---
title: What is a lender credit?
description: A credit from lender to buyer at closing. This credit covers some or all closing costs to help keep some money in the borrower's pockets for closing.
---

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# What is a lender credit?

## A credit from the lender to the buyer at closing.

A lender credit is a credit from the lender to the buyer at closing. **Lender credits are designed to help cover some or all of the borrower's [closing costs](https://www.jvmlending.com/glossary/#closingcostsnon-recurringandrecurring) that they would otherwise be responsible for paying at closing.** 

There are multiple ways for a borrower to obtain a lender credit. **One of the most popular ways is for the borrower to take a slightly higher interest rate in exchange for a lender credit.** This is a popular option with**[FHA financing](https://www.jvmlending.com/glossary/#fhaloan)**, since FHA loans are generally associated with lower interest rates. 

**The lender credit, which goes towards closing costs due, helps the borrower keep more cash in their pocket for closing**. As is the case with any credits, the lender must ensure that all combined credits do NOT exceed total closing costs.

- [FAQs](https://info.jvmlending.com/knowledge/faqs?hsLang=en#main-content)

    - [Closing](https://info.jvmlending.com/knowledge/faqs?hsLang=en#closing)
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