilities of every
         kind, nature and character, direct or indirect, absolute or contingent,
         liquidated or

                                     - 6 -

<PAGE>

         unliquidated, voluntary or involuntary, of the Issuer to the Holders of
         the Senior Notes arising under the Senior Debt Indenture dated as of
         October 14, 1997, as amended and supplemented by the First Supplemental
         Indenture dated as of December 18, 2003, among the Issuer, Sun Trust
         Bank, as successor trustee, and the guarantors party thereto (such
         Indenture, as so amended and supplemented and as the same may be
         further amended or supplemented from time to time, the "Indenture") or
         the Senior Notes (collectively, the "Guarantied Obligations") in
         accordance with, and subject to, the terms set forth in Article
         Thirteen of the Indenture. All capitalized terms used in this Guaranty
         which are defined in the Indenture shall have the meaning assigned to
         them in the Indenture.

                          "Each Guarantor and, by its acceptance and ownership
         of a Senior Note and by its acceptance of any benefits under this
         Guaranty, each Holder of a Senior Note hereby confirms that it is the
         intention of all parties that the obligations of the Guarantors under
         their Guaranties shall not constitute a fraudulent conveyance or
         fraudulent transfer under any applicable fraudulent conveyance,
         fraudulent transfer, bankruptcy, insolvency or other similar law of any
         applicable jurisdiction. To effectuate the foregoing, each Holder of
         Senior Notes, by its acceptance and ownership of Senior Notes and by
         its acceptance of any benefits under this Guaranty, and each Guarantor
         hereby agrees that the obligations of such Guarantor under its Guaranty
         are limited to the maximum amount as will, after giving effect to all
         other contingent and fixed liabilities of such Guarantor, result in the
         obligations of such Guarantor under its Guaranty not constituting a
         fraudulent conveyance or fraudulent transfer under applicable law.
         Subject to the preceding limitation, the obligations of each Guarantor
         under its Guaranty constitute a guaranty of payment in full when due
         and not merely a guaranty of collectability.

                          "The obligations of each Guarantor to the Holders of
         Senior Notes and to the Trustee pursuant to its Guaranty and the
         Indenture are expressly set forth in Article Thirteen of the Indenture,
         and reference is hereby made to such Indenture for the precise terms
         thereof.

                          "This instrument shall be governed by and construed in
         accordance with the laws of the State of New York.

                          "IN WITNESS WHEREOF, the undersigned have caused this
         instrument to be executed by their respective duly authorized
         signatories.

                                                 [NAMES OF GUARANTORS]

                                                 By:
                                                     ---------------------------
                                                     Title:

                  "Upon execution of any Guaranty pursuant to this Section
         13.14, the Guarantors party thereto shall deliver such Guaranty to the
         Trustee, which shall hold such Guaranty on behalf of each the Holders
         of the Senior Notes.

                                     - 7 -

<PAGE>

                  "Anything in this Indenture or the Senior Notes to the
         contrary notwithstanding, neither the validity nor the enforceability
         of any Guaranty set forth in Section 13.2 of this Indenture shall be
         impaired or otherwise affected by the fact that a Guaranty (whether in
         substantially the form specified pursuant to this Section 13.14 or
         otherwise) is not endorsed on any of the Senior Notes or delivered to
         any Holder of Senior Notes or the Trustee, and each Guarantor agrees
         that its Guaranty set forth in Section 13.2 of this Indenture shall
         remain in full force and effect with respect to each Senior Note
         notwithstanding any failure of any or all of the Guarantors to execute
         or deliver Guaranties pursuant to this Section 13.14, it being
         understood and agreed by the Guarantors and the Issuer that the
         provisions of this Section 13.14 are intended merely to further
         evidence the Guaranties set forth in Section 13.2.

                  "Each Guarantor agrees that any Guaranty executed pursuant to
         this Section 13.14 shall be signed on behalf of such Guarantor by its
         president, any vice president or its treasurer or any other duly
         authorized signatory of such Guarantor (each, a "subject officer") and
         that such Guarantor's seal, or a facsimile thereof, may, but need not
         be, affixed to such Guaranty. The signature of any subject officer may
         be the manual or facsimile signature of the present or any future such
         subject officer. Typographical and other minor errors defects in any
         such reproduction of any such signature shall not effect the validity
         or enforceability of any Guaranty delivered pursuant to this Section
         13.14.

                  "In case any subject officer of any Guarantor who shall have
         signed any Guaranty pursuant to this Section 13.14 shall cease to be
         such subject officer before such Guaranty shall have been delivered to
         the Holders of Senior Notes or the Trustee, such Guaranty may
         nonetheless be delivered as though the person who signed such Guaranty
         had not ceased to be such subject officer, and any Guaranty delivered
         pursuant to this Section 13.14 may be signed on behalf of any Guarantor
         by any person who was, at the actual date of the execution of such
         Guaranty, a subject officer of such Guarantor.

                  "SECTION 13.15  Release of Guarantors.

                  "(a) For so long as the Issuer is a party to or otherwise
         bound by the terms of the Loan Agreement or any Substitute Loan
         Agreement, if a Guarantor is released from all of its guaranties under
         or pursuant to the Loan Agreement and all Substitute Loan Agreements,
         such Guarantor shall be automatically and unconditionally released and
         discharged from all of its obligations under this Indenture and its
         Guaranty without any further action required on the part of the Issuer,
         the other Guarantors, the Trustee or any Holder.

                  "(b) For so long as the Issuer is not a party to or bound by
         the terms of the Loan Agreement or any Substitute Loan Agreement, if a
         Guarantor shall cease to be either a Restricted Domestic Subsidiary or
         a Restricted Significant Subsidiary, such Guarantor shall be
         automatically and unconditionally released and discharged from all of
         its obligations under this Indenture and its Guaranty without any
         further action required on the part of the Issuer, the other
         Guarantors, the Trustee or any Holder; provided that all guarantees (as
         defined in Section 20 of the 7 3/4% Officers' Certificate) by such
         Guarantor of any other Indebtedness (as defined in Section 20 of the 7
         3/4% Officers'

                                     - 8 -

<PAGE>

         Certificate) of the Issuer and any Subsidiaries of the Issuer are
         terminated at or prior to the time of such release.

                  "(c) The Trustee shall deliver an appropriate instrument
         evidencing any such release upon receipt of a written request by the
         Issuer accompanied by an Officers' Certificate and an Opinion of
         Counsel, each to the effect that such release has been effected in
         compliance with the provisions of this Indenture.

                  "SECTION 13.16  Additional Guarantors.

                  "(a)     For so long as the Issuer is a party to or bound by
         the terms of the Loan Agreement or any Substitute Loan Agreement, if
         any Subsidiary of the Issuer that is not then a Guarantor guaranties
         any indebtedness or other obligations of the Issuer under the Loan
         Agreement or any Substitute Loan Agreement, then, contemporaneously
         with or prior to the effectiveness of such guaranty, the Issuer shall
         (i) execute and deliver, cause such Subsidiary and all other Guarantors
         to execute and deliver and use its reasonable best efforts to cause the
         Trustee to execute and deliver a supplemental indenture, in form
         satisfactory to the Trustee, pursuant to which such Subsidiary shall
         become a Guarantor under this Indenture and shall cause such Subsidiary
         and all other Guarantors to execute and deliver Guaranties pursuant to
         Section 13.14 of this Indenture and (ii) deliver to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that such
         supplemental indenture and such Guaranties pursuant to Section 13.14
         hereof comply with this Indenture. Thereafter, such Subsidiary shall be
         a Guarantor for all purposes of this Indenture unless and until
         released from its Guaranty pursuant to Section 13.15 of this Indenture.

                  "(b)     For so long as the Issuer is not a party to or bound
         by the terms of the Loan Agreement or any Substitute Loan Agreement, if
         any Subsidiary of the Issuer that is not a Guarantor is or becomes both
         a Restricted Domestic Subsidiary and a Restricted Significant
         Subsidiary, the Issuer shall (i) promptly execute and deliver, cause
         such Subsidiary and all other Guarantors to execute and deliver and use
         its reasonable best efforts to cause the Trustee to execute and deliver
         a supplemental indenture, in form satisfactory to the Trustee, pursuant
         to which such Subsidiary shall become a Guarantor under this Indenture
         and shall cause such Subsidiary and all other Guarantors to execute and
         deliver Guaranties pursuant to Section 13.14 of this Indenture and (ii)
         deliver to the Trustee an Officers' Certificate and an Opinion of
         Counsel, each stating that such supplemental indenture and such
         Guaranties pursuant to Section 13.14 hereof comply with this Indenture.
         Thereafter, such Subsidiary shall be a Guarantor for all purposes of
         the Indenture unless and until released from its Guaranty pursuant to
         Section 13.15 of this Indenture.

                  "SECTION 13.17 Notices to Guarantors. Any notice or demand to
         a Guarantor under this Indenture shall be delivered pursuant to Section
         11.4 of this Indenture to such Guarantor in care of the Issuer.

                  "SECTION 13.18 Waiver of Stay, Extension and Usury Laws. Each
         Guarantor covenants (to the extent that it may lawfully do so) that it
         will not at any time insist upon,

                                     - 9 -

<PAGE>

         plead, or in any manner whatsoever claim or take the benefit or
         advantage of, any stay or extension law or any usury law or other law
         which would prohibit or forgive such Guarantor from paying all or any
         portion of any amount due under its Guaranty as contemplated in this
         Indenture, wherever enacted, now or at any time hereafter in force, or
         which may affect the covenants or the performance of this Indenture and
         (to the extent that it may lawfully do so) each Guarantor hereby
         expressly waives all benefit or advantage of any such law and covenants
         that it will not hinder, delay or impede the execution of any power
         granted to the Trustee, but will suffer and permit the execution of
         every such power as though no such law had been enacted."

                                   ARTICLE TWO
                                  MISCELLANEOUS

         SECTION 2.1. Ratification of Indenture; First Supplemental Indenture
Part of Indenture. Except as expressly amended and supplemented hereby, the
Indenture is in all respects ratified and confirmed and all the terms,
conditions and provisions thereof shall remain in full force and effect. This
First Supplemental Indenture shall form a part of the Indenture for all
purposes.

         SECTION 2.2. Concerning the Trustee. The rights and duties of the
Trustee shall be determined by the express provisions of the Indenture and
except as expressly set forth in this First Supplemental Indenture, nothing in
this First Supplemental Indenture shall in any way modify or otherwise affect
the Trustee's rights and duties thereunder. The Trustee makes no representation
or warranty as to the validity with respect to the Issuer or the Guarantors or
sufficiency of this First Supplemental Indenture and, except insofar as relates
to the validity hereof with respect to the Trustee, shall not be liable in
connection therewith.

         SECTION 2.3. New York Law to Govern. This First Supplemental Indenture
shall be deemed to be a contract under the laws of the State of New York, and
for all purposes shall be governed by and construed in accordance with the laws
of such State.

         SECTION 2.4. Separability. In case any one or more of the provisions
contained in this First Supplemental Indenture shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
Supplemental Indenture, but this First Supplemental Indenture shall be construed
as if such invalid, illegal or unenforceable provision had never been contained
herein.

         SECTION 2.5. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.

         SECTION 2.6. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.

                            [Signature Page Follows]

                                     - 10 -

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.

"Issuer"                        KB HOME, a Delaware corporation

                                By:
                                    --------------------------------------------
                                    Title:

"Trustee"                       SUNTRUST BANK, as Trustee

                                By:
                                    --------------------------------------------
                                    Title:

"Guarantors"                    KB HOME PHOENIX INC., an Arizona corporation

                                By:
                                    --------------------------------------------
                                    Title:

                                KB HOME COASTAL INC., a California corporation

                                By:
                                    -------------------------------------------
                                    Title:

                                KB HOME NORTH BAY INC., a California corporation

                                By:
                                    --------------------------------------------
                                    Title:

                                KB HOME SOUTH BAY INC., a California corporation

                                By:
                                    --------------------------------------------
                                    Title:

                                     - 11 -

<PAGE>

                                KB HOME GREATER LOS ANGELES INC., a California
                                corporation

                                 By:
                                     -------------------------------------------
                                     Title:

                                 KB HOME COLORADO INC., a Colorado corporation

                                 By:
                                     -------------------------------------------
                                     Title:

                                 KB HOME NEVADA INC., a Nevada corporation

                                 By:
                                     -------------------------------------------
                                     Title:

                                 KB HOME LONE STAR LP, a Texas limited
                                 partnership

                                 By: KBSA, Inc., a Texas corporation,
                                     Its general partner

                                 By:
                                     -------------------------------------------
                                     Title:

                                     - 12 -