What is a lender credit?
A lender credit is money your lender puts toward your closing costs in exchange for a slightly higher interest rate — the reverse of paying points. It cuts your cash to close but raises the payment, so the longer you keep the loan, the more it costs.
A lender credit is a straightforward trade: the lender covers part of your closing costs today, and you accept a slightly higher interest rate in return. It's the mirror image of paying "points," where you bring more cash for a lower rate. Same dial, turned the other way.
When the trade makes sense
When cash at closing is your tight constraint, or when you don't expect to hold the loan long — a higher rate charged for fewer years costs less. For buyers stretching to preserve an emergency cushion, keeping that cash can genuinely be worth more than rate purity.
When it doesn't
When you'll keep the loan for many years. The higher rate runs every month for the life of the loan, and the total often exceeds the original credit several times over. Rule of thumb: the longer you'll hold the loan, the less attractive the credit. (Refinancing later could shorten that math — but that's an option, never a guarantee.)
Comparing it properly
Ask your lender for same-day Loan Estimates with and without the credit, and compare two lines: cash at closing and monthly payment. Then weigh it against a seller credit — the same relief, funded by the seller instead of your rate; which one's available depends on the deal in front of you. All of it lives inside the closing-cost picture.
If cash to close is your constraint, say so plainly — to your lender and to me. This is a solvable design problem, and designing it well is the job.
This answer is general education, not legal, tax, or financial advice. Your situation is unique — let's talk through the specifics together.