finance
origination fee
An origination fee is a charge by the lender for processing and making a loan, usually stated as a percentage of the loan amount. It covers administrative costs such as evaluating the application and preparing documents. It appears on the Loan Estimate and Closing Disclosure and counts as a finance charge in the annual percentage rate. It differs from discount points, which are prepaid interest paid to lower the interest rate.
- Exam tip
- Compute on the loan amount, not the price. One point equals 1% of the loan; origination fees cover costs, discount points buy down the rate.
- Example
- A 1% origination fee on a $250,000 loan costs the borrower $2,500 at closing.
Related terms & state variants
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Last verified: 2026-10-23