Do Raleigh Builders Require You to Use Their Preferred Lender?
What Raleigh Homebuyers Should Know About Builder Preferred Lenders
Do Raleigh builders require you to use their preferred lender? This is one of the most common questions buyers ask when considering new construction homes in Raleigh, especially when incentives are involved.
Here is the calm, clear answer upfront. No, Raleigh builders cannot legally require you to use their preferred lender. However, the way incentives are structured can make it feel like you do. Understanding the difference can save you thousands of dollars and a lot of stress.
I help buyers navigate Raleigh new construction every day using a clear buyer-first approach outlined in my Raleigh homebuyers guide, and in this guide, I will walk you through exactly how preferred lenders work, what your rights are, and how to decide what actually benefits you.
What Does “Preferred Lender” Mean in New Construction?
A preferred lender is a mortgage company that has a business relationship with a builder and frequently finances homes in that builder’s communities.
Builders like preferred lenders because they already understand the construction timelines, contract terms, and closing processes. Buyers are often offered incentives for using them, which may include closing cost credits, rate buydowns, or lender-paid fees.
According to New Home Source, builders commonly partner with lenders to create smoother transactions for buyers exploring new construction homes in Raleigh and reduce delays during construction, not to control buyer financing choices. Full source: https://www.newhomesource.com/learn/pros-of-using-your-builders-preferred-lender-and-reasons-not-to/
Can Raleigh Builders Legally Require You to Use Their Preferred Lender?
No, builders in Raleigh cannot legally force you to use their preferred lender.
Federal law under the Real Estate Settlement Procedures Act, often called RESPA, prohibits builders from requiring buyers to use a specific lender as a condition of purchasing a home. You always have the right to choose your own mortgage provider.
RealtyTimes explains that while builders can offer incentives for using their lender, they cannot deny you the ability to purchase a home if you choose a different one. Full source: https://realtytimes.com/consumeradvice/item/1034452-should-you-use-the-builder-s-preferred-lender-when-buying-new-construction
This distinction is important. Incentives are legal. Requirements are not.
Why Do Raleigh Builders Promote Preferred Lenders So Heavily?
Builders promote preferred lenders because it reduces risk and improves efficiency for them.
When a lender already understands the builder’s process, there is less chance of financing delays, missed deadlines, or contract issues. From the builder’s perspective, this helps keep construction timelines on track.
In Raleigh, builder incentives often include closing cost credits, interest rate buydowns, or temporary rate locks tied to construction completion dates. Martini Mortgage Group explains that these incentives are marketing tools designed to move inventory, not necessarily guarantees of better loan terms. Full source: https://www.martinimortgagegroup.com/builder-mortgage-incentives-in-raleigh-what-buyers-must-know/
Are Builder Lender Incentives Always the Best Deal?
Not always. Builder lender incentives can look attractive, but the total loan cost matters more than the upfront credit.
Some preferred lenders may offer incentives while offsetting them with slightly higher interest rates or lender fees. Over time, that difference can cost more than the incentive saves.
Michael Swolff & Associates notes that buyers should compare the annual percentage rate, not just the incentive amount, to understand the true cost of a loan. Full source: https://michaelswolff.com/new-construction-in-the-triangle-preferred-lender-incentives-without-the-gotchas/
This is where many buyers feel overwhelmed, which is why following the first steps for Raleigh homebuyers makes a real difference. The incentives are real, but so are the long-term costs.
What Rights Do Raleigh Buyers Have When Choosing a Lender?
As a Raleigh buyer, you always have the right to shop lenders and compare loan offers, especially when you follow a structured plan like the 90-day Raleigh home buying plan.
You can get pre-approved with an independent lender, compare it to the builder’s lender, and choose whichever option best fits your financial goals. Builders may remove incentives if you choose another lender, but they cannot cancel your contract or penalize you beyond that.
The Mortgage Reports confirms that shopping lenders often results in better rates or loan structures, even when incentives are involved. Full source: https://themortgagereports.com/80414/builders-preferred-lender-pros-cons
When Does Using the Preferred Lender Make Sense?
Using a preferred lender can make sense in certain situations.
For example, preferred lenders often offer longer rate locks that accommodate new construction timelines. They may also close more smoothly when the builder has strict deadlines.
The key is not avoiding the preferred lender automatically. The goal is comparing options objectively and understanding the full financial picture, something I explain often when discussing why Raleigh buyers need local guidance.
What Builder Incentives Look Like in Raleigh Right Now
In Raleigh communities, incentives commonly include closing cost credits or temporary interest rate buydowns tied to using the builder’s lender.
For example, some master-planned communities publicly advertise lender incentives as part of their marketing strategy. Wendell Falls provides transparent examples of how builder incentives are structured. Full source: https://www.wendellfalls.com/homes/builder-incentives/
These offers can change quickly based on inventory and market conditions, which is why timing and strategy matter.
How to Compare Your Financing Options Step by Step
Here is a simple approach I recommend for Raleigh buyers:
Get pre-approved with at least one independent lender
Request a loan estimate from the builder’s preferred lender
Compare interest rate, APR, and total closing costs
Review how incentives impact the long-term loan cost
Choose the option that aligns with your financial comfort
This process brings clarity and confidence to what can otherwise feel confusing.
Frequently Asked Questions
Do Raleigh builders require buyers to use their lender?
No. Builders cannot legally require buyers to use a specific lender, but incentives may be tied to using their preferred option.
What incentives do Raleigh builders typically offer?
Common incentives include closing cost credits, temporary rate buydowns, or lender-paid fees when using the preferred lender.
Should I always compare lenders?
Yes. Comparing lenders helps you understand the true cost of financing and ensures incentives are genuinely beneficial.
Can I negotiate builder lender incentives?
Sometimes. Incentives can change based on inventory, timing, and market conditions, especially in Raleigh.
Does using an independent lender delay closing?
Not necessarily. Experienced local lenders can close on time, even with new construction, when timelines are managed properly.
How Phil Slezak Real Estate Can Help You
At Phil Slezak Real Estate, brokered by LPT Realty, we do more than just help you find a home, we make sure your entire moving process is stress-free and seamless. Whether you’re buying, selling, investing, or relocating, we have the resources, expertise, and connections to guide you every step of the way.
Why Work With Us?
✔Exclusive Off-Market Listings– Get access to homes before they hit the market.
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Final Thoughts and Next Steps
Raleigh builders do not require you to use their preferred lender, but incentives can make the decision feel complicated.
The right move depends on your financial goals, loan structure, and long-term comfort. With the right guidance, you can take advantage of incentives without sacrificing the loan that truly works best for you.
Ready to make a confident decision? Schedule a buyer strategy call and let’s walk through your new construction options together.
