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When shopping around for a mortgage, you’ll find that many mortgage lenders charge an origination fee, which is the cost to cover processing and underwriting the loan. You’ll also find that some lenders don’t have this fee at all, or can discount or waive it for certain customers. Here is Bankrate’s guide to the best mortgage lenders with no origination fee in 2023.

Best mortgage lenders with no origination fee

 

 

 

LowRates.com

LowRates.com mortgage review

Availability Available in 48 U.S. states (not available in GA or MA)
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans; 700 for jumbo loans; 500 for FHA and VA loans
Down payment minimum 3% for conventional loans; 3.5% for FHA loans; none for VA and USDA loans
Where to find Online
  • No fees
  • Can close as fast as 20 days
  • Offers HELOCs and home equity loans

Ally Bank

Ally Bank mortgage review

Availability Available in all U.S. states
Loans offered Conventional, jumbo
Credit requirements 620 for conventional loans; 700 for jumbo loans
Down payment minimum 3%-5% for conventional loans; 10% for jumbo loans
Where to find Online
  • No fees
  • Can close as fast as 25-45 days
  • No FHA, VA or USDA loans
  • No HELOCs or home equity loans

Better

Better mortgage review

Availability Available in all U.S. states
Loans offered Conventional, jumbo, FHA
Credit requirements 620 for conventional and FHA loans
Down payment minimum 3% for conventional loans; 10.01% for jumbo loans; 3.5% for FHA loans
Where to find Online
  • No fees
  • Can close as fast as three weeks
  • No VA or USDA loans
  • No home equity lines of credit (HELOCs) or home equity loans (second mortgages)

 

 

 

First Mortgage Direct

First Mortgage Direct review

Availability Available in California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Kansas, Maryland, Missouri, Nebraska, New Jersey, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Washington
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans; 580 for FHA loans; 580 for VA loans
Down payment minimum 3% for conventional loans
Where to find Online
  • Borrowers assigned readily available loan officer to work with via phone or email
  • No origination or hidden fees
  • Loans for purchases, first-time homebuyers and refinancing

Homefinity

Homefinity mortgage review

Availability Available in all U.S. states except Nevada and New York
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans; 600 or higher for FHA loans and VA loans (can be lower in some cases)
Down payment minimum 3% for conventional loans; 3.5% for FHA loans
Where to find Online
  • Loan originators available around the clock, and borrowers communicate with same person from start to finish
  • Real-time prequalification or same or next-day preapproval

Summary: Best mortgage lenders with no origination fee

Lender Credit requirements Down payment minimum Bankrate review
LowRates.com 620 for conventional loans; 700 for jumbo loans; 500 for FHA and VA loans 3% for conventional loans; 3.5% for FHA loans; none for VA and USDA loans LowRates.com mortgage review
Ally Bank 620 for conventional loans; 700 for jumbo loans 3%-5% for conventional loans; 10% for jumbo loans Ally Bank mortgage review
Better 620 for conventional and FHA loans 3% for conventional loans; 10.01% for jumbo loans; 3.5% for FHA loans Better mortgage review
First Mortgage Direct 620 for conventional loans; 580 for FHA loans; 580 for VA loans 3% for conventional loans First Mortgage Direct review
Homefinity 620 for conventional loans; 600 or higher for FHA loans and VA loans (can be lower in some cases) 3% for conventional loans; 3.5% for FHA loans Homefinity mortgage review

Mortgage lenders with no origination fee FAQs

  • An origination fee is an upfront fee a lender charges to cover the cost of initiating and processing a loan. This one-time fee compensates the lender for services such as gathering the borrower’s information to process and fund the loan, and sometimes handling the escrow account as well.

    Some lenders also include the cost of underwriting — the risk assessment the lender does for every borrower — in the origination fee, while others charge a separate processing or underwriting fee.

    Origination fees exist for many types of loans, including mortgages and personal loans.
  • Mortgage origination fees are based on a percentage of your home loan, and in general, you’ll pay anywhere from 0.5 percent to 1 percent. So, if you were to take out a $350,000 loan, the origination fee could set you back $1,750 to $3,500.

    This fee is part of your closing costs, which are all of the costs associated with the mortgage, including the appraisal, credit check and other fees. All told, closing costs usually tally up to 2 percent to 5 percent of your loan.

    You can find the origination fee for your specific mortgage on the loan estimate, the three-page document given to you by your lender when you applied for the loan. It should also be included in your closing statement of costs.
  • Origination fees compensate the lender for services such as gathering the borrower’s information to create the loan, and, in the case of a home sale, handling escrow.
  • You might be able to negotiate the origination fee by simply asking the lender to reduce the cost or waive it, especially if you’re a strong borrower with good credit. This might also be an option if you’re obtaining a loan from a bank or credit union that you already have a relationship with.

    Another way to get out of paying the origination fee is to ask the home seller to cover it — although this tactic typically only works in a buyer’s market, when sellers have fewer offers to choose from, or if the seller needs to move quickly or has had a hard time unloading the property.

    Some lenders also offer no-closing-cost mortgages, which include the cost of the origination fee in the loan itself. This can be a good route to take if you don’t have a lot of cash available for closing costs upfront, but be aware: You’ll pay more for your loan overall.

Methodology

To determine the best mortgage lenders with no origination fee, Bankrate evaluated lenders based on several criteria, including affordability (APR, discounts and/or incentives); availability (approval/closing timelines, loan products); and experience (application process, customer service).