Usually you should at least start with them, because in this market the builder’s incentive is often worth more than the better rate an outside lender can quote you on paper. What you should never do is take the builder’s Loan Estimate without putting a second one next to it, because the incentive is the builder’s money and you are entitled to know what it is costing you.
Right now this is not a close call for a lot of buyers, and the reason is the spread. The Freddie Mac survey for the week ending September 24, 2026 put the average 30-year fixed at 7.03% and the 15-year at 6.42% (Freddie Mac Primary Mortgage Market Survey, September 24, 2026). Every featured builder in our new construction section is funding a rate buydown this month that lands well below that, and those buydowns run through the builder’s preferred lender. No outside lender is going to match a rate the builder is paying for.
That does not mean the preferred lender is automatically the right answer. It means the question is not “who has the lower rate,” it is “what is the whole package worth, and what am I giving up to get it.” Those are different questions and they have different answers depending on your file.
What are the builder incentives actually worth right now?
Here is what is on the table in our market as of the terms we last confirmed, all of them tied to the builder’s lender on eligible homes.
- Freddie Mac 30-year fixed average: 7.03%, and 15-year 6.42% Freddie Mac Primary Mortgage Market Survey, week ending September 24, 2026
- Mungo Homes: 2/1 buydown at 3.25% in year one, 4.25% in year two, then 5.25% for the life of the loan, through the builder’s lender on eligible homes Builder terms as of September 22, 2026
- Logan Homes: 2.99% in year one, 3.99% in year two, 4.99% thereafter, or up to $20,000 use-as-you-choose on select homes Builder terms as of September 22, 2026
- HHHunt Homes: 4.99% fixed and locked on select move-in-ready homes at Fawn Valley and McQuillan Pines with the builder’s preferred lender Builder terms as of September 22, 2026
Put a number on that. On a $400,000 loan, principal and interest at 7.03% runs about $2,669 a month. At 4.99% the same loan runs about $2,145. That is roughly $524 a month, which is our own arithmetic on the Freddie Mac rate above, and it is more than most buyers can negotiate off a new construction price. Over a five-year hold it is north of $31,000. An outside lender quoting you 6.85% instead of 7.03% is not in the same conversation.
We keep the current terms and the math on our monthly mortgage update, and the builder-by-builder detail on our new construction page. Both move month to month, so confirm the terms in writing on the day you apply rather than relying on the flyer in the model home.
Can a builder require me to use their lender?
Not for title insurance, and not as an outright condition of selling you the house. Under Section 9 of the Real Estate Settlement Procedures Act (12 U.S.C. 2608), a property seller cannot require a buyer, directly or indirectly, to purchase title insurance from any particular company as a condition of sale. Regulation X, the rule that implements RESPA, also defines when a discount crosses the line into a prohibited “required use” of an affiliated settlement service provider (12 CFR 1024.2).
What a builder can lawfully do, and what every builder in our market does, is condition its own incentive money on you using its lender. You are free to finance the house anywhere. You are just not free to take the builder’s $20,000 or its 4.99% rate with you. In practice that is the fork in the road, and it is a dollars question rather than a legal one.
How do I actually compare the two offers?
Apply with both, on the same day, and compare the two Loan Estimates line for line. Once you give a lender the six pieces of information that trigger an application, it has three business days to give you a Loan Estimate on the standard form (12 CFR 1026.19(e)). The form exists precisely so two offers can be laid side by side, and the builder’s lender has to give you one the same as anybody else.
Five things we tell our buyers to look at, in this order:
The incentive as a dollar figure
Ask the builder to state the incentive in dollars, not as a rate. A 2/1 buydown is a pot of money sitting in escrow. You want to know how big the pot is, because that is the number you are choosing between financing options with, and it is the number you would be walking away from.
Page 3 of the Loan Estimate
Compare the “In 5 Years” total cost and the APR on both estimates, not the interest rate on page 1. A lower rate bought with heavy points can lose to a higher rate with no points if you are the kind of buyer who moves in six years, which most of our buyers are.
The lock length against the build schedule
This is the one that bites people on a to-be-built home. A 60-day lock on a house that delivers in 90 days is an expensive problem, and extension fees are quoted per day. Ask both lenders what an extended lock costs and how far out they will write one before you pick.
Whether the loan type fits your file
If you are using a VA loan, a USDA loan, a construction-to-permanent loan or you are self-employed with two years of complicated returns, the builder’s lender is not always the strongest option. We have seen an outside lender with real VA volume close a file two weeks faster than a preferred lender who does three of those a year, and two weeks matters when your lock is running.
Who actually answers the phone
New construction loans run 60 to 180 days with a moving closing date. A local loan officer who picks up on a Saturday in week ten is worth real money, and that is as true of some builder lenders as it is of some outside lenders.
Two honest cautions. The first is that we are brokers, not lenders, and we do not quote loans. What we do is get you a competing quote so the builder’s incentive gets priced rather than assumed, and that is a service, not a rate. The second is more uncomfortable: the buydown is not free even when it looks free. The builder is paying for it out of the transaction, which means it is generally being paid for in the price of the house. That is fine when the price is supported by comparable sales, and it is a problem when it is not. A buydown on a home priced above the neighborhood’s recent closings can leave you with a great payment and a thin appraisal. Ask us to pull the closed comparables in that community before you get attached to the rate. And if you are offered an incentive as either a rate buydown or a price reduction, know that most builders will not give you the same dollars as a price cut, because a recorded lower price resets the comparable sales for every other home they have to sell in that phase.
Related questions people also ask
Does applying with two lenders hurt my credit score?
Not in any way that should change your decision. Mortgage inquiries made inside a short shopping window are treated as a single inquiry by the major credit scoring models, which is a rule that exists specifically so buyers can shop lenders. Apply with both within a couple of weeks of each other and the score impact is minimal. The bigger risk is not shopping at all.
Can I use the builder’s incentive and then refinance later?
Often yes, but read the terms before you plan on it. A 2/1 buydown pays down your rate for the first two years out of escrow money, and if you refinance early some programs return the unused portion to the lender rather than to you. Permanent buydowns and below-market fixed rates are different again. Ask the preferred lender in writing what happens to unused buydown funds if you refinance in year two.
Will the builder still negotiate on price if I use my own lender?
Sometimes, but usually less than you expect, and almost never enough to replace the incentive. Builders protect the recorded sale price in a community because it sets the comparable sales for the rest of the phase, so they would rather give you closing costs, upgrades or rate help than a lower number on the deed. That is why the practical play is to take the incentive and negotiate the upgrades and the timeline instead.
Before you sign anything in a model home, apply with the builder’s lender and one outside lender on the same day, and get both Loan Estimates in hand. If you want us to price the incentive against a competing quote and pull the closed comparable sales in that community first, schedule a consultation and we will do that side of it with you.
Sources: Freddie Mac Primary Mortgage Market Survey, week ending September 24, 2026 (30-year and 15-year fixed averages); builder incentive terms as of September 22, 2026, as published on our new construction pages for Mungo Homes, Logan Homes and HHHunt Homes; Real Estate Settlement Procedures Act Section 9, 12 U.S.C. 2608; Regulation X, 12 CFR 1024.2 (definition of required use); Regulation Z, 12 CFR 1026.19(e) (Loan Estimate timing); payment figures are our own arithmetic on a $400,000 loan at the rates shown.
