U.S. Mortgage Index

Lender credits

Definition

Lender credits are amounts a lender credits toward the borrower’s closing costs. They appear on the Loan Estimate and Closing Disclosure and reduce cash needed at closing. They are not cash in hand.

In plain English

A lender may offer a credit that lowers the closing costs the borrower pays. The credit is a disclosure line, not a gift card. The tradeoff, if any, is loan-specific. This page does not say credits are free or that a higher rate always accompanies them.

Technical definition

12 CFR 1026.37 governs Loan Estimate content, including lender credits as a disclosed closing-cost offset. That regulation is the PRIMARY identity already stored in the canary source set.

Why it matters

Cash-to-close totals change when lender credits change. Treating credits as cash-out refinance proceeds is a category error.

Example

Riley’s Loan Estimate shows closing charges and a lender credit that reduces the amount due at closing. The credit is not extra cash taken from home equity.

Sources reviewed