Becoming a mortgage loan officer is a promising career path that offers unlimited earning potential. Here is everything you need to know
Becoming a mortgage loan officer is a promising career path that offers unlimited earning potential, flexibility, and career growth. And this is certainly the case in Texas. In the Lone Star State, you can make more than $150,000 in your first couple years alone, plus commission (in some cases) over $20,000.
But how do you become a mortgage loan officer in Texas? What are the educational and on-the-job requirements? And how long does it take to become a loan officer?
In this article, we will answer these questions and more. Here is everything you need to know on how to become a loan officer in Texas.
To be a mortgage loan officer in Texas, you will need to complete six steps. Some of these steps include enrolment in Texas Pre-Licensure Education (PE) and licenses from the Texas Department of Savings and Mortgage Lending (Texas-SML) and the Texas Office of Consumer Credit Commissioner (Texas-OCCC). Let’s take a quick look at the requirements on how to become a loan officer in Texas:
If you’re considering a career as a mortgage loan officer, one of your biggest questions is likely – how much can I make? The compensation for mortgage loan officers is primarily commission-based, so your earning potential directly correlates with your sales performance. However, commission structures can vary widely between lenders. Read on for a deep dive into how mortgage loan officer commissions work.
The Basics of Mortgage Loan Officer Commission
Mortgage loan officers are paid by commission for the loans they originate. The commission rates can range from 0.5% to 3% depending on:
- The lender
- Loan type
- Loan amount
- Commission structure
On average commissions fall around 1% of the mortgage loan amount. So for a $300000 mortgage, the loan officer would earn a $3,000 commission.
Commissions are almost always a percentage of the loan amount rather than a flat fee per loan. This incentivizes loan officers to “upsell” borrowers to get larger loan amounts and earn higher commissions.
Factors That Impact Commission Rates
While the loan amount is the primary driver of a mortgage loan officer’s commission, several other factors come into play:
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Loan type – Government-backed FHA and VA loans usually have lower commissions than conventional loans due to stricter guidelines and limitations, Jumbo loans above conforming limits often pay higher commissions
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Time and effort – More complex loans like jumbos, self-employed borrower loans, and refinances take more work and therefore may pay slightly higher commissions.
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Market competition – Areas with lots of lenders competing for business may push commissions up. Less competitive markets may have lower rates.
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Lender commissions – Big banks and lenders take a cut of the commission before the loan officer gets paid. Retail commissions are higher than wholesale ones with this lender fee subtracted.
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Experience level – Top producing loan officers can negotiate higher commission rates based on their track records.
As you can see, loan officer commission is highly variable and depends on multiple factors. Tracking your commissions over many loans will help you understand the averages to expect.
Common Mortgage Loan Officer Commission Structures
While commissions center around a percentage of the loan amount, lenders structure their commission plans in different ways including:
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Flat percentage – A set commission percentage like 1% stays the same no matter the loan amount or type.
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Tiered percentage – The percentage increases for higher loan amounts. For example, 1% for loans under $200k, 1.5% for loans $200K-$500K, and 2% for jumbo loans above $500k.
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Payment per stage – Partial payments at each milestone like application, processing, and closing with the biggest chunk paid at funding.
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Draw against commission – Loan officers take a set monthly draw which gets deducted from future commissions. Unearned draws must be repaid if they leave.
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Hybrid models – Combinations like flat fees plus percentages, or percentages plus bonuses for volume.
It pays to look at the entire commission structure when evaluating mortgage lender job offers to understand your full earning potential.
The Loan Originator Compensation Rule
The Loan Originator Compensation Rule is a federal regulation governing how mortgage loan officers can be paid. It was created under the Truth in Lending Act to avoid conflicts of interest.
Key requirements include:
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Compensation must be based on loan performance, not loan terms or conditions. For example, officers cannot earn higher commissions by steering borrowers into higher interest rates or expensive fees.
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All compensation plans must be consistent and standard across loan officers at a company. There can’t be individually negotiated rates.
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Total compensation cannot change based on the interest rate or other terms of the loan. Only the loan amount itself can affect commissions.
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Compensation must be disclosed clearly to borrowers so they understand what the officer makes if they accept a loan offer.
The rule aims to prevent predatory lending practices and ensure consumers get fair treatment.
How to Calculate Loan Officer Commission
Let’s walk through some examples to see how loan officer commission amounts are calculated:
Flat Percentage
- Loan amount: $275,000
- Commission percentage: 1%
- Commission formula: Loan amount x Percentage
- $275,000 x 0.01 = $2,750
Tiered Percentage
- Loan amount: $480,000
- Tier 1 (up to $200k): 1%
- Tier 2 ($200k-$500k): 1.5%
- Tier 3 (over $500k): 2%
- Commission formula:
- Tier 1: $200k x 0.01 = $2,000
- Tier 2: $300k x 0.015 = $4,500
- Tier 3: $80k x 0.02 = $1,600
- Total commission = $2,000 + $4,500 + $1,600 = $8,100
Payment per Stage
- Loan amount: $350,000
- Application payment: $500
- Processing payment: $750
- Closing payment: $1,000
- Funding payment: 2% of loan amount = 0.02 x $350,000 = $7,000
- Total commission = $500 + $750 + $1,000 + $7,000 = $9,250
The calculations can get more complex with hybrid models featuring multiple pay components.
Average Mortgage Loan Officer Income
According to the Bureau of Labor Statistics, the median annual pay for mortgage loan officers as of 2020 was $68,260. However, incomes can vary:
- Top earners in the 90th percentile make over $141,000 per year
- The lowest 10% of mortgage loan officers earn under $35,750
- Average base salaries range from $30,000 to $60,000
- High performers can earn $150,000+ in strong markets
Geographic location also impacts average pay scales due to differences in cost of living and competition levels:
| Metro Area | Average Base Salary |
|---|---|
| New York, NY | $112,803 |
| San Francisco, CA | $100,957 |
| Washington, DC | $92,389 |
| Houston, TX | $69,207 |
| Atlanta, GA | $62,412 |
Keep in mind only part of a loan officer’s pay comes from base salary. Commission is where the real earning potential lies.
The Bottom Line
Mortgage loan officer commissions primarily depend on the loan amount and commission percentage set by their lender. Percentages usually fall around 1% but can range from 0.5% to 3% or more. Besides loan amount, commissions vary based on loan type, market, lender payout structure, and officer experience. While base salaries average $60,000, commissioned loan officers can earn well into six figures at the upper end. Ultimately, your mortgage sales skills determine how much you’ll earn in commissions.
Pass SAFE mortgage loan officer test
You can visit the NMLS website to schedule the SAFE mortgage loan officer test. You can use your existing account number to schedule the test. It has 115 scored questions, and you must answer at least 75% correctly. The test costs $110 to take and you are given three hours and 10 minutes to finish.
Request an NMLS account
Before you start the educational portion of licensing, you must create a Nationwide Multistate Licensing System and Registry (NMLS) account on the State Mortgage Registry website. The NMLS is a nationwide database where all mortgage loan officers in Texas must register.
After creating your account, you will receive a personal NMLS number you will have for the entire time you are a working mortgage loan officer.
How Much does a Loan Officer Make?
FAQ
Why do mortgage loan officers make so much money?
How much do mortgage loan officers make in Texas?
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Annual Salary
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Monthly Pay
|
|
Top Earners
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$116,922
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$9,743
|
|
75th Percentile
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$93,200
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$7,766
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Average
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$69,954
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$5,829
|
|
25th Percentile
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$48,400
|
$4,033
|
Is being an MLO worth it?
How to make money as a mortgage loan officer?
Do mortgage loan officers get paid?
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 Much Do Mortgage Loan Officers Make?
How much Commission can a MLO make from a loan?
Some brokerages have a limit on the dollar amount an MLO can make from a single loan, and this is to be negotiated alongside the commission fee. 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 get the commission percentage they have negotiated.
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 do loan officers get paid?
These draws are then paid back to the company as the loan officer begins to earn money. In most cases, independent loan officers working at brokerages receive a percentage of the loan amount. For example, a $500,000 loan at a 1% commission rate will be paid out at $5,000.