The details
“Free” usually means the costs moved, not that they vanished. With lender-paid compensation, the lender pays the broker and recovers it through the rate. With lender credits, the lender covers some closing costs in exchange for a higher rate.
That trade can be smart: if you expect to sell or refinance within a few years, paying less upfront often beats paying points for a lower rate. Over 10+ years, the higher rate usually costs more.
Under federal rules a loan officer can be paid by the lender or by you on a given loan, not both, and the Loan Estimate shows exactly which.
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Lender-Paid vs Borrower-Paid Calculator
Pay the broker or pay the rate?
Closing Cost Calculator
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Related loan programs
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
FHA Loans
An FHA loan is a government-insured mortgage that allows 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579.
More answers
- Can you get an interest-free mortgage?
- What is a no-closing-cost mortgage?
- What is the difference between lender-paid and borrower-paid compensation?
- What does “lender-backed” mean on a mortgage?
- Mortgage broker or bank: which is better?
- How is DSCR calculated for a mortgage?
- What DSCR ratio do I need to qualify?
- Can an LLC get a mortgage?