Origination fee
A lender's charge for processing a new loan, usually a percentage of the amount borrowed, paid at closing.
What does origination fee mean?
The origination fee is what the lender charges to process and underwrite your loan, usually quoted as a percentage of the amount borrowed and paid at closing. Because it is a real cost of the loan, it feeds into the APR, which is the fairest way to compare two offers with different fees. It is also negotiable, and sometimes offset by a lender credit in exchange for a slightly higher rate.
Frequently asked
How much is a typical origination fee?
Commonly around 0.5% to 1% of the loan amount — $1,500 to $3,000 on a $300,000 mortgage — though it varies by lender. Because it is a real cost of borrowing, it is built into the loan’s APR.
Can you negotiate the origination fee?
Yes. It is one of the more negotiable lines on a loan estimate; you can ask the lender to lower or waive it, or accept a slightly higher rate for a lender credit that offsets it. Comparing loan estimates gives you leverage.
Put it to use
Home Closing Cost Calculator
Estimate the closing costs a buyer pays: origination, title, escrow, appraisal and prepaids.
APR Mortgage Calculator
Convert a rate plus points and fees into the true annual percentage rate (APR) of your mortgage.
Mortgage Points Calculator
Decide whether buying discount points to lower your rate pays off, and how long it takes.
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