loan origination fee


One of the several add-on charges a lender may impose on a home mortgage borrower. It is a one-time flat fee payable at loan closing, usually ranging from 0.5 percent to 1 percent of the loan amount on FHA and VA loans, and up to 2 percent in other types. Some lenders factor it in when computing the interest rates instead of including it separately. Introduced by the Federal Housing Administration in the 1950s, it is justified in several different ways including costs for administrative needs, setting up the loan file, creating the mortgage, entering the loan into the lender's books, preparing documents, loan underwriting, or just as a service charge.
It must be disclosed in the good faith estimate and, depending on the local regulations, may or may not be tax deductible.

Use this term in a sentence

The loan origination fee was an unexpected expense for the new trader who had never made any financial investments before.

​ Was this Helpful? YES  NO 10 people found this helpful.

You mean to tell me that these greedy mortgage brokers slapped us with yet another loan origination fee on another mortgage?

​ Was this Helpful? YES  NO 2 people found this helpful.

After John had paid off his mortgage, he had less of his savings available than he had anticipated, since he had forgotten he also had to pay the loan origination fee.

​ Was this Helpful? YES  NO 10 people found this helpful.

Show more usage examples...

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
loan origination loan package