Identify exactly what the incentive provides
An incentive may be tied to the builder’s affiliated or preferred lender and could take the form of closing-cost assistance, a rate buydown, design credit or another concession. Confirm the amount, permitted use, expiration, lock requirements and whether the home price changes with the offer.
Compare the same transaction assumptions
Ask both lenders to use the same purchase price, down payment, loan type, lock period, credit assumptions, closing date, taxes, insurance and association dues. Then compare interest rate, APR, points, lender charges, credits, monthly payment and estimated cash to close.
- Permanent rate and any temporary buydown schedule
- Discount points and origination charges
- Builder, seller and lender credits
- Rate-lock period and extension costs
- Mortgage insurance and recurring payment items
- Total cash to close and expected time in the loan
Separate temporary payment relief from permanent pricing
A temporary buydown reduces the scheduled payment for an initial period using funds contributed at closing; it does not permanently change the note rate. Evaluate whether the fully adjusted payment fits the household budget without assuming a future refinance.
Consider execution and flexibility
An affiliated lender may have close coordination with the builder, while an outside broker or lender may offer different programs or pricing. Compare communication, appraisal and closing processes, program fit and contingency timing in addition to the dollar incentive.
Common questions
Frequently asked questions
Is the builder’s preferred lender always the cheapest option?
No. The incentive may make the preferred option competitive, but the result depends on rate, points, fees, credits, loan type, lock period and how long the borrower expects to keep the loan.
Can I use an outside lender and still receive the builder incentive?
That depends on the purchase contract and incentive terms. Some benefits are conditioned on using an affiliated or preferred lender, while others are not.
How should I compare a temporary rate buydown?
Review the note rate, the payment during each buydown year, the full payment after the subsidy ends, the source of buydown funds and the alternative permanent-rate options.
Should I assume I can refinance when the temporary rate ends?
No. Future rates, property value, credit, income, equity and program availability are unknown. The fully adjusted payment should be affordable without relying on a future refinance.
Primary sources
Official resources
- Consumer Financial Protection Bureau: mortgage resources
- Consumer Financial Protection Bureau: compare Loan Estimates
Program rules and consumer guidance can change. These links were reviewed with this article on September 20, 2026.