What are lender credits?

Lender credits are amounts the lender applies at closing to reduce your out-of-pocket closing costs. They are often offered in exchange for a higher interest rate—sometimes called a “no-closing-cost” or similar option.

Credits can help if you want to minimize upfront cash at closing. Over time, the higher rate means more interest paid, so the tradeoff is similar to financing your closing costs. Whether it’s worth it depends on how long you plan to keep the loan.

When comparing quotes, a loan with lender credits will show lower closing costs and possibly different cash to close. Compare the full picture: rate, APR, closing costs, and cash to close.

Use a comparison tool to enter each quote and view rate, closing costs, and cash to close side by side. That way you can see how lender credits affect each offer.