Mortgage Glossary›Loan Origination Fee
Costs & Fees

Loan Origination Fee

A lender charge for processing a new mortgage loan, typically 0.5–1% of the loan amount.

Full Definition

The loan origination fee compensates the lender (or mortgage broker) for the work involved in originating the loan — processing, underwriting, and administrative costs. It's separate from third-party fees like appraisal or title and is paid directly to the lender. Some lenders break origination into separate line items (origination fee, underwriting fee, processing fee) while others bundle them. A 'no origination fee' loan is not free — the cost is typically offset by a higher interest rate (lender credits). When comparing loan offers, compare the APR (which incorporates most fees) and the total cash needed to close, not just the interest rate.

Related Terms

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Closing Costs
Fees and expenses paid at closing beyond the down payment, typically 2–5% of the…
Costs & Fees
Annual Percentage Rate (APR)
The true cost of borrowing expressed as a yearly rate — includes the interest ra…
Costs & Fees
Discount Points
Upfront fees paid to a lender at closing in exchange for a reduced interest rate…

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