According to Duane Buziak, whether a no closing cost mortgage is worth it comes down to one number: the month where the extra interest you pay overtakes the cash you kept. In the example below, that month is 46. Sell or refinance before it and the credit wins. Hold the loan past it and paying the costs up front wins.
Nobody pays nothing. The costs move into your rate or your balance, and you pay them back a little at a time. At Mortgage Rate Hawk by Duane Buziak, the approach is “We Don’t Just Look. We Hunt.” That means pricing the same loan at several rate and credit levels and letting your own timeline pick the winner.
How a No-Out-of-Pocket Mortgage Actually Works
Closing costs are real charges from real vendors, and someone has to pay them. A loan marketed as “no closing cost” settles them in one of two ways: a lender credit, which means you accept a higher interest rate, or rolling the costs into your loan balance. Your Loan Estimate shows which method is in play, so read it before you trust the label.
Three terms explain the mechanics:
- Par rate: the rate at which you receive no credit and pay no points. The lender’s price for the loan is neutral.
- Discount points: cash you pay at closing to buy a rate below par. One point is one percent of the loan amount.
- Lender credit: money the lender gives you toward closing costs in exchange for a rate above par. It is the mirror image of points.
Points and credits sit on the same scale. Moving down from par, you pay cash for a lower rate. Moving up from par, the lender pays you for a higher one. A no-out-of-pocket loan is simply a spot on the credit side of that scale.
Closing costs have separate lines. Lender fees (origination, underwriting) and third-party fees (appraisal, title, recording) both appear on the Loan Estimate, and a credit can offset either. Prepaids and escrow deposits, such as the first year of homeowners insurance and initial tax and insurance reserves, are a different category. Whether a credit reaches them depends on the program and how the credit is structured, so ask for the cash-to-close figure rather than assuming.
That is why Duane Buziak avoids the phrase “no closing cost” and says no-out-of-pocket instead. The second phrase is accurate: you bring no cash for those costs. The first suggests the costs are gone, and they are not. They are being paid over the life of the loan.
Duane Buziak’s Break-Even Math: A Worked Dollar Example
Suppose a buyer in North Carolina takes a $350,000 conventional 30-year loan and is quoted two options. The rates are illustrative for 2026 and are not a quote or an offer. Actual pricing changes daily and depends on credit, down payment, property, and lock terms.
- Option A (par rate): 6.25%, no credit. The buyer pays $5,250 in closing costs at closing.
- Option B (credit): 6.75%, with a lender credit of 1.5% of the loan, which is $5,250. It covers the same costs, so cash due for those items is $0.
Step 1: Compute each payment
Use the standard amortization formula: payment = P Ć r Ć· (1 ā (1 + r)ān), where r is the monthly rate and n is 360 payments.
- Option A: r = 0.0625 Ć· 12 = 0.0052083. Then (1.0052083)ā360 ā 0.15411. So payment = 350,000 Ć 0.0052083 Ć· (1 ā 0.15411) = 1,822.92 Ć· 0.84589 ā $2,155.02.
- Option B: r = 0.0675 Ć· 12 = 0.005625. Then (1.005625)ā360 ā 0.13264. So payment = 350,000 Ć 0.005625 Ć· (1 ā 0.13264) = 1,968.75 Ć· 0.86736 ā $2,270.10.
Step 2: Find the break-even month
The monthly difference is $2,270.10 ā $2,155.02 = $115.08. Break-even is the credit divided by that monthly saving: $5,250 Ć· $115.08 ā 45.6 months, so roughly month 46.
Step 3: See how the answer flips with time
Here is the extra you pay for taking the credit, measured against the $5,250 you did not have to bring to closing:
- 5 years (60 payments): 60 Ć $115.08 = $6,904.80 extra, which is $1,654.80 more than the credit was worth.
- 7 years (84 payments): $9,666.72 extra, or $4,416.72 beyond the credit.
- 10 years (120 payments): $13,809.60 extra, or $8,559.60 beyond the credit.
These figures understate the gap slightly, because Option A also pays down principal a bit faster. They also ignore what the $5,250 could earn elsewhere, which is the argument in favor of Option B. For a buyer who sells in three years, the credit saves money. For a buyer who stays ten, it costs thousands.
Verify guideline details like these against the sources rather than the rates. FHFA and the Fannie Mae Selling Guide publish conventional loan rules and limits, but neither publishes the rate you will be offered.
Side-by-Side: Paying Closing Costs vs. Taking the Credit vs. Rolling Costs In
The table uses the same $350,000 example. Total interest is over the full 30-year term, and the rolled-in column assumes the $5,250 is added to the balance at the par rate. These numbers are illustrations, not quotes.
| Feature | Pay at closing | Lender credit (higher rate) | Roll into loan balance |
|---|---|---|---|
| Cash needed for these costs | $5,250 | $0 | $0 |
| Rate and loan amount | 6.25% on $350,000 | 6.75% on $350,000 | 6.25% on $355,250 |
| Monthly payment | $2,155.02 | $2,270.10 | $2,187.35 |
| Total interest over 30 years | $425,807 | $467,236 | $432,196 |
| Fits when | You hold the loan long term and have spare cash | You need cash now or expect to move or refinance soon | You want the lower rate and have room under loan limits |
| Main risk | Less cash reserve after closing | Paying more interest every month for as long as you keep the loan | A larger balance and less equity, and it may not be allowed |
Rolling costs in is not available everywhere. On a purchase, the loan generally cannot exceed the sales price or appraised value, so there is little room to add costs unless the home appraises above the price. Refinances have more flexibility, but program rules differ. Check current FHA guidance on HUD.gov and VA guidance on VA.gov before assuming a cost can be financed.
Loan-to-value ceilings are the other limit. A VA cash-out refinance can go up to 100% LTV, and a conventional cash-out refinance tops out at 90% LTV. Adding closing costs to the balance on a refinance can push a borrower to that ceiling, and the loan cannot go past it.
For VA borrowers, a Certificate of Eligibility can usually be pulled electronically with your Social Security number and date of birth. If you have used entitlement before, second-tier (bonus) entitlement applies: multiply the county loan limit by 25% for the maximum guarantee, subtract the entitlement already used, then multiply the remainder by four for the zero-down purchase limit.
Is a No Closing Cost Mortgage Worth It for You? Who Should Take It and Who Should Skip It
Duane Buziak sorts borrowers by two questions: how long will you realistically keep this loan, and what is your cash worth to you right now?
The credit tends to fit when:
- Cash is tight and you want reserves intact after closing.
- Your cash is better used for a down payment or for repairs the home needs right away.
- You expect to sell or refinance within a few years, before the break-even month.
Skipping it tends to make sense when:
- You plan to hold the loan for ten years or more.
- You can comfortably pay the costs and your priority is the lowest lifetime interest.
- Your plans are uncertain but lean toward staying put.
The refinance angle is the strongest argument for the credit. If rates fall, a loan with no cash invested is easy to leave behind, because there is no sunk upfront cost to recover. Repeated refinancing carries its own costs, though. Each new loan resets the amortization clock and brings new closing costs, so a borrower who refinances every couple of years can end up paying more than one who simply paid costs once and kept a lower rate.
Seller concessions and lender credits are different tools and can work together. A seller concession is money the seller agrees to put toward your costs as part of the contract, and it is capped by loan type, occupancy, and down payment. Lender credits come from the lender and are priced through your rate. Confirm current concession limits in the Fannie Mae Selling Guide for conventional loans and on HUD.gov for FHA, since those limits can change. Limits for VA loans are on VA.gov.
Duane Buziak Teaches How to Hunt the Real Cost of Any Offer
Watch. Compare. Save. The process is straightforward if you keep the inputs identical:
- Request Loan Estimates on the same day from each lender, using the same loan amount, loan type, credit assumptions, property, and lock period.
- Compare Section A (origination charges), then Sections B and C (services you cannot shop for and services you can). Differences in Section A are the lender’s own markup.
- Find the credit or points line on page 2. Lender credits appear as a deduction in the total closing costs section, so you can see exactly how much of your costs the rate is buying.
- Check page 3, where the CFPB’s Loan Estimate guidance points you to the APR and the “In 5 Years” figures for total paid and principal reduced.
The trap is comparing offers at different rate-credit levels. A lender quoting 6.25% with a big credit can look pricier than one quoting 6.5% with none, even if their pricing is identical, because they are standing at different points on the scale. Always compare at the same point or the same credit. APR helps, but it assumes you keep the loan to the end of the term, so it can flatter a lower rate you will not hold that long.
This is where Duane Buziak’s broker model fits. Working as a broker, he can gather pricing from hundreds of wholesale lenders and lay the rate-versus-credit choices side by side for your scenario. PowerTPO is Lower LLC’s own wholesale subsidiary, and Duane has direct access to it with no retail markup. That is a difference in channel, not a claim of a better rate. Lower’s digital app and pricing transparency are real strengths, and large lenders such as Rocket, Veterans United, and Movement are worth comparing as well. Mortgage Rate Hawk by Duane Buziak is licensed in VA, FL, TN, GA, DC, NC, SC, and MD.
You can start without affecting your credit score. Duane offers free no-touch credit checks and returns calls the same day, so the first round of comparisons costs you nothing.
The Trade at the Heart of a No-Out-of-Pocket Loan
A no-out-of-pocket mortgage trades cash now for interest later. It earns its place when your cash has a better use today or your loan will be gone before the break-even month. It loses when you stay put long enough for that higher rate to add up. Know your month before you choose.
Your dream home is waiting, so don’t let the mortgage process hold you back. Get your free rate comparison and personalized loan match today, with same-day expert guidance to help you find the right path forward, whether you’re a first-time buyer or ready to refinance. You can also call Mortgage Rate Hawk by Duane Buziak at 804-212-8663 for side-by-side options built on your own numbers.
