Key Takeaways
- Lenders including Tomo Mortgage and Bison State Bank charge no origination fees on purchase and refinance mortgages, but you’re only really saving if the offer costs less over the time you’ll keep the loan. Compare the Section A total on Loan Estimates quoted the same day with the same points, then check the break-even point, because a lender can recover a waived fee through a higher interest rate.
- No origination fee isn’t no closing costs: appraisal, title and prepaid items still apply.
- Compare the Section A “Origination Charges” total, not the name of one fee.
- Use APR to compare offers with the same points, but remember it assumes you keep the loan for its full term.
- Lender credits lower closing costs in exchange for a higher interest rate.
What does “no origination fee” actually remove?
It removes one lender charge. It doesn’t remove your closing costs, and it may not remove every charge the lender collects.
Think of Section A of your Loan Estimate as the lender’s own bill. It’s labeled “Origination Charges,” and the CFPB notes that lenders itemize it differently: application, underwriting, processing, verification and rate-lock fees can all sit there alongside the origination fee itself. Lenders that do charge origination fees commonly charge 0.5% to 1% of the loan amount, or $1,500 to $3,000 on a $300,000 loan.
Third-party costs like the appraisal and title show up in Sections B and C. Program charges like the FHA upfront mortgage insurance premium and the VA funding fee appear in Section B.
| What the lender advertises | What it removes | What you still pay | Where to check |
| No origination fee | The charge labeled “origination fee” | Other Section A charges, third-party costs, prepaid items | Section A total |
| No lender fees | Lender charges in Section A (discount points you choose still appear there) | Third-party costs, prepaid items, program fees | Section A total |
| Lender credits, including “no closing cost” offers that use them | Some or all closing costs | A higher interest rate for the life of the loan | Section J, plus the interest rate on page 1 |
So what’s the catch?
Usually, the interest rate. According to the CFPB, lender credits lower what you pay at closing in exchange for a higher interest rate, so you pay less up front and more over time. You’ll see them as a negative number in Section J.
How big is the trade? Tomo Mortgage’s pricing guidance gives one example: a rate about 0.25 percentage points higher might produce around $4,000 toward closing costs. The exact exchange depends on the loan amount, the market and the day you lock.
The other catch is naming. A lender can stop charging an “origination fee” and still charge a processing or underwriting fee in the same section (same money, different label). As the CFPB puts it: “It’s the total that matters.”
How do you check an offer?
Get Loan Estimates on the same day, with the same discount points (or none). Compare the Section A total, the Section B total and the APR, then run the break-even check in the next section.
Start with the Section A total
Section A shows everything the lender charges to make the loan, however it’s itemized. If you choose to buy discount points, they’re listed there too, which is why you compare offers with matching points.
Charges paid to the lender are also zero-tolerance items: what you pay at closing can’t exceed the Loan Estimate amount, apart from limited exceptions such as a valid changed circumstance. If they do, the lender must refund the difference within 60 days of closing. Check Section A again on your Closing Disclosure, which you’ll get at least three business days before closing.
Check Section B too
Section B lists required services where the lender picks the provider, such as the appraisal and credit report. You can’t shop for these, so the CFPB suggests comparing their total across Loan Estimates. A $0 Section A doesn’t help if Section B is higher.
Then compare APR, not just the interest rate
The interest rate is the yearly cost of borrowing the money, and it doesn’t reflect fees. The APR is broader: it reflects the interest rate plus points, broker fees and other charges you pay to get the loan. You’ll find the interest rate on page 1 of the Loan Estimate and the APR on page 3.
APR has two limits. It spreads upfront costs over the full loan term, so it favors higher-fee, lower-rate offers even if you’ll sell or refinance in a few years. And it doesn’t capture every closing cost: third-party charges such as appraisal and title fees generally aren’t in it.
For adjustable-rate loans, APR also assumes today’s index rate stays put. That’s one reason the CFPB says not to rely on APR alone.
Is a no-origination-fee mortgage worth it?
Yes, if you’ll sell or refinance before the break-even point of the higher-fee alternative. A $0 fee paired with a higher interest rate costs more the longer you keep the loan.
To find the break-even point, divide the extra upfront cost of one offer by the monthly savings it buys. Here’s a hypothetical: Offer A has $0 in Section A. Offer B has $2,000 in Section A, about 1% of a $200,000 loan, and a lower interest rate that saves $40 a month. That’s a 50-month break-even ($2,000 ÷ $40).
If you expect to sell or refinance within about four years, Offer A likely costs less. If you’ll keep the loan longer, Offer B likely does. Offer B will probably show the lower APR either way, because APR assumes you keep the loan for its full term, which is why the break-even check matters.
Do VA and FHA loans work differently?
Yes. Each program sets its own limits on what lenders can charge, and no lender’s fee policy removes a program’s own charges.
VA loans
The VA funding fee applies whatever a lender advertises. It’s a one-time charge that depends on the loan type, whether you’ve used a VA loan before and your down payment, and VA publishes the current rates. Some borrowers are exempt, including those receiving VA compensation for a service-connected disability and active-duty service members who have received a Purple Heart.
In practice, watch for double-charging. VA says a lender that takes the full 1% can’t also charge unallowable fees, such as document preparation. So a 1% origination fee plus separate processing or underwriting fees in Section A is worth questioning before you lock.
FHA loans
FHA dropped its 1% origination-fee cap for standard forward mortgages in 2010, under Mortgagee Letter 2009-53, and later removed it for 203(k) rehabilitation loans too. HUD instead lets lenders collect customary and reasonable closing costs, which leaves the amount to each lender.
Without a cap, FHA origination charges vary more from lender to lender, so the Section A comparison matters more. Reverse mortgages (HECMs) still have their own origination-fee limit.
Does Tomo Mortgage Charge Origination or Lender Fees?
Not on purchase of refinance mortgages. Tomo Mortgage charges $0 in lender fees (no origination, processing or underwriting fees) on purchase or refinance mortgages it offers, in every state where it’s licensed. On a Tomo Mortgage Loan Estimate for those mortgage types, that leaves Section A at $0 unless you choose to buy discount points.
You’ll still pay third-party costs like the appraisal and title, prepaid items, and any program fee, such as the VA funding fee if you’re not exempt.
- Interest rates: Tomo Mortgage advertises interest rates about 0.25 percentage points below the industry average. Compare the APR too, on offers with the same points.
- Points, credits or neither: Tomo Mortgage offers pricing with discount points, lender credits or neither, so you can match the trade to how long you expect to keep the loan. The options available depend on your loan program and the market when you lock.
- Price match: Tomo Mortgage will match another lender’s combination of interest rate, lender credits, rate lock period and Section A and B charges, from a comparable conventional Loan Estimate for a primary residence that’s less than one business day old. Ask before you lock; if Tomo Mortgage matches, you lock the same day. Price match can be used once per loan application, can’t be combined with other promotions, and can be suspended during unusual market volatility. It doesn’t match interest rates on jumbo loans or adjustable-rate mortgages, or offers from credit unions and other organizations with membership requirements. Full terms apply.
- Where and what: Tomo Mortgage lends in 40 states and Washington, D.C. Requirements, including minimum credit scores and typical closing times, vary by loan program and are listed on each product page: conventional, FHA, VA, jumbo and refinance. The cash-out refinance isn’t available on Texas properties.
Tomo Mortgage, LLC · NMLS #2059741 · Equal Housing Lender.
Frequently asked questions
What lenders don’t charge an origination fee?
Tomo Mortgage and Bison State Bank both advertise no origination fees on purchase and refinance mortgages. Labels vary, so confirm on each lender’s Loan Estimate: the Section A total shows every charge the lender collects to make the loan.
Is it better to get a mortgage with or without an origination fee?
It depends on how long you’ll keep the loan. Divide any extra upfront cost by the monthly savings from a lower interest rate; if you’ll keep the loan past that break-even point, the offer with the fee can cost less overall.
Is no origination fee the same as no closing costs?
No. Third-party costs such as appraisal and title, prepaid items, and program fees still apply. Offers marketed as “no closing costs” can use lender credits, which come with a higher interest rate.
Are discount points an origination fee?
No. Discount points are optional: you pay more at closing to lower your interest rate. They’re listed in Section A with origination charges, so compare offers with the same points.
Do VA loans have origination fees?
They can, within limits. VA lets lenders charge a flat fee of up to 1% of the loan amount in place of origination charges it doesn’t specifically allow; discount points are separate. The VA funding fee is also separate and applies unless you’re exempt. Tomo Mortgage VA loans carry $0 lender fees.
Does a refinance with no origination fee make sense?
Upfront costs decide how many months a refinance takes to pay for itself, so a lower Section A total shortens that break-even point. Compare the Section A and B totals and the APR, then run the break-even check. Tomo Mortgage refinances also carry $0 lender fees.