203(k) Loans and Supplemental Origination Fees
A 203(k) loan requires two or even three times the amount of paperwork necessary for a 203(b) loan or conventional home financing. This means extra effort for the lender, which must be compensated. This is done in the form of a supplemental origination fee, which is generally 1.5% or $350, whichever is larger, and can be paid upfront or can be worked into the loan. For instance, a mortgage of $100,000 would incur a supplemental origination fee of $1,500.