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Real estate glossaryNational exam concept

Loan origination fee

A loan origination fee is a charge for the lender's work in making, processing, or underwriting a loan.

Exam area: Financing

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What does “loan origination fee” mean in real estate?

A loan origination fee is a charge for the lender's work in making, processing, or underwriting a loan. When quoted as points, one point equals 1 percent of the loan amount.

How is “loan origination fee” different from the closest wrong answer?

An origination fee compensates the lender for origination services. Discount points are prepaid interest commonly exchanged for a lower rate.

What is the Georgia-specific rule?

The national formula applies in Georgia. Both fees may appear on federal loan disclosures, and both are calculated from the loan when stated as points.

Worked exam example

Scenario

A 1.25-point origination fee on a $320,000 loan is $320,000 × 0.0125 = $4,000.

What is the most common exam trap?

Trap correction

Do not use the sales price or assume every point shown is a discount point.

Original exam check

Apply the definition

A buyer pays $400,000 for a home with an 80 percent loan. The lender charges a 1-point origination fee and 1.5 discount points to lower the rate. What is the origination fee?

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Continue with Financing complete lesson. It places this term inside the full rule, worked examples, exam traps, and mixed practice required for mastery.