What is a No Fee Mortgage?

What is a No Fee Mortgage?

There are plenty of fees to pay when you get a new mortgage loan. While there is no way to get around these costs, you may be able to avoid paying them upfront with a “no fee loan.”

What Are Traditional Fees?

With a standard home loan, borrowers are responsible for paying closing costs, the fees for services required to create the loan. This includes home inspections, appraisals, title search fees, recording fees, and origination fees. These are due when the loan closes, or when you sign the paperwork for your mortgage. Closing costs can add up to between 2%-5% of the loan total which can come out to thousands of dollars. For example, if you take out a mortgage for $300,000 you could pay anywhere from $6,000 to $15,000 at the mortgage table. A no fee loan is a way to initially avoid these charges.

No Fee Doesn’t Mean No Fees

The name is a little misleading as you will end up paying the closing costs at some point during the loan, just not upfront. A no fee loan allows borrowers to roll the closing costs into the mortgage balance or increase the loan interest rate so they can pay for the closing costs slowly over time.


Without having to save up for both a down payment and closing costs, a no fee loan can help you become a homeowner faster. You will be able to enjoy the benefits of homeownership right away, earning equity sooner and having the freedom to use your home the way you want.

These types of loans might also make a lot of sense if you are not planning to stay in the home very long. For example, if you move and sell after just a few years, you will not end up paying for the full closing costs, saving you lots of money.

Most lenders offer no fee loans but check with us to see if it is an option in your particular situation. We can discuss with you the pros and cons of a no fee loan for your situation.

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