8 Best Mortgage Lenders with Low Origination Fees of 2023
Most lenders charge an origination fee for giving you a mortgage. These top-rated mortgage lenders boast lower origination fees.
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Origination fees are one of the many costs you should research when choosing a lender. When it comes to the closing costs you’ll face when signing the paperwork for your loan, the mortgage origination fee can be a significant number. It’s often 0.5% to 1% of your total loan amount.
NerdWallet constantly surveys mortgage providers about their origination fee and any other lender charges that will be included in your overall closing costs.
These lenders charge competitive origination fees.
Nerdy tip: Even for lenders that advertise loans with no origination fee, one may not be automatically offered — you may have to ask for loan terms that exclude an origination fee.
Origination fees are one of the many costs you should research when choosing a lender. When it comes to the closing costs you’ll face when signing the paperwork for your loan, the mortgage origination fee can be a significant number. It’s often 0.5% to 1% of your total loan amount.
NerdWallet constantly surveys mortgage providers about their origination fee and any other lender charges that will be included in your overall closing costs.
These lenders charge competitive origination fees.
Nerdy tip: Even for lenders that advertise loans with no origination fee, one may not be automatically offered — you may have to ask for loan terms that exclude an origination fee.
Best Mortgage Lenders with Low Origination Fees
Lender | NerdWallet rating | Min. credit score | Min. down payment | Learn more |
|---|---|---|---|---|
 NBKC: NMLS#409631 Learn more at NBKC | Best for lending experience overall | 620 | 3% | Learn more at NBKC |
 Better: NMLS#330511 Learn more at Better | Best for refinance | 620 | 3% | Learn more at Better |
 BNC National Bank: NMLS#418467 Learn more at BNC National Bank | Best for traditional lending experience | 620 | 3% | Learn more at BNC National Bank |
 PenFed: NMLS#401822 | Best for credit union lending | 620 | 3% | Read review |
 Bank of America: NMLS#399802 | Best for traditional lending experience | 660 | 5% | Read review |
 Citibank: NMLS#412915 | Best for borrowers with weaker credit | N/A | 3% | Read review |
 Freedom Mortgage: NMLS#2767 | Best for FHA lending | 620 | 3% | Read review |
 Watermark Home Loans: NMLS#1838 | Best for borrowers with weaker credit | 620 | 3% | Read review |
at BNC National Bank
BNC National Bank: NMLS#418467
Min. credit score
620Min. down payment
3%at BNC National Bank
PenFed: NMLS#401822
Min. credit score
620Min. down payment
3%Bank of America: NMLS#399802
Min. credit score
660Min. down payment
5%National / regional
NationalCitibank: NMLS#412915
National / regional
NationalMin. down payment
3%Freedom Mortgage: NMLS#2767
Min. credit score
620Min. down payment
3%Watermark Home Loans: NMLS#1838
Min. credit score
620Min. down payment
3%What is an origination fee on a mortgage?
The origination fee is what a lender charges you for giving you a mortgage — it's essentially a service fee, and one way that lenders make money. Another big source of income is profit that's built into the mortgage interest rate it offers you.
If a lender claims to offer no origination fee, proceed with caution. The fee may be baked into the interest rate, or it could show up under a different name, like an underwriting fee or an administrative fee.
You can find the origination fee and associated costs on the second page of your Loan Estimate. You'll get this document from any lender that has offered you mortgage preapproval, and it's a standard form, which makes them easy to compare. At the top left of page two, you'll see a box labeled "A. Origination Charges." Under that heading, you'll find lender charges, including the origination fee and optional mortgage points.
How much should origination costs be?
Origination fees are charged as a percentage of the loan amount, so they vary depending on the size of your mortgage and the percentage the lender charges you. Between 0.5% and 1% of the total loan amount is fairly standard. If you're taking out a loan for $250,000, your origination fee would probably be between $1,250 to $2,500. In 2021, the median origination fee paid on purchase loans was $1,914, according to Home Mortgage Disclosure Act data.
You can try to negotiate these costs. This is yet another reason having mortgage preapprovals can help, as you could try to convince a lender to lower its fees based on another lender's offer. In a buyer's market, you could potentially also negotiate to have a home seller chip in toward your closing costs.
When do you pay the origination fee?
You’ll pay the origination fee as part of your closing costs, once your loan has been approved and money's ready to change hands. No later than three days before closing, you'll get a closing disclosure that you should go over to check on all costs, including the origination fee. This form looks more or less identical to the Loan Estimate, except that it has real numbers instead of estimates. Compare the two forms to see how the costs may have changed. Some are easy to understand. For example, property taxes are prorated based on the closing date, and when you got the loan estimate, no one knew what day of the month that would be. If anything looks off, contact your loan officer to ask about it. That's why the three-day window is required.
Since the considerable chunk of change paid on closing day also includes your down payment, it's usually paid with a wire transfer or cashier's check to a third party (this is one type of escrow in real estate) rather than directly to the seller. Make sure to leave enough time to move all the funds you're using for your down payment and closing costs to an easily accessible bank account to avoid any last-minute holdups.
More from NerdWallet
Last updated on February 2, 2023
Methodology
The star ratings on this page reflect each lender's overall star ratings. Read more about how we determine those ratings.
The lenders on this page are chosen using this methodology:
NerdWallet reviewed more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
For inclusion in this roundup, lenders must achieve an overall rating of at least 4 stars from NerdWallet. Lenders must charge among the lowest origination fees relative to other lenders NerdWallet surveys, according to federal data, and have among the best ratios of origination fees to offered mortgage rates.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also utilized 2021 HMDA data for origination volume, origination fee, average interest rate and share-of-product data.
To recap our selections...
NerdWallet's Best Mortgage Lenders with Low Origination Fees of 2023
- NBKC: Best for lending experience overall
- Better: Best for refinance
- BNC National Bank: Best for traditional lending experience
- PenFed: Best for credit union lending
- Bank of America: Best for traditional lending experience
- Citibank: Best for borrowers with weaker credit
- Freedom Mortgage: Best for FHA lending
- Watermark Home Loans: Best for borrowers with weaker credit
Frequently asked questions
The buyer pays the mortgage origination fee, since they're the one getting the mortgage. The origination fee is levied by the lender as a charge for providing the loan.
An origination fee is one type of lender fee. You'll find all fees charged by the lender on the top left of the second page of your Loan Estimate, under "A. Origination Fees." Origination fees can go by many names, so you might be shopping for a "no origination fee" mortgage but find items like a processing fee, an underwriting fee and so on.
Discount points are one type of origination fee, but they're different from the type of processing charge that most people mean by "origination fee." Points are optional prepaid interest that you can pay to bring down your interest rate. An origination fee, which a lender charges for giving you the loan, is not optional.
