What Is an Origination Fee? A Guide for U.S. Homebuyers

Introduction

The origination fee is a charge from the lender for processing and underwriting your mortgage. It compensates the lender for the work involved in evaluating your application, ordering the appraisal, and preparing the loan.

The origination fee appears in the "Origination Charges" section of your Loan Estimate and Closing Disclosure. It may be expressed as a percentage of the loan amount (e.g., 1%) or as a flat dollar amount.

For how origination fees differ from discount points, see our Discount Points vs Origination Fee guide.

What It Covers

Origination fees typically cover administrative costs such as application processing, underwriting, and document preparation. The exact breakdown may vary by lender. Some lenders itemize; others use a single origination charge.

Frequently Asked Questions

What is an origination fee?

The origination fee is a charge from the lender for processing and underwriting the loan. It may be a percentage of the loan amount or a flat fee.

Where do I see the origination fee?

It appears in the "Origination Charges" section of the Loan Estimate and Closing Disclosure, under "Services You Cannot Shop For" or similar.

Is the origination fee included in APR?

Yes. Origination fees are typically included in the APR calculation, which is one reason APR can be higher than the interest rate.

Can I avoid paying an origination fee?

Some lenders offer "no origination fee" loans, but the cost may be reflected in a higher interest rate. Compare the APR and total costs.