Skip to main content
Advertiser Disclosure
We do receive compensation from some partners whose offers appear on this page. We have not reviewed all available products or offers. Compensation may impact the order in which offers appear on page, but our editorial opinions and ratings are not influenced by compensation.

The Ascent Logo The Ascent Logo - Blue circle with an A in it and the ascent a motley fool company to the right of that

  • Credit Cards
  • Banking
  • Brokerages
  • Loans
  • Mortgages
  • Knowledge
  • Latest Picks
  • Search Icon Click here to search

Credit Cards

Top Picks
  • Best of January 2021
  • Cash Back
  • Balance Transfer
  • Travel
  • 0% APR
  • Rewards
  • Bad Credit
Knowledge
  • Beginners Guide to Credit Cards
  • How to Rebuild Your Credit
  • Maximize Your Credit Card Rewards
  • Learn More About Credit Cards
Credit Card Tools
  • Compare Cards
Looking for a new credit card?

Explore the best credit cards in every category as of January 2021.

Get started!

Banking

Top Picks
  • Best Savings Accounts
  • Best Bank Accounts
  • Best Money Market Accounts
  • Best CDs
  • Best Checking Account Bonuses
Knowledge
  • Beginners Guide to Banking
  • Everything You Need to Know About Savings
  • Money Market Accounts Made Easy
  • Learn More About Banking
Looking for a place to park your cash?

Check out our top picks of the best online savings accounts for January 2021.

Get Started!

Brokerages

Top Picks
  • Best Brokers of January 2021
  • Best Online Brokers for Beginners
  • Best Options Brokers
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Robo Advisors
Knowledge
  • How to Open a Brokerage Account
  • Beginner's Guide to Brokerages
  • Learn More About Brokerage
Just getting started?

Explore our picks of the best brokerage accounts for beginners for January 2021.

Get Started!

Loans

Top Picks
  • Best Loans of January 2021
  • Best Personal Loans for Bad Credit
  • Best Loans for Debt Consolidation
  • Best Low-Interest Personal Loans
  • Best Personal Loans for Good Credit
  • Best Personal Loans for Fair Credit
Knowledge
  • Personal Loans Made Easy
  • Debt Consolidation Guide
  • How to Pay Off Debt
  • Learn More About Loans
Thinking about taking out a loan?

Before you apply for a personal loan, here's what you need to know.

Get Started!

Mortgages

Top Picks
  • Best Mortgage Lenders of January 2021
  • Best Mortgage Lenders for Poor Credit
  • Best Refinance Lenders
  • Best VA Mortgage Lenders
Knowledge
  • First Time Homebuyers Guide
  • Home Loans Made Easy
  • The Complete Guide to Refinancing
  • How to Get a Mortgage with Bad Credit
  • Learn More About Mortgages
Tools & Calculators
  • Mortgage Calculator
Compare Rates
  • Today's Mortgage Rates
  • Refinance Rates
  • 15-Year Mortgage Rates
  • 20-Year Mortgage Rates
  • 30-Year Mortgage Rates
  • Jumbo Mortgage Rates
  • VA Loan Rates
  • 5/1 ARM Rates
  • 7/1 ARM Rates
  • FHA Mortgage Rates

Knowledge

Knowledge Section
  • All Articles
  • Credit Card Articles
  • Banking Articles
  • Brokerage Articles
  • Personal Loan Articles
  • Mortgage Articles
  • Personal Finance Articles
Recent Articles
  • How My Costco Anywhere Visa Card Scores Me Major Cash Back on Essentials

    Credit Cards

    How My Costco Anywhere Visa Card Scores Me Major Cash Back on Essentials
  • 4 Signs It's Time Switch Brokerages in 2021

    Brokerages

    4 Signs It's Time Switch Brokerages in 2021
  • Weekly Mortgage News Roundup for Jan. 22, 2021

    Mortgages

    Weekly Mortgage News Roundup for Jan. 22, 2021
  • Stimulus Check Update: 7 Reasons a Third Stimulus Check Is Likely to Become a Reality

    Personal Finance

    Stimulus Check Update: 7 Reasons a Third Stimulus Check Is Likely to Become a Reality
  • The Ascent
  • Best Mortgage Lenders
  • What Is a Mortgage Origination Fee?

What Is a Mortgage Origination Fee?

by: The Ascent Staff  |  Nov. 25, 2020

When you buy a home, you'll probably need to come up with a down payment. But there are other costs you'll need to pay, too. For example, you might need to pay what's called an "origination fee." In this guide we'll explain why you have to pay an origination fee on your mortgage, and how much can you expect to be charged.

What is an origination fee?

An origination fee is an up-front payment charged for establishing a new loan or account with a broker or bank. When the fee is for a home loan, it is called a mortgage origination fee.

Why origination fees are charged

To understand origination fees, you need to understand the role of a loan originator. These professionals are also known as loan officers or mortgage brokers.

Loan originators go between the borrower and the bank to help negotiate mortgage terms. A mortgage origination fee is payment to the mortgage originator for their work. The fee is only paid if and when the loan is actually funded.

While many brokers charge origination fees, some do not. If you don't want to pay an origination fee, look for a fee-free mortgage broker.

How much is the typical mortgage origination fee?

Loan origination fees are usually a percentage of the total loan amount. They usually fall between 0.5% and 1% of a borrower's mortgage. Some factors that can determine the size of your fee include:

  • Who you work with
  • The size of your mortgage
  • The complexity of your home loan
  • Your credit score (which influences the complexity of your loan)

If you're taking out a smaller loan, you may find that your origination fee is more than 1% of your loan total. This is because smaller loans often require the same amount of work to process as larger ones. A larger percentage ensures your loan originator is paid fairly for their work on your loan.

Your mortgage lender must tell you what your origination fee will be in advance. In fact, this information can typically be found on a loan estimate. Origination fees usually cannot increase at closing.

Negotiating a lower origination fee

Keep in mind that -- unlike other closing costs -- origination fees are often negotiable. If you're taking out a larger mortgage, then you may be able to work your way down to a lower fee. The most common way to do so is to agree to a higher mortgage interest rate in return.

If you're planning to sell your home or refinance in the near future, then this type of arrangement might work out in your favor. However, if you're planning to stay in your home long-term, you're probably better off paying an origination fee and keeping your lower interest rate. Among other things, a low interest rate can help keep your monthly mortgage payments low.

As with any financial decision, you'll need to run the numbers to see which option makes the most sense for you.

About the Author

The Ascent Staff
The Ascent Staff icon-button-twitter-2x

The Ascent brings financial expertise, trusted advice, and unbiased analysis to the world of daily personal finance decisions. Our mission is to help you live more richly.

Like this page? Share it!

Blue Facebook Icon Share this website with Facebook
Blue Twitter Icon Share this website with Twitter
Blue LinkedIn Icon Share this website with LinkedIn
Blue Mail Icon Share this website by email

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Ascent Logo

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

btn_facebook-yellow btn_twitter-yellow btn_instagram-yellow

Copyright © 2018 - 2021 The Ascent. All rights reserved.

About The Ascent
About Us Contact Us Newsroom How We Make Money Editorial Integrity Ratings Methodology
Legal
Terms of Use Privacy Policy Accessibility Policy Terms and Conditions Copyright, Trademark and Patent Information
Learn
Credit Cards Banking Brokerage Loans Recent Articles

By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Back to The Motley Fool