Which Mortgage Lender Has the Lowest Closing Costs?

Why advertised rates don't tell the whole story

A lender advertising a low interest rate may offset that rate with higher origination fees, discount points, or inflated third-party service costs. The only way to compare apples-to-apples is to look at the total cost of the loan — rate plus all lender fees.

HMDA data captures this. It records total loan costs (Section A+B+C of the Closing Disclosure), origination charges, and interest rate for every reported mortgage. With enough volume, the median becomes a reliable benchmark for how a lender actually prices loans.

What HMDA data shows about lender cost variation

Across lenders with 500+ purchase originations nationally, median total loan costs vary by thousands of dollars. Credit unions and direct lenders often rank lower than correspondent lenders or broker-heavy shops — but not always. Lender costs also vary significantly by state, loan type (conventional vs. FHA vs. VA), and loan amount.

The most important takeaway: there is no single cheapest lender for every borrower in every market. Cost rankings shift by geography and loan type. A lender that is the lowest-cost nationally may rank in the middle of the pack in your state.

How to use lender rankings when shopping

Use HMDA rankings as a screening tool, not a final answer. Start by looking at the lowest-cost lenders in your state for your loan type. Request Loan Estimates from 3-5 lenders on your shortlist. The Loan Estimate is legally standardized — every lender uses the same form, making fee-by-fee comparison straightforward.

Pay attention to Section A (origination charges) and Section B (services you cannot shop for). These are the fees that are lender-controlled. Third-party fees in Section C vary by provider, not just lender.

• Use state-level HMDA rankings as your starting shortlist
• Request Loan Estimates from 3-5 lenders within the same week (credit inquiries during a 45-day window count as one hit)
• Compare total costs on Page 3 of the Loan Estimate, not just the rate
• Negotiate Section A fees using competing Loan Estimates as leverage

Limitations of HMDA cost rankings

HMDA data has limitations worth understanding. It's reported at the loan level, not the borrower level — so lender costs may partly reflect differences in the types of loans they originate rather than pure pricing differences. A lender that originates many jumbo loans will have higher absolute closing costs than one focused on FHA loans, even if their fee structure is similar.

Rankings use medians to reduce outlier effects, and we filter to originated loans only (applications that were actually closed). Minimum volume thresholds (500+ nationally, 50+ by state, 10+ by county) ensure statistical reliability.