What they are asking is not standard practice. I agree with the comments below and I add the following. Ask the builder to put their offer in writing so you can bring it to your Lawyer for review. See there that goes.
My question is why are they asking to take a second on your home? Are the funds required for a down payment? Are you selling your home and is it currently on the market?
Make sure you speak to a broker or a real estate lawyer.
I have helped many buyers in Central Ohio build a home, and no one has had to take a second on their primary residence to satisfy the builder. There is ALOT of risk to doing this. Your home may not sell, you could lose your job, etc.
In my area builders are not accepting home sale contingencies. They will lock in a lot and contract, however they will not build a home until yours is in contract. This is a new way of doing things. In the past a large deposit was required and they would start building before your home was sold. If your home did not sell, your deposit was retained by the seller. Now, if your home does not sell, most builders in my area give back the buyers deposit.
This is likely not what you want to hear, but your best option is to sell your home first, then rent for 6 months to a year while you are building a home. This will give you the most leverage in negotiations.
Best of luck,