Can a builder in Texas require you to use its mortgage lender?

No. A builder can offer you an incentive for using its preferred or affiliated lender, but it cannot require you to use that lender to buy the house. If the lender is affiliated with the builder, federal rules require a written disclosure saying you are not required to use it.

Are builder lender incentives worth it?

Sometimes. A closing cost credit or rate buydown can be worth thousands, but only if the loan underneath it is priced fairly. Compare the builder lender's Loan Estimate with one from an outside lender, on the same day and the same loan type, before you decide.

What happens to the incentive if I use my own lender?

Usually you lose the part of the incentive that is tied to the lender, and some builders reduce other credits too. Get the exact terms in the purchase contract or its addendum so you know what you keep and what you give up.

How long does a rate lock need to be on new construction?

Long enough to cover the build, plus a cushion for delays. Standard locks often run 30 to 60 days, while a home still under construction can take months, so ask each lender what an extended lock costs before you compare their rates.

Market

Do You Have to Use the Builder's Lender in Houston?

October 24, 2026

The wood frame of a new house under construction against a clear blue sky

No. A builder in Houston cannot make you use its lender to buy one of its homes. What it can do is offer an incentive, like a closing cost credit or a rate buydown, that only applies if you use its preferred or affiliated lender. That is legal, it is common, and sometimes it is a good deal. The only way to know is to compare the builder lender’s offer against an outside lender’s, line by line.

Peter worked in construction and mortgage lending before real estate, so this is the part of a new build we slow down on. The sales office is selling the house and the loan together. You are allowed to buy them separately.

How Builder Incentives Work

Builders use incentives to move inventory without cutting the advertised price. A typical offer covers some of your closing costs, buys down your interest rate for a year or for the life of the loan, or pays for upgrades. The lender piece is often the biggest part.

When the lender is owned by or tied to the builder, that is an affiliated business arrangement under federal mortgage rules. The builder has to give you a written disclosure explaining the relationship and saying you are not required to use that lender. The rule is in 12 CFR 1024.15. If nobody hands you that form, ask for it.

How to Compare the Two Offers

Ask the builder’s lender and one outside lender for a Loan Estimate on the same day, for the same loan type, the same down payment and the same lock length. Lenders have to send a Loan Estimate within three business days of your application, per the Consumer Financial Protection Bureau. Then line them up:

Interest rate and APR. The APR folds in fees, so it shows more than the rate alone.
Origination charges and points. Page 2, section A. A big credit can hide a high fee here.
The incentive in dollars. Write the actual number down, and confirm it in the contract.
How long the buydown lasts. A one-year buydown is not the same as a lower rate for 30 years.
Rate lock length and cost. On a home still being built, this one matters most.

If you are weighing whether points or a buydown are worth paying for at all, our piece on mortgage discount points in Houston walks through the break-even math.

The Lock Is Where People Get Caught

A resale purchase closes in about a month. A new build can take several months, and the builder’s finish date is an estimate. If your rate lock expires before the house is done, you either pay to extend it or take whatever rates are that week.

Builder lenders often offer long locks as part of the incentive, and that can be worth more than the credit itself. Ask every lender what an extended lock costs and what happens if the build runs late. Our breakdown of rate locks and float-downs explains the options.

Get It in Writing Before You Sign

The incentive belongs in the purchase contract or an addendum, with the dollar amount and the conditions spelled out. So does what you keep if you switch lenders. Builder contracts are written by the builder, which is why we read every page of them with our buyers, and why our guide to custom home builder contracts in Houston exists.

And bring your own agent to the first visit. Many builders want your agent to register you the day you walk in, and the sales rep at the model home works for the builder.

The Move Live Love TX Team™ is a husband-and-wife real estate team serving Houston and the surrounding areas.

Frequently Asked Questions

Can a builder in Texas require you to use its mortgage lender?: No. A builder can offer you an incentive for using its preferred or affiliated lender, but it cannot require you to use that lender to buy the house. If the lender is affiliated with the builder, federal rules require a written disclosure saying you are not required to use it.
Are builder lender incentives worth it?: Sometimes. A closing cost credit or rate buydown can be worth thousands, but only if the loan underneath it is priced fairly. Compare the builder lender's Loan Estimate with one from an outside lender, on the same day and the same loan type, before you decide.
What happens to the incentive if I use my own lender?: Usually you lose the part of the incentive that is tied to the lender, and some builders reduce other credits too. Get the exact terms in the purchase contract or its addendum so you know what you keep and what you give up.
How long does a rate lock need to be on new construction?: Long enough to cover the build, plus a cushion for delays. Standard locks often run 30 to 60 days, while a home still under construction can take months, so ask each lender what an extended lock costs before you compare their rates.