Should I use the builder’s preferred lender?
Treat it as one package with one price: the incentive minus whatever the affiliated lender’s pricing costs you versus the open market. A $15,000 credit attached to a rate a half-point above outside quotes can be a wash or worse within a few years — and the only way to know is a same-day outside quote on the identical scenario, compared on rate, APR, points, and lender fees. Know your rights while you compare: builders may offer incentives for using an affiliated lender, but under federal law (RESPA) they cannot require you to use one, and the affiliation must be disclosed to you in writing.
Last reviewed 2026-08-24
Why the incentive exists
Builder-affiliated lenders serve the builder twice: the financing profit stays in the family, and the builder gains control of the closing timeline — a real, legitimate operational benefit on new construction. The incentive that steers you there is funded somewhere, and the somewhere is often the lending side’s pricing room. None of this makes the deal automatically bad; affiliated lenders sometimes price competitively and the incentive is real money. It makes the deal unverified — a package whose lending half you have not priced until you shop it.
Benchmarking the package in one afternoon
Get the affiliated lender’s full offer in writing: rate, APR, points, lender fees, and the incentive’s exact terms (closing-cost credit, price reduction, upgrades — and what happens to it if you finance elsewhere). Same day, get one outside quote on the identical scenario. Then compute both all-in packages over your realistic hold: the incentive is an upfront credit; the pricing difference is a monthly annuity. A spread of an eighth rarely eats a large credit; a spread of a half-point over years usually does. The arithmetic is short — the discipline is refusing to sign before running it. How to grade competing Loan Estimates
The teaser structures to read carefully
New-construction financing leans on temporary buydowns — a 2-1 or a multi-year teaser — and on extended locks for long build timelines. Three checks: you qualify at the full note rate, not the teaser, so the year-three payment is the real one; the teaser subsidy is a seller-paid escrow, which is fine, but its value belongs in the package math like any other credit; and extended locks carry their own fees and float-down terms that deserve the same written scrutiny as the rate. A teaser that only works until it ends is not a discount — it is a schedule. How to spend builder credits in the right order
Your rights, and how to use them politely
RESPA prohibits requiring you to use an affiliated settlement provider and requires written disclosure of the affiliation; a builder can price an incentive around the lender but cannot condition selling you the home on financing with them. In practice the strongest move is not legal — it is competitive: bring the outside quote to the affiliated lender and invite them to match. They often can, at which point you keep the incentive and the market price. Ralo — an automated mortgage broker, not a lender — is a fast way to produce that same-day benchmark from one application. Get an illustrative benchmark quote
Ralo is an automated mortgage broker — not a lender — that compares multiple lenders from one application, earns a thin commission, and shows rate, APR, and fees upfront. Rates shown anywhere on this site are illustrative examples, not a loan approval, rate lock, or commitment. Available where licensed: California, Colorado, and Texas.