Short answer
It isn't free. A no-closing-cost mortgage usually means the lender gives you lender credits that cover some or all of your closing costs, and in exchange you take a higher interest rate. Points work the other way: you pay more at closing for a lower rate. Which is better depends mostly on how long you expect to keep the loan, so ask to see both options side by side.
How does the tradeoff work?
Every loan can usually be priced a few ways. A lower rate may come with points you pay at closing. A higher rate may come with lender credits that pay part of your costs. In the middle is an option with neither. The CFPB suggests asking a loan officer to show options with and without points or credits, and to compare the total cost over the shortest, longest and most likely time you'll keep the loan.
When can a no-closing-cost loan make sense?
- You expect to sell or refinance in a few years, so a higher rate costs you less over the time you keep it.
- You want to keep cash for the down payment, reserves or repairs.
- You're refinancing and want a lower payment without paying much up front.
If you plan to stay a long time, paying the costs yourself, or even paying points, may cost less overall.
Does it cover every New Hampshire cost?
Not always. Lender credits usually go toward lender and third-party charges such as the appraisal, title and recording. Your prepaid items, like the first escrow deposits for property taxes and insurance, and the NH transfer tax on a purchase may not be fully covered. Check your Loan Estimate's Calculating Cash to Close table. See NH closing costs.
How is this different from seller credits?
Seller credits come from the seller as part of your purchase agreement, and they don't change your rate. Lender credits come from the lender through your rate. You can sometimes use both, within program limits. See seller credits and rate buydowns.
How do I compare offers?
Put Loan Estimates side by side and look at the rate, the Lender Credits line in section J, and the total cash to close. Tom can price your loan with and without credits so you can see the real difference. See how to read a Loan Estimate.
Sources
Checked November 2, 2026. Rules and dates change, so confirm current details before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.