The upfront fee paid to the lender for issuing the loan.
An origination fee, often quoted as "points" (where 1 point = 1% of the loan amount), is the upfront fee a lender charges to underwrite, process, and close a loan. The fee is paid at closing — typically rolled into the loan or paid in cash — and compensates the lender for the work of getting the deal funded.
Origination fees vary significantly by loan type. Conventional residential mortgages typically charge 0.5–1.5% origination (sometimes zero with rate trade-offs). DSCR loans usually charge 1–2 points. Bridge and hard money loans typically charge 1.5–3 points, reflecting more intensive underwriting and shorter loan life. CMBS and agency commercial origination fees are typically 0.5–1.5%, with broker fees layered on top.
Points are sometimes confused with discount points, but they're different. Origination points compensate the lender for closing the loan. Discount points are a borrower-paid premium that reduces the interest rate — paying 1 discount point typically reduces rate by 0.25%, making it a math problem about how long the borrower plans to hold the loan. Most modern lenders bundle both into a single "fee structure" but they're conceptually distinct.
On short-term loans, origination fees can dramatically impact effective annualized cost. A 2-point origination fee on a 12-month bridge loan adds 2% to the year-one cost. If the bridge is paid off in 6 months, the effective annualized cost is closer to 4%. Borrowers comparing loans should always look at all-in cost — interest + origination + closing costs — relative to the actual expected hold period.
Negotiation room varies by loan type and lender. On conventional and DSCR, origination is mostly fixed by program. On bridge and hard money, repeat operators often negotiate origination down by 0.25–0.5 points based on relationship and deal flow. On larger institutional commercial deals, origination is usually negotiated within a band based on broker, lender, and overall deal structure.
| Bridge loan amount | $1,250,000 |
| Rate | 9.5% |
| Origination | 2.0 points = $25,000 |
| Expected hold period | 12 months |
| Year 1 interest | $118,750 |
| Year 1 origination | $25,000 |
| Year 1 all-in cost | $143,750 |
| Effective annualized cost | 11.5% |
| If paid off in 6 months | 17.5% effective annualized |
An upfront fee a lender charges to underwrite, process, and close a loan. Usually expressed as "points" where 1 point = 1% of the loan amount.
Origination points compensate the lender for making the loan. Discount points are paid by the borrower to buy down the interest rate. Both are paid at closing but serve different purposes.
Yes — most lenders allow origination to be paid from loan proceeds at closing rather than out-of-pocket. This increases the loan balance and slightly increases monthly payment.
On conventional and DSCR programs, mostly fixed. On bridge, hard money, and institutional commercial, often yes — especially for repeat operators or larger deals.
Points raise APR because they add to the upfront cost. The APR calculation amortizes points over the full loan term. On short-term loans, points have a bigger APR impact than on 30-year mortgages.
Matrix quotes all-in cost on every deal: rate, origination, and closing costs together. We structure pricing that's competitive and predictable.
