I dont really know where the added fee's came from, he simply said in an email:
"At 97% loan to value your loan amt. is $98,940 and with the LTV at 96.5% your loan amt. is $98,430. The difference is $510. When the LTV goes lower that means you come up with moreâ€”The loan amt goes down but you have to cover the difference. Example: 80% of $102,000 is a loan amt. of $81600â€”That means you would have to come up with $20,400. I hope this clarifies your question. "
He just sent me a sheet showing the loan fee's for the first 3% down as 2,000 and the loan fee's for 3.5% down as 2,500.