The fee the lender charges for processing and underwriting your loan. Usually 0.5–1% of the loan amount, listed on the Loan Estimate.
The origination fee is what the lender charges for the work of taking your application, processing the loan, and getting it to closing. It's typically 0.5–1% of the loan amount, though it varies by lender. Some lenders advertise "no origination fee" loans — they're still making money, just through a slightly higher interest rate instead.
This fee is one of the biggest items on your Loan Estimate. It's also one of the most negotiable, especially with mortgage brokers and direct lenders. Always ask: "Can you reduce or waive the origination fee?" Some lenders will, especially if you're comparing offers from competitors.
The origination fee is part of your APR, so a loan with a higher origination fee will have a higher APR than the headline interest rate suggests.
Example
On a $320,000 loan, a 1% origination fee = $3,200, paid at closing. Compare that to a competitor lender quoting the same rate with a 0.5% origination ($1,600). Same rate, but $1,600 cheaper closing costs — worth the comparison.
Also known as
origination charge, loan origination fee, lender fee