Mortgage Glossary
Origination Fee
A fee charged by the lender to process and set up your mortgage. It's typically 0.5%–1% of the loan amount, paid at closing.
What It Means
The origination fee (sometimes called a loan origination fee or underwriting fee) is what the lender charges for creating your loan. It covers the cost of processing your application, verifying your information, and preparing loan documents.
It's typically expressed as a percentage of the loan amount (0.5%–1%) or as a flat dollar amount. You'll see it listed on your Loan Estimate and Closing Disclosure.
Some lenders offer no-origination-fee loans but compensate with a slightly higher interest rate. It's worth comparing the full cost of each option.
Real-World Example
"On a $300,000 loan with a 1% origination fee, you'd pay $3,000 at closing. Compare this to a loan with no origination fee but a 0.25% higher rate — run the math over how long you plan to stay."
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Definitions are for educational purposes only and do not constitute financial or legal advice.