Origination Fee
A fee charged by a lender for processing and issuing a new loan, typically calculated as a percentage of the loan amount and deducted at funding or added to the balance.
Origination fees cover the lender’s cost of underwriting and setting up a loan, and they’re usually disclosed as part of the term sheet, either as a flat dollar amount or a percentage of the total financing amount.
Because an origination fee reduces the actual funds received (if deducted upfront) or adds to the total repayment (if financed into the balance), it’s an important factor in calculating a loan’s true total cost, not just its stated rate.
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