Mortgage Markets and Rates

Yield Spread Premium (YSP) (YSP)

Direct definition

Historically, a payment from a wholesale lender to a broker for delivering a loan at a rate above par.

Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content

Plain-English explanation

Post-2010 regulation restricts how YSP can be used and requires clear disclosure. Today it typically appears as a lender credit that offsets closing costs when the borrower chooses a higher rate.

Why it matters

It's the mechanism behind lender credits at higher rates.

Where you may see it

Loan Estimate
Compensation disclosure
Closing Disclosure

A real-world example

You choose a rate 0.25% above the par rate to receive a $3,000 lender credit toward closing costs.

Educational and illustrative only

A common misunderstanding

A yield spread premium isn't a hidden fee charged to the borrower directly — it's compensation paid by the lender to the originator, disclosed as part of loan pricing.

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This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.

Author: Vabasso Mortgage Editorial Team
Reviewed by: Vabasso Mortgage Licensed Advisory Team
Last reviewed: July 30, 2026