How to Become a Mortgage Loan Originator: The Complete Guide

If you enjoy working with people, have strong sales skills, and want to build a lucrative career in finance, becoming a mortgage loan originator (MLO) may be a great option. MLOs play a critical role in helping homebuyers obtain financing to purchase real estate.

As a mortgage loan officer, you’ll meet with prospective borrowers to assess their financial situations, educate them on loan options, gather documentation, and guide them through the mortgage application process. Once approved, you’ll assist them with closing on their new home loan.

It’s a rewarding career that allows you to make a difference in people’s lives by helping them achieve the dream of homeownership Here is a step-by-step guide on how to become a licensed mortgage loan originator

Mortgage Loan Originator Job Description

Mortgage loan officers typically work for mortgage lenders, banks or mortgage brokerages. Their primary duties include

• Meeting with clients to understand their financial goals and needs
• Collecting documentation and data for loan applications
• Assessing applicants’ finances to determine the most suitable loan programs and terms
• Educating borrowers on different types of mortgages and financing options
• Submitting completed applications to underwriting for approval
• Guiding clients through the lending process until closing
• Explaining loan terms, interest rates, fees, and loan documents
• Building and maintaining a network of referral partners like real estate agents
• Generating new business through marketing and networking

It’s a fast-paced job that requires multi-tasking, organization, and communication skills to ensure borrowers have a smooth financing experience.

Licensing Requirements for Becoming an MLO

To become a licensed mortgage loan originator, you must complete several steps:

• Complete 20 hours of NMLS-approved pre-licensing education – These mortgage classes cover topics like ethics, regulations, credit evaluation, loan products, and more.

• Pass the SAFE mortgage loan originator test – This nationwide exam tests your proficiency across core mortgage lending topics. You’ll need a minimum score of 75% to pass.

• Submit fingerprints for an FBI background check – This critical step verifies you have no criminal history.

• Get licensed by your state – Each state has its own requirements for licensing and registering new MLOs.

• Get sponsored by a mortgage lender or broker – The final step is having an employer submit your license application to the NMLS.

We’ll cover these steps in more detail throughout this guide.

Step 1: Complete 20 Hours of Pre-Licensing Education

The first major requirement is completing 20 hours of NMLS-approved mortgage classes. These pre-licensing courses cover essential information like:

• Federal laws and regulations
• Ethics and consumer protection
• Loan products and programs
• Income and credit evaluation
• The mortgage process from application to closing

Some states also require 1-2 hours of instruction on state-specific lending laws. The education gives you a solid foundation of mortgage knowledge before taking the licensing exam.

You can complete classroom or online pre-licensing education. Compare costs and course formats from providers like OnCourse Learning before enrolling.

Step 2: Pass the SAFE Mortgage Loan Originator Test

After finishing your pre-licensing courses, the next step is passing the SAFE mortgage loan originator test. This nationwide exam was introduced in 2013 under the federal SAFE Act.

The test consists of 125 multiple choice questions covering five general topic areas:

• Federal Mortgage-Related Laws – 22%
• Ethics – 22%
• Lending Standards – 22%
• Loan Products – 22%
• Uniform State Content – 12%

You’ll have 190 minutes to complete the exam. A score of at least 75% is required to pass.

Be sure to give yourself adequate study time using practice exams and materials from reputable providers. You can schedule testing appointments online.

Step 3: Submit Fingerprints for a Background Check

To ensure high ethical standards, all mortgage loan originators must undergo an FBI criminal background check.

After registering with the NMLS, you’ll get fingerprint cards to take to a local law enforcement office or fingerprinting service. The fingerprints are submitted to the FBI and NMLS to screen for any criminal history.

There is a $36.25 fee for the background check payable during the NMLS application process.

Step 4: Get Licensed in Your State

While the SAFE Act established national standards, you still must get licensed in your state to originate mortgages. Requirements vary but often include:

• Submitting an application with the NMLS
• Paying licensing fees
• Providing financial history and work experience
• Disclosing any criminal record
• Meeting minimum education standards
• Maintaining errors and omissions insurance

Some states also impose additional testing or education requirements beyond the national standards. Check your state banking department website for specifics.

Step 5: Get Sponsored by an MLO Employer

The final step to activate your MLO license is getting sponsored by a mortgage lender or broker. They will submit your license application to the state regulators through the NMLS.

Common employers include:

• Mortgage lenders like banks and credit unions
• Mortgage brokers and independent MLOs
• Online mortgage companies and fintech lenders

Look for a company that provides marketing support, competitive commission splits, and helpful technology to ensure your success as a new loan officer.

How Long Does It Take to Become a Licensed MLO?

If you already have a bachelor’s degree, you can complete the process in as little as 5-6 weeks. Those without a degree may spend 2-3 months meeting state experience requirements.

But dedicating more time to education and exam prep will ensure you start your mortgage career fully prepared. Expect the licensing process to take 2-4 months on average.

How Much Do Mortgage Loan Officers Make?

According to the U.S. Bureau of Labor Statistics, the average annual pay for mortgage loan officers is $76,260 per year. Those in the top 10% of earners make $141,490 annually.

As commission-based sales professionals, MLO income depends on:

• Number of loans closed
• Loan amounts
• Commission split with their employer
• Geography and local economic conditions

With hard work, six-figure earning potential is achievable for successful mortgage loan originators after gaining some experience.

Job Outlook for Mortgage Loan Officers

Employment for mortgage loan officers and other financial sales agents is projected to grow 15% from 2020 to 2030, according to BLS data. That’s much faster than average for all occupations.

Rising home prices, low interest rates, and demand from millennials and first-time buyers should continue driving mortgage origination volume. And seasoned MLOs skilled at advising clients are crucial to the lending process.

Is Being a Mortgage Loan Officer the Right Career for You?

Before pursuing your MLO license, think about whether this high-touch sales role is a good fit:

You enjoy working with people. From handling first calls to guiding clients through closing, you’ll interact with borrowers constantly. Strong interpersonal skills are essential.

You have sales abilities. Much of the job involves lead generation, marketing, and building referral relationships. Successful MLOs are disciplined self-starters.

You’re organized and attentive to detail. Mortgage loans involve lots of moving parts. Methodical tracking and careful documentation is critical.

You want to help people. Assisting families achieve their homeownership dreams is incredibly rewarding. Guiding borrowers through a complex process requires patience.

You’re willing to put in the time. Expect nights, weekends, and some holidays as you build and service your pipeline. Persistence and work ethic pay off.

If becoming a licensed MLO aligns with your skills and interests, now is an opportune time to start your mortgage career. Homebuyer demand remains strong and industry veterans are retiring. Follow the steps above to get licensed and start this rewarding path.