An origination fee is part of the multi-step process of getting a loan and includes the cost of processing the application, underwriting, and financing the loan. The lender may combine the fees into one charge or may list each one individually.
Either way, origination fees are separate from your mortgage down payment and are often paid as part of your closing costs.
The typical origination fee is between 0.5% and 1% of the total loan amount. Several factors affect your exact fees. Unfortunately, we cannot give you the formula to figure out your costs as each lender uses slightly different criteria to determine them.
However, the largest contributing factors that determine the costs are the loan amount and your credit score --the higher the score, the lower the origination fees.
Origination fees must be paid — but not necessarily by you. The home seller may be willing to pay your fees if:
Lenders sometimes cover origination fees, too. Note that although this could mean paying less upfront, it might come at the cost of a higher interest rate. Consider what's most important to you before negotiating origination fees.
Also, keep in mind that some loan fees are unavoidable, such as:
Loan origination fees are tricky because each lender calculates differently, and those differences may not always be clear. Transparency and simplicity are foundational to our process, and we welcome all your questions about how we calculate origination fees.
In the market for a mortgage? Pre-qualify online today and get an obligation-free quote of how much you qualify for and how much your monthly payment will be!