4 Best Mortgage Lenders That Don’t Charge Origination Fees in 2022

Extra fees can be an especially costly part of applying for a mortgage. It’s very common for lenders to charge an application fee, an underwriting fee and an origination fee, which are typically all grouped together and classified as lender fees. Sometimes you’ll also incur discount points to lower your interest rate. As a result, you’ll end up having to pay more money on top of what you’re already paying upfront when you want to buy a new home.

As the name suggests, origination fees are charged by lenders for originating and processing your loan. The amount can be anywhere from 0.5% to 1.5% of the loan amount — for a $200,000 loan, for instance, that ends up being between $1,000 and $3,000 extra.

Below, Select takes a closer look at four of the best mortgage lenders that don’t charge origination fees (see our methodology below).

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Ally Bank

Ally Bank

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Conventional loans, HomeReady loan and Jumbo loans

  • Terms

  • Credit needed

  • Minimum down payment

    3% if moving forward with a HomeReady loan

Pros

  • Ally HomeReady loan allows for a slightly smaller downpayment at 3%
  • Pre-approval in just three minutes
  • Application submission in as little as 15 minutes
  • Online support available
  • Existing Ally customers can receive a discount that gets applied to closing costs
  • Doesn’t charge lender fees

Cons

  • Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs
  • Mortgage loans are not available in Hawaii, Nevada, New Hampshire, or New York

Who’s this for? Ally Bank doesn’t charge application fees, origination fees, processing fees or underwriting fees — the lender may, however, charge appraisal fees and recording fees, as well as for title searches and insurance. That said, you can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes as long as you have all the necessary documents handy.

Homebuyers can use the HomeReady mortgage program, which is geared toward low- to mid-income homebuyers — regardless of whether it’s their first time or if they’re a repeat buyer — and would allow them to put down as little as 3% as a down payment. Stipulations do apply: Applicants must also have a debt-to-income ratio of no more than 50%, their income must be equal to or less than 80% of the area’s median income and at least one borrower must take a homeowner education course.

Ally also offers a jumbo loan option, though it’s worth noting FHA loans, VA and USDA loans are not available through this lender. Customers can also choose between fixed rate and adjustable rate mortgages, and 15-, 20- and 30-year loan terms.

PenFed Credit Union

PenFed Credit Union Mortgage

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Conventional loan, VA loan, FHA loan, Jumbo loan and adjustable-rate mortgage (ARM)

  • Terms

  • Credit needed

  • Minimum down payment

    3.5% if moving forward with an FHA loan

Pros

  • The Power Buyer program lets you lock in an interest rate while you shop for a home
  • Offers options for an adjustable-rate mortgage (ARM)
  • PenFed members can receive up to $2,500 in lender credit applied to closing costs
  • Doesn’t charge lender fees
  • Online support available

Who’s this for? PenFed offers a variety of mortgages with no lender fees, including no origination fees, though other types of fees may apply. In addition to VA loans, conventional loans, jumbo loans, FHA loans and adjustable-rate mortgage loans, this lender also offers the Power Buyer program, which allows applicants to be pre-approved and lock in an interest rate for up to 60 days while they look for a home.

The Power Buyer program can really come in handy during a volatile interest rate environment where rates could likely continue to increase over the next few months. Going through the program will ensure you already have a low interest rate. Not only that, getting pre-approved before you look for a home will help you streamline the homebuying process since you’ll already know how much of a loan you’re cleared for — plus, you’ll be less likely to miss out on a great property because you had to go back and get pre-approved.

PenFed members can also potentially take advantage of lender credits, depending on how much of a loan they borrow. Those borrowing up to $199,999 can qualify for a $500 credit; while those borrowing between $200,000 and $699,999 can qualify for a $1,000 credit and those needing to borrow $700,000 can qualify for a $2,500 credit. The credits would then be received during the closing process.

Better.com

Better.com Mortgage

  • Annual Percentage Rate (APR)

    Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

  • Types of loans

    Conventional loan, FHA loan, Jumbo loan and adjustable-rate mortgage (ARM)

  • Terms

  • Credit needed

  • Minimum down payment

    3.5% if moving forward with an FHA loan

Pros

  • No application fee, origination fee, or underwriting fee
  • Pre-approval in as little as three minutes
  • 24/7 support available
  • Offers options for an adjustable-rate mortgage (ARM)
  • Promise to match competitor’s loan offer and if they are unable to, they will give you $100

Cons

  • Doesn’t offer VA loans or USDA loans

Who’s this for? Better is a mortgage lending and refinancing service that boasts lower rates. According to the lender’s website, since agents won’t earn a commission from your home loan, the company is able to pass those savings onto its customers. Of course, the best way to get a personalized interest rate is to get pre-approved and submit your application, and with Better, this can be done in as little as three minutes.

While this lender doesn’t charge any origination fees, application fees, or underwriting fees, other fees may apply. Better also offers conventional loans, FHA loans, jumbo loans and adjustable-rate mortgages. Note that VA loans and USDA loans are not offered by this lender. Loan terms can range from 10 to 30 years. Overall, Better offers bare-bones mortgage options with no lender fees, making it a great option.

Navy Federal Credit Union

Navy Federal Credit Union

  • Annual Percentage Rate (APR)

    Apply online for personalized rates

  • Types of loans

    Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans, adjustable-rate mortgage

  • Terms

  • Credit needed

    Not disclosed but lender is flexible

  • Minimum down payment

    0%; 5% for conventional loan option

Pros

  • 0% downpayment for most loan options
  • flexible repayment terms ranging from 10 years to 30 years
  • Offers refinancing, second-home financing and loans for investment properties
  • No PMI required
  • Fast pre-approval
  • RealtyPlus program allows applicants to receive up to $9,000 cash back

Cons

  • Must be a Navy Federal Credit Union member to apply

Who’s this for? Navy Federal Credit Union provides the most benefits to current or retired members of the Armed Forces who have signed up for a Navy Federal Credit Union membership as well as their immediate family members.

This lender offers VA loans with the option to pay 0% down and contribute up to 4% of the home’s value toward closing costs. Another option, the Military Choice mortgage, has similar guidelines to the VA loan — no private mortgage insurance, or PMI, and a 0% minimum down payment, among other features — but allows sellers to contribute up to 6% of the home’s value toward closing costs.

Homebuyers can also use the RealtyPlus program to buy a home and receive up to $9,000 in cash back. Note that while this lender does charge fees, the origination fee may be waived if the applicant would instead prefer a 0.25% increase on their interest rate.

Our methodology

To determine which mortgage lenders are the best, Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best mortgages, we focused on the following features:

  • Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you’ll lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
  • Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. Lenders may also offer USDA loans and jumbo loans. Having more options available means the lender can to cater to a wider range of applicants. We’ve also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property. 
  • Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
  • Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances where a lender does. 
  • Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
  • No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early. 
  • Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches. 
  • Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
  • Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount. 

After reviewing the above features, we sorted our recommendations by best for overall financing needs, quick closing timeline, lower interest rates and flexible terms.

Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee your interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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