How Much Can I Expect to Pay in Lender Fees?

There are several costs associated with getting a mortgage, and lender fees are a part of that process. When shopping for the best available loan, it’s important to factor in all the additional costs associated with each option, including the lender fees.

So, what are lender fees, and how much do they typically cost?

What Are Lender Fees?

Lender fees, also known as “Origination Fees,” are essentially any fees (separate from costs) charged by the lender in exchange for originating the loan. They may include fees associated with underwriting an application, credit checks, commitment and processing, or similar fees for obtaining a mortgage.

The purpose of lender fees is to cover the lenders’ costs of originating a loan. Lender fees do not include 3rd party fees and costs such as escrow, appraisal, credit report fees, tax service, title insurance, or other costs for services which the lender doesn’t provide directly to the borrower.

Mortgage insurance may be factored into lender fees with certain loan types such as Federal Housing Administration (FHA) loans and United States Department of Agriculture (USDA) loans, so it’s important to speak with your lender to know all of your options.

How Much Are Lender Fees?

Lender fees are typically between 0.5% and 1% of the total loan amount. For example, if your total loan amount is $250,000, traditional lender fees would be expected to equal roughly $1250 – $2500.

Other factors may affect lender fees as well. Mortgage points, or discount points which act as prepaid interest, can be paid in exchange for a lower interest rate and may thereby affect lender fees since the total loan amount has changed.

Lender fees will always be included in your mortgage loan estimate, so borrowers will have a good idea upfront of the price they will pay to the lender. If you have any questions or need additional information, feel free to give us a call and we will be happy to help you every step of the way.