Fix and Flip Origination Fees vs Points: What You Actually Pay to Get the Loan (2026)
Two fix and flip loans can quote the same interest rate and still cost you very different amounts of cash at closing, and the reason usually hides in two line items that investors treat as the same thing: the origination fee and the points. They are not the same thing, they are calculated differently, and confusing them is one of the easiest ways to misjudge which loan is actually cheaper. This guide breaks down what each one is, how they show up on a rehab loan, how to run the real math, and how to compare two offers honestly instead of just eyeballing the rate.
If you are still building your picture of what a rehab loan costs overall, start with our breakdown of fix and flip loan rates and points. This guide zooms in on the upfront charges specifically, because that is where the confusion, and the money, lives.
What points actually are
A point is one percent of the loan amount, charged up front. Two points on a three hundred thousand dollar loan is six thousand dollars, due at closing. On a short-term fix and flip loan, points function as prepaid, guaranteed compensation to the lender for putting the capital to work, and they are the single biggest lever between a lower rate and a higher one. A lender will often let you pay more points to buy the rate down, or take fewer points and accept a higher rate, which is the same tradeoff we cover in the rate discussion above.
The key feature of points is that they scale with the loan. The bigger the loan, the more dollars a given number of points costs, because it is a straight percentage. That matters when you compare a small flip loan to a large one, because the same two points is a very different dollar amount on a one hundred thousand dollar loan than on a five hundred thousand dollar loan.
What the origination fee actually is
The origination fee is the charge for creating and processing the loan itself, the underwriting, the document preparation, the file setup, the administrative work of getting the loan to closing. On some programs it is expressed as its own percentage of the loan, and on others it is a flat dollar amount, for example a fifteen hundred or two thousand dollar processing or administration fee that does not move with the loan size.
This is the distinction that trips people up. Points are almost always a percentage. An origination fee may be a percentage or it may be a flat fee, and when it is flat, it behaves very differently across deal sizes. A flat two thousand dollar origination fee is a meaningful cost on a one hundred thousand dollar loan and a rounding error on a five hundred thousand dollar loan. Points do the opposite. So the mix of the two, and how each is structured, changes which loan wins depending on how big your deal is.
Running the real math on two offers
Here is where it gets practical. Say you are financing a three hundred thousand dollar fix and flip loan and you have two quotes. Offer A is eleven percent with one point and a flat two thousand dollar origination fee. Offer B is ten and a half percent with two points and no separate origination fee. On the surface Offer B has the lower rate, and a lot of investors stop there and take it.
Now do the arithmetic. On Offer A, one point on three hundred thousand dollars is three thousand dollars, plus the two thousand dollar origination fee, for five thousand dollars in upfront charges. On Offer B, two points on three hundred thousand dollars is six thousand dollars in upfront charges, with no separate origination fee. So Offer B costs one thousand dollars more up front. Against that, Offer B saves you half a percent on the rate. Half a percent on three hundred thousand dollars is about fifteen hundred dollars per year, or roughly one hundred twenty-five dollars a month. If your project runs six months, the rate savings is about seven hundred fifty dollars, which does not cover the extra one thousand dollars you paid in points. On a short flip, Offer A is actually cheaper all-in, even though it quotes the higher rate. On a long project, the math flips and the lower rate eventually wins. The point is that you cannot know which is cheaper without running both the upfront charges and the time you will hold the loan.
Run every version of this through our deal calculator so you are comparing total dollars out, not just the rate on the front of the term sheet.
How loan size flips the answer
The example above used a three hundred thousand dollar loan, but the winner between two offers can change entirely with the size of the deal, and that is worth seeing directly. Run the same two offers on a smaller flip. Say you are borrowing one hundred thousand dollars. Offer A is eleven percent with one point and the same flat two thousand dollar origination fee. Offer B is ten and a half percent with two points and no origination fee.
On the small loan, Offer A now costs one point, which is one thousand dollars, plus the two thousand dollar flat fee, for three thousand dollars up front. Offer B costs two points, which is only two thousand dollars up front. This time Offer B is one thousand dollars cheaper at closing, the opposite of what happened on the big loan, because the flat origination fee is a much heavier drag on a small balance while the points shrink with it. The flat fee does not care that your loan is small, so it eats a larger share of it. This is the whole reason you cannot carry a rule of thumb from one deal to the next. On a large loan, a flat origination fee is cheap and points are expensive. On a small loan, the flat fee dominates. The leverage tier you use shifts the loan amount too, which is one more reason to total the actual dollars on your actual deal rather than trusting the rate line.
Where these charges sit in your total cost
Origination and points are only two of the numbers that hit at closing. They sit alongside your fix and flip closing costs, your title and appraisal fees, and any interest reserve the loan sets aside to cover payments during the rehab. When you build your deal, all of these belong in the analysis from day one, not as a surprise at the table. The investors who get burned are the ones who modeled the purchase, the rehab, and the resale, and left a blank where the financing costs should have been.
It also helps to remember that these are largely fixed costs of using this kind of capital. Whether your flip takes four months or eight, the points and the origination fee are the same. That is different from your interest, which accrues with time, and different again from your carrying costs, which we cover in the holding-cost discussion. Knowing which of your costs are fixed and which scale with time is what lets you price a fast flip and a slow one correctly.
Questions to ask at the quote stage
Getting ahead of this is mostly about asking the right questions before you sign. First, how many points, and are they a straight percentage of the loan. Second, is there a separate origination or processing fee, and is it a percentage or a flat dollar amount. Third, are there any other lender fees, an underwriting fee, a document fee, a draw administration fee, that are not folded into the first two. Fourth, does paying an extra point actually buy the rate down, and by how much, so you can decide whether that trade fits your expected hold.
The answers let you put every offer on the same footing. Two term sheets that look identical on the rate line can differ by thousands of dollars once you total the upfront charges, and the only way to see it is to add up the actual dollars and divide by the months you expect to hold. That is the same discipline that separates the investors who protect their margin from the ones who watch it quietly leak into fees.
Where FMC fits
We arrange fix and flip and bridge financing for real estate investors across Pennsylvania and additional states, and we are a Pittsburgh-based brokerage placing these loans throughout our service area. Part of that job is laying the points and the origination fee out plainly so you can see the real all-in cost of each option, and matching the structure to how long you actually expect to hold the loan. Run your numbers through our deal calculator, then contact us and we will walk you through exactly what the upfront charges look like on the fix and flip loan options for your deal.
FMC Capital is a Pittsburgh-based mortgage brokerage, NMLS #1840537, serving real estate investors across Pennsylvania and additional states. This article is educational and is not a commitment to lend or financial advice. Rates, points, origination fees, and program terms vary by lender, property, and borrower and are subject to change. To talk through a specific project, call 412-990-2941.