Is Your Origination Fee Too High?
If you're looking at your Closing Disclosure and the origination fee seems steep, trust your instincts. Here's how to tell whether it's genuinely too high and what to do about it.
The benchmark: what 'normal' looks like
A normal origination fee is 0.5% to 1.0% of the loan amount — $1,750 to $3,500 on a $350,000 loan. If your fee exceeds 1%, there should be a clear reason (discount points, smaller loan amount, jumbo loan). If there isn't, you're likely overpaying.
Don't forget to include all Section A charges — processing fees, underwriting fees, and application fees are all part of your total origination cost. A lender showing a 0.5% origination fee plus $400 processing plus $500 underwriting is charging the same as a lender with a 1% origination fee and nothing else.
What to do if it's too high
Get competing Loan Estimates and ask your lender to match. This is the single most effective negotiation tactic. Lenders have significant discretion over origination charges and will often reduce them to keep your business.
If the fee increased from your Loan Estimate, this is a TRID violation — origination charges are zero-tolerance and cannot increase. Request a cure (refund) in writing.
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Frequently asked questions
How do I know if my origination fee is too high?
If total Section A charges on your Closing Disclosure exceed 1.5% of your loan amount (excluding discount points), you're paying above average. Get competing Loan Estimates to benchmark.
Can I negotiate the origination fee after receiving my Closing Disclosure?
You can try — the 3-day review window before closing is actually leverage because the lender wants to close on time. A reasonable request made in writing during this window is often successful.