Money the lender provides to reduce your closing costs in exchange for a higher interest rate — the opposite of buying discount points.
Full Definition
Lender credits are a trade-off: the lender gives you money to cover closing costs in exchange for you accepting a higher interest rate for the life of the loan. For example, taking a rate of 7.25% instead of 7.0% might generate enough lender credits to cover $3,000 in closing costs. This reduces the cash you need upfront, which can be valuable if you're short on savings or plan to sell/refinance within a few years before the higher rate costs catch up. The break-even math is the inverse of discount points — calculate how many years of higher payments equal the closing cost savings. Lender credits and discount points are two sides of the same trade-off dial.
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