What Is a Lender Credit?

Short answer

A lender credit is money the lender puts toward your closing costs in exchange for a higher interest rate; a credit of 1% of the loan is like one "negative point" (CFPB, as of October 2026). On a $400,000 loan, a 1% credit is $4,000. It is the reverse of discount points, where you pay more at closing for a lower rate.

Definition

A credit from the lender that reduces the cash you need at closing. You pay for it over time through a higher rate than the no-points, no-credit option.

Worked example

Example only, not a quote: on a $400,000 loan, Option A has no points and no credit. Option B has a slightly higher rate and a 0.75% lender credit, which is $3,000, shown as -$3,000 on the Lender Credits line. Suppose, for illustration, Option B costs $60 more per month. Break-even = $3,000 / $60 = 50 months, a little over 4 years. If you expect to sell or refinance before then, the credit likely saves you money; keep the loan longer and the higher rate costs you more.

Where it shows on the Loan Estimate

Per the CFPB, lender credits appear on page 2 of the Loan Estimate, in Section J, as a negative number on the Lender Credits line. The Closing Disclosure uses the same spot. Points, if any, appear on page 2, Section A.

• Check Section J: a credit that shrinks or disappears between the Loan Estimate and closing is worth asking about
• Compare the rate too: a bigger credit always comes with a higher rate, so compare offers at the same credit level
• Lenders may call it negative points: -0.375 points on a $180,000 loan is a $675 credit, the CFPB's own example

Lender credit vs. discount points

The CFPB puts it simply: points lower your rate in exchange for paying more at closing, and lender credits lower your closing costs in exchange for a higher rate. The right choice depends on how long you keep the loan. Short stay, or a likely refinance: a credit often wins. Long stay: points or a zero-credit rate often win. Rates vary daily; call for today's pricing.

In South Florida

Florida adds state taxes to every mortgage closing: doc stamps on the note at $0.35 per $100 and intangible tax of 2 mills on the mortgage (F.S. 201.08 and 199.133). On a $400,000 loan that is $1,400 plus $800, or $2,200, before title and other fees. A lender credit is one way to cover part of that when cash is tight, often combined with a seller concession.