A preferred lender is not automatically cheaper or more expensive. Request a current Loan Estimate from the preferred lender and at least one alternative using the same property, price, down payment, loan type, term and lock timing. Compare the permanent rate and payment, APR, points, origination charges, lender credits, five-year borrowing cost, cash to close and ability to meet the builder's deadline. Only the lender can confirm terms or approval.
Checking loan amount, rate, product, principal and interest, mortgage insurance and total payment
Comparing origination charges, points, lender credits, prepaids and estimated cash to close
Separating principal paid from interest and fees over a shared time horizon
A lender affiliation is not a cost conclusion. Compare current written offers for the same loan request and ask each lender to explain differences.
Preferred does not mean pre-compared
Some written builder offers state that a credit, temporary buydown or closing support is available only when the buyer uses a named preferred or affiliated lender. Do not treat that condition as a blanket legal or value conclusion. CFPB tells buyers to shop even when a homebuilder has a preferred lender; the relationship alone does not establish value.
For transactions covered by Regulation X, its required-use definition says an optional package or discount avoids required-use treatment only when it is a true discount below otherwise generally available prices and is not made up by higher costs elsewhere in the settlement process. Other federal or state restrictions may apply. Ask the builder to state the incentive, eligibility, expiration, named relationships and price available without it; request any applicable affiliated-business disclosure and qualified advice when the condition is unclear.
- Get the stated condition in writing
- Ask for the no-incentive home price
- Do not treat prequalification as final terms
Make the loan requests genuinely comparable
CFPB recommends comparing Loan Estimates for the same kind of loan. Give each lender the same property, sale price, down payment, loan amount, loan type, term and occupancy information. Request the estimates close enough together that market movement is less likely to explain the difference.
Record whether each rate is locked, the lock period and the assumed closing date. A lower rate that cannot cover the builder's schedule is not the same offer; neither is a quote that changes the loan type or down payment.
Read the permanent payment before the incentive
Compare the loan amount, permanent note rate, principal-and-interest payment, mortgage insurance and estimated total monthly payment. Check which property taxes, insurance or assessments are escrowed and which remain outside the displayed total.
If a temporary buydown is included, keep its early payment schedule separate. The household decision should still work at the permanent payment, with no assumed refinance.
Trace points, fees and credits on page two
Compare origination charges, points, services, lender credits, prepaids, initial escrow and estimated cash to close. CFPB notes that a lender credit can offset closing costs while being associated with a higher interest rate. Ask for an alternative from the same lender without the credit or points.
Do not award one lender an advantage for a lower tax or insurance estimate. Those amounts are not lender-controlled and should be reconciled with the same property evidence.
Use the five-year line without losing the principal
The Loan Estimate's Comparisons section shows total payments over five years and principal paid. CFPB explains that subtracting principal paid from the five-year total gives an interest-and-fee comparison under the form's assumptions.
Use the same time horizon for both lenders, then add builder-specific price, lot, upgrades, HOA, tax, insurance and maintenance outside the loan document. This keeps the mortgage comparison from swallowing the home comparison.
Recheck timing and final documents before closing
Ask each lender about appraisal timing, document deadlines, rate-lock extension policy and the builder's required closing date. Speed matters, but it should be compared alongside cost, clear answers and the ability to deliver the promised structure.
CFPB says the Closing Disclosure should be checked against the latest Loan Estimate before closing. HomeCostGrid action: normalize the preferred and outside offers, save the assumptions, and question every unexplained change in price, credit, rate, payment or cash to close.
Compare documents line by line, not logos side by side.
Use the same loan request and a short quote window. Record who controls each number and which terms are still unlocked or estimated.
- 01Get the builder incentive conditions in writing
- 02Request the price without the preferred-lender incentive
- 03Request any applicable affiliated-business disclosure
- 04Use the same property, price and down payment
- 05Match loan type, term and occupancy
- 06Record quote date, lock status and lock period
- 07Compare permanent rate and principal-and-interest payment
- 08Compare APR, points and origination charges
- 09Trace lender credits and estimated cash to close
- 10Compare five-year interest and fees
- 11Reconcile the Closing Disclosure with the chosen Loan Estimate
A few things worth knowing before you start.
Do I have to use the builder's preferred lender?
Some written offers tie a particular incentive to a named lender, but whether that condition is permitted and what alternatives remain depends on the transaction, contract and applicable rules. Regulation X distinguishes an optional true discount that is not made up by higher costs elsewhere. Ask for the home price and offer without the incentive, request any applicable affiliated-business disclosure and compare an outside lender.
Is a lender credit free money?
No. CFPB explains that lender credits offset closing costs and may be connected to a higher interest rate. Compare the rate, fees, monthly payment, five-year borrowing cost and cash to close.
Can I compare APR alone?
No. APR is one measure of loan cost, but payment, points, lender credits, mortgage insurance, cash to close, loan features and timing also matter. Compare the complete Loan Estimates.
Does HomeCostGrid decide which lender is better?
No. HomeCostGrid organizes user-entered written terms and planning arithmetic. It does not verify approval, rank lenders or recommend a mortgage.
Check the original guidance.
- Consumer Financial Protection Bureau — Contact multiple lenders, including when a builder has a preferred lender↗
- Consumer Financial Protection Bureau — Regulation X required-use definition↗
- Consumer Financial Protection Bureau — RESPA Section 8 FAQs↗
- Consumer Financial Protection Bureau — Choosing a loan offer↗
- Consumer Financial Protection Bureau — Compare and negotiate Loan Estimates↗
- Consumer Financial Protection Bureau — Loan Estimate explainer↗
- Consumer Financial Protection Bureau — Closing Disclosure explainer↗
Sources provide the current national or program context reviewed on the date above. Contracts, loan terms, prices, eligibility, codes and property conditions still require transaction-specific verification.
