What is the difference between lender-paid and borrower-paid compensation?

Short answerWith lender-paid compensation the lender pays your mortgage broker and the cost is built into your rate. With borrower-paid compensation you pay the broker directly at closing and usually get a lower rate. A broker can be paid one way or the other on a loan, never both.

Reviewed by Juan Fernando Romero, NMLS 2557318Updated October 14, 2026

The details

Lender-paid means less cash at closing and a slightly higher rate. Borrower-paid means more cash at closing and a lower rate over the life of the loan.

The better choice depends on how long you keep the loan. Our calculator shows the month when the two options break even.

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