If you’re considering a career as a mortgage loan officer, one of your biggest questions is likely – how much can I make? Loan officer commissions can vary widely depending on your experience, location, and employer. But overall, it offers the potential for a lucrative income
In this comprehensive guide, we’ll break down everything you need to know about loan officer commission structures and pay, including:
- How loan officer commissions work
- Factors that impact commissions
- Commission rates at banks vs. mortgage brokers
- Base salary vs. commission-only pay plans
- Additional bonus opportunities
- Average nationwide pay for loan officers
- Top paying states for loan officers
- Strategies to maximize your commissions
Whether you’re exploring loan officer salaries or negotiating pay at a new job, understanding commissions is key. Let’s dive into the details so you can make informed decisions.
How Loan Officer Commissions Work
The majority of loan officers earn money through commissions based on the loans they originate. This commission is stated as a percentage of the loan amount.
For example, if a loan officer’s commission rate is 1% on a $300,000 mortgage, they would earn $3,000 on that loan. Most loan officers can expect to earn 0.5% to 1% on conventional loans and 0.75% to 1.5% on government-backed loans.
The commission rate you receive will depend on
- Your experience level
- Type of loans you originate
- Loan volume you produce
- Employer pay structure
Commission rates also tend to be higher on purchase mortgages versus refinances, and for more complex loan products.
Factors That Impact Loan Officer Commissions
Several important factors determine how much you can make as a mortgage loan officer:
Experience – Commission rates tend to improve with longer tenure in the mortgage industry. Junior loan officers often start around 0.5%.
Employer – Large banks tend to pay less than smaller independent mortgage brokers. Top brokers pay up to 90% of loan commissions.
Loan volume – Originating more loans directly correlates with higher earnings. Top producers can close $100 million+ in loans per year.
Loan type – Government loans (FHA, VA, USDA) pay 0.5% to 1% more than conventional mortgages. Jumbo loans also pay higher commissions.
Production splits – Getting a higher percent split of each loan means more money in your pocket. Splits range from 50/50 to 90/10.
Location – Urban areas like Los Angeles and New York have higher incomes and home prices, leading to larger loans and commissions.
With the right strategies, six-figure earnings are attainable as an experienced loan officer with high production volume.
Loan Officer Commission at Banks vs. Brokers
One key factor in loan officer pay is whether you work for a traditional bank or an independent mortgage broker. Here’s an overview of how commissions differ:
Banks
- Lower commission rates (0.5% to 0.75%)
- Consistent base salary ($50k average)
- Bonuses for exceeding sales goals
- Full benefits package (healthcare, 401k, etc.)
- Capped earnings upside
Mortgage Brokers
- Higher commission rates (1% to 1.5%)
- 100% commission-based pay
- Higher income potential
- Responsible for own benefits
- Unlimited earnings upside
While banks offer more stability, mortgage brokers provide greater income opportunity for high performers. New loan officers may prefer a bank role while experienced originators can thrive in the broker model.
Base Salary vs. Commission-Only Pay Plans
Beyond commissions, loan officer pay plans fall into two structures:
Salary + Commission
- Lower base salary ($30k – $60k)
- Supplemented by commissions
- Consistent income stream
- Capped commission rates
Commission-Only
- No base salary
- 100% commissions
- Higher commission rates
- Unlimited earning potential
- Income fluctuates based on production
For newer loan officers, a salary + commission model provides some income stability as you build your book of business. Once established, transitioning to commission-only pay uncaps your earning ability but introduces more risk.
Additional Bonus Opportunities
Besides commission on closed loans, many loan officers have additional bonus opportunities, such as:
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Volume bonuses – Bonuses for reaching certain annual loan volume thresholds
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Referral fees – Earning a fee for referring a client to a lender (common for real estate agents)
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Contest rewards – Competitions for top performers
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Sign-on bonuses – Larger upfront bonuses for proven performers
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Profit sharing – Sharing in company profits based on individual production
Relying solely on commissions may not get you top dollar. Pursuing bonuses and profit sharing gives your income potential a boost.
Average Nationwide Pay for Loan Officers
According to the Bureau of Labor Statistics, the average annual pay for loan officers nationwide is:
- Entry level: $44,500
- Experienced: $76,200
- Top earners: $122,500+
Salaries go up steeply with experience. Top producing loan officers at the right brokerages can earn $300,000+ in the right markets.
Bonuses and profit sharing are not reflected in these figures, so actual take-home pay for many loan officers exceeds reported salaries.
Top Paying States for Loan Officers
Where you live also impacts earnings. Higher home prices equal bigger loans and commissions. Here are the top 5 states for loan officer pay:
- California – $100,270
- Washington – $92,680
- Massachusetts – $89,430
- Connecticut – $88,640
- New York – $88,350
Major metro areas also tend to pay more than rural locations due to more expensive real estate markets and higher loan volumes.
Strategies to Maximize Your Commissions
As a loan officer, you have significant control over your earning ability through the loans your originate and close. Here are tips to maximize your commissions:
- Originate higher loan amounts – Jumbos over conforming loans
- Specialize in niche products – VA, USDA, renovation loans
- Target home purchase leads over refinances
- Build realtor partnerships for buyer referrals
- Ask for a higher commission split
- Join a top paying brokerage
- Obtain your MLO license to broaden product eligibility
- Close loans quickly to increase annual volume
- Master objection handling to improve conversion rates
- Stay current on loan programs and trends
With the right strategies, you can steadily grow loan volume, command higher commission rates, and reach your maximum earning potential as a loan officer.
The Bottom Line
Loan officer commissions provide substantial income potential, especially as you build expertise. While entry level salaries are around $45,000, top producers can easily earn over $200,000. To maximize commissions, align with a high-paying broker, increase your annual loan volume, and negotiate the best commission split. With hard work and perseverance, six figure incomes are achievable.
How Much Do Mortgage Loan Officers Make?
According to ZipRecruiter, Mortgage Loan Officer salaries below $50,000 (25th percentile) and above $200,000 (90th percentile) are outliers. The majority of MLOs (24%) make between $81,500 and $102,499.
The typical MLO is paid 1% of the loan amount in commission. On a $500,000 loan, a commission of $5,000 is paid to the brokerage, and the MLO will receive the percentage they have negotiated. If the portion of the commission for the MLO is 80%, they will receive $4,000 of the $5,000 brokerage percentage fee. Depending on the MLO’s involvement in the transaction, the percentage fee can range anywhere from 20-80%.
While some Mortgage Loan Officers are paid commission by percentages, others are paid by basis points. The Mortgage Reports says, “Each basis point is 1/100th of one percent, so 25 basis points, or bps, equals 1/4 of one percent. That’s $250 for a $100,000 mortgage.”
If you’re entering the industry and don’t know where to start regarding a compensation plan, check out this sample.
Your earning potential as a Mortgage Loan Officer can increase as you gain experience and develop your career with additional education. Other factors that will impact your earnings as an MLO include the state in which you do business and the fluctuation of the mortgage market. Around 16% of full-time MLOs make above the national average salary, earning up to $181,000 per year.
With unlimited earning potential and the chance to gain experience and education as you go, becoming a Mortgage Loan Officer can unlock a lucrative and stable career path.
How Do Mortgage Loan Officers Make Money?
The way that Mortgage Loan Officers are paid will vary from office to office, depending on commission structure, fee splits, salary, bonuses, and benefits. If an MLO works for a financial institution, like a bank, they are more likely to be paid a salary and receive benefits. MLOs working for a state-licensed mortgage brokerage will most likely earn commission.
How Loan Officers Make Money? Comp plans, BPS, rate sheets, and salaries?
FAQ
How to calculate loan officer commission?
Why do loan officers get commission?
How much commission do you get on loan sales?
How much Commission can a Loan Officer make?
Loan officers can make commissions ranging from 0.2% to 2% of the total loan amount as a sales-based role. The difference depends on the employer. Additionally, they can earn incentives for reaching certain thresholds or selling certain products.
How is a loan officer’s commission calculated?
If the loan officer is paid a flat fee per loan, then the commission is simply the predetermined amount. If the loan officer is paid a percentage of the loan amount, then the commission is calculated by multiplying the loan amount by the predetermined percentage. For example, a $500,000 loan at a 2% commission rate will be paid out at $10,000
How much does a mortgage loan officer make?
According to ZipRecruiter, Mortgage Loan Officer salaries below $50,000 (25th percentile) and above $200,000 (90th percentile) are outliers. The majority of MLOs (24%) make between $81,500 and $102,499. The typical MLO is paid 1% of the loan amount in commission.
How do loan officers get paid?
Loan officers can be paid in various ways, including a salary or hourly rate, and others earn commissions and incentives on top of a lower base salary. The wage structure depends on the employer and the loan officer’s job performance.