When you are approved for a mortgage, there are many fees that will be tacked on. One of those is the origination fee. The mortgage origination fee is an upfront fee, and your lender will charge it as a fee to process a new loan application. Then, the fee is considered the lender’s compensation for executing your loan.
The mortgage origination process includes all the steps you take to get a home loan as a borrower.
Origination fees are one part of your closing costs, and you might expect to pay around 0.5-1% of the amount you’re borrowing.
The following are important things to know, as a borrower, about an origination fee.
The Basics
A mortgage origination fee is something a lender adds to increase their profit when they make loans. A mortgage lender will charge borrowers fees in some form or another. These fees are why it’s important to shop around for mortgages and make sure you’re comparing and getting the best terms.
You also have to figure out whether the fees, including the origination fee, are rolled into the interest rate or if they’re listed as an additional charge on the fee sheet. Sometimes, they’re both.
The interest rate on a loan already comes with markup for the lender. However, to look more competitive in the eyes of potential borrowers, a lender will charge more lender fees rather than only getting a profit from the rate.
Essentially, an origination fee is a ploy to make the loan you’re getting seem more appealing than what it is.
As a borrower, fees are inevitable, but your goal is to make sure they’re valid and that you’re negotiating on them when possible.
How Much Is an Origination Fee?
As we touched on above, an origination fee is typically around 0.5% of a total loan, but it can also be 1% or more.
The type of loan, as well as the loan amount, determines how you pay your origination fee.
With home loans, the origination fee is part of your closing costs. You can pay your closing costs out of pocket, or you can add them to your loan. If you add them to your loan, you have to pay interest on them.
Other financial products like personal loans also have origination fees, but they can work a little differently than a mortgage. For example, with a personal loan, the lender could deduct the origination fee from your loan proceeds. The lender might also let you pay the fee upfront.
Going Over the Fees
When you get a loan, review the Loan Estimate. The Loan Estimate is something a lender is legally required to provide to you after you apply for a loan. It’s a few pages long, and you want to specifically look at anything listed in Section A. That section is labeled Origination Charges. Look past the discount points you can buy to lower interest rates.
From there, you’ll find the fees that are add-ons the lender is utilizing to increase their profit.
These fees, along with an origination fee, might include underwriting, processing, administration, appraisal review, and other fees.
Lenders may split all the fees up into different categories to make them more palatable.
Mortgage points are one type of origination fee. Discount points are a way to reduce your mortgage rate if you pay more upfront.
Can You Negotiate?
You can negotiate mortgage origination fees, and you should try. The higher your loan amount, the more likely you’re going to be successful at negotiating it down.
Additionally, not every lender charges an origination fee. Many lenders find other ways to make money now, so they’ve done away with origination fees altogether.
With personal loans, car loans, and private student loans, similarly, it’s up to the lender.
Written by Ashley Sutphin for www.RealtyTimes.com Copyright © 2026 Realty Times All Rights Reserved.
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