What Is a Lender Credit? Up To $4,000 Toward Your Colorado Closing Costs
By Ben Yost ·
I’m Ben Yost, a Colorado mortgage broker with 25+ years of experience, and I want to talk about two words most buyers have never heard: lender credit.
The ones who have heard them usually don’t know what they actually do. So let’s fix that.
The short answer
A lender credit is money the lender puts toward your closing costs. Not a loan. Not a gimmick. Not something you pay back three years from now.
It’s a credit applied at the closing table that lowers the cash you have to bring on closing day.
On my loans, that credit can go up to $4,000.
Watch the breakdown
The video above walks through the whole thing in about four minutes — what it is, how it works, and who can use it. If you’d rather read it, keep going.
Why this matters more than people expect
Here’s what I see constantly. A buyer has been saving for two years. They’ve got the down payment handled. They feel good. Then they get their first real cost breakdown and there’s this other number sitting there — closing costs — and suddenly they’re short.
Real talk: for most Colorado buyers, closing costs are the surprise. Not the down payment. They budgeted for the down payment. Nobody told them about the appraisal, the title work, the lender fees, the prepaid taxes and insurance that get collected up front.
A lender credit goes straight at that number. Up to $4,000 less that you have to come up with on closing day.
That’s not a small thing when you’re stretching to get into a house.
Where the money actually shows up
This trips people up, so let’s be precise about it.
A lender credit does not:
- Lower your down payment
- Lower your monthly payment
- Get added to your loan balance
- Show up as a second mortgage you repay later
A lender credit does:
- Reduce your cash to close — the total you wire or bring to the closing table
Three separate numbers get confused constantly: down payment, monthly payment, and cash to close. The credit hits the third one.
Who qualifies for the up-to-$4,000 credit
Let me be straight with you, because this is the part most marketing skips.
It applies to: FHA, VA, conventional, and jumbo loans with a loan amount of $400,000 or more.
It gets prorated: on loan amounts under $400,000, and on specialty products like a 5/1 ARM.
It does not apply to: down payment assistance programs.
That last one surprises people, so here’s the honest version. If you’re using one of the 30+ down payment assistance programs I run, you can’t stack this credit on top. But that’s usually fine — for a lot of buyers, the assistance is worth considerably more than $4,000 would have been. The answer isn’t to guess. It’s to price both and look at the two numbers next to each other.
That takes me about fifteen minutes.
How to tell a real lender credit from a shell game
Now the part most lenders won’t tell you.
Anybody can hand you a credit. The question is where it came from.
A credit can be real — it comes out of the lender’s side of the deal and you keep the same loan you would have had anyway. Or it can be manufactured — priced back into your loan somewhere else so you’re paying for your own gift and calling it a discount.
You can’t tell the difference by looking at the credit. You can only tell by looking at the whole loan side by side with another quote. Same loan amount, same loan type, same day.
Here’s why I can offer this one as a true credit: I’m an independent broker. I shop 160+ wholesale investors on every single loan. When you’ve got that many lenders competing for the same file, there’s actual room in the pricing — room a bank or a retail lender working off one rate sheet simply doesn’t have. So the credit comes off the top instead of getting buried somewhere in your loan.
If you’ve got a Loan Estimate from someone else, bring it. I’ll put mine next to it and show you the real comparison, line by line. If theirs is better, I’ll tell you that too.
One more thing about payments
I say this to every buyer I work with: nobody writes a check for an interest rate. They write a check for a payment — and on closing day, they write one for cash to close.
Those are the two numbers that actually hit your bank account. The rate is just the dial that sets the first one. This credit goes after the second one.
Keep your eye on the numbers you actually pay, and a lot of the noise in this business stops mattering.
What to do next
If you’re buying in Colorado in the next 6–12 months, here’s the move: find out early what you qualify for and what your cash to close actually looks like. Not a ballpark. The real number, with the credit applied and the eligibility confirmed for your situation.
I’ll either get you a loan, or I’ll put you on a track to success — spelling out exactly what to do over the next month, six months, or year.
Either way you’ll know where you stand.
Call or text me at 303-587-4297, or reach out through the contact form and tell me where you’re at. No pressure, no pitch. Just straight answers.
Go get ‘em.
Eligibility: The up-to-$4,000 lender credit applies to FHA, VA, conventional, and jumbo loans with a loan amount of $400,000 or more. The credit is prorated for loan amounts under $400,000 and for specialty products such as a 5/1 ARM. Down payment assistance programs are not eligible. Not all loans and programs qualify. This is general information and not a commitment to lend. All loans are subject to credit approval, income and asset verification, and program guidelines. Terms subject to change.
Ben Yost — Colorado’s Lending Expert · Edge Home Finance, LLC · NMLS #243370 · Company NMLS #891464 · Equal Housing Opportunity.
Related reading: How much money do you actually need to buy a house in Colorado? · Colorado down payment assistance programs · FHA vs. conventional loans in Colorado · How much house can I afford in Colorado?. See all loan programs and services, or apply online.
