What Is an Origination Fee for an FHA Loan?
A Federal Housing Administration (FHA) lender charges an origination fee in order to carry some of the cost of underwriting, processing and administering your loan. The fee is generally included as part of your mortgage closing costs.
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Disclosure
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You will find the origination fee, which may sometimes be called a "point," listed on your Good Faith Estimate (GFE) document. The Real Estate Settlement Procedures Act (RESPA) requires that the fee be disclosed via the GFE.
Calculation
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The lender calculates an origination fee by percentage points based on the purchase price of your home. For example, an origination fee of one "point" is equal to one percent of the entire purchase price of your home.
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Fee Limits
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As of January 1, 2010, there is no limit on the percentage an FHA lender can charge you as an origination fee.
Payment
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Unless you negotiate a change to your mortgage closing, the buyer will pay the FHA origination fee. The lender can add the origination fee up to the total amount of the loan in the event the buyer does not pay the fee up front.
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References
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