Yield Spread Premium Calculator

YSP is the compensation a mortgage broker earns from the lender when placing a loan above par rate. This calculator sizes the YSP and the borrower's cost in extra interest so you can evaluate the tradeoff against upfront origination fees.

Loan amount

Par (zero-cost) rate

Rate offered to borrower

YSP % of loan per 0.25% up

Yield spread premium

$4,200

broker comp / rebate

Borrower extra monthly interest

$88

Borrower cost over 5 years

$5,250

How the math works

YSP is the broker compensation for placing a higher-rate loan. Lenders pay the broker directly out of the rate spread. Positive YSP = broker earns rebate but borrower pays higher rate. Negative YSP (borrower-paid point) = borrower pays discount points to buy down rate.

Since Dodd-Frank, brokers must disclose compensation and can't double-dip (earn YSP from lender and origination fee from borrower on the same deal). YSP pricing is common on correspondent and wholesale channels.

How to Use

Enter loan amount.
Enter the par rate (zero-cost, zero-rebate baseline).
Enter the rate actually offered.
Enter the YSP percentage per 0.25% rate increment — typical 0.5–1.5%.

Frequently Asked Questions

Is higher rate + YSP better than paying points?

Depends on how long you hold. Short hold (3-5 years) → higher rate with YSP paying closing costs often wins. Long hold (10+ years) → paying points to buy down rate usually wins. Run our Mortgage Points vs Closing Costs calculator.

Is YSP disclosed to the borrower?

Under Dodd-Frank, yes. YSP appears on the Loan Estimate and Closing Disclosure as 'lender paid compensation' to the broker. Brokers cannot earn YSP and a borrower-paid origination fee on the same loan.

What's 'negative YSP'?

When borrower pays discount points to buy down the rate below par. Creates a lender credit to the borrower (negative YSP from the broker's perspective). Appears as 'discount points' on the LE/CD.

Does the retail lender model use YSP?

Retail banks and direct lenders don't use YSP terminology — they set rates and fees directly. YSP is a wholesale/broker model concept. If you're working with a broker, ask explicitly how they're compensated.