Mortgage loan officers play a critical role in the home buying process. They help prospective homebuyers navigate the complex mortgage application and approval process. Their expertise and guidance ensure borrowers find the right mortgage product for their needs.
But how are mortgage loan officers compensated for their work? Do they earn a set salary or commission? And most importantly, how much do they make per mortgage loan they originate?
In this comprehensive guide, we will break down exactly how much mortgage loan officers make per loan. We will look at the average commission rates, salary ranges, and earning potential.
The Basics of Mortgage Loan Officer Commission
The majority of mortgage loan officers are compensated through commissions. This means they earn a percentage of the mortgage loans they originate.
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
Commission rates typically range from 0.5% to 2% depending on:
- The lender
- Loan type and amount
- Loan officer’s experience level
So on a conventional $300,000 mortgage, a loan officer may earn anywhere from $1,500 to $6,000. The higher the loan amount, the more potential commission.
Average Earnings Per Loan
According to data from the Bureau of Labor Statistics, the average mortgage loan officer earns around 1% commission per funded loan. This commission is paid out by the lending institution after the loan closes.
Based on average mortgage amounts, this breaks down as follows:
- Average mortgage amount: $300,000
- 1% commission rate: $3,000 per loan
So for the average mortgage loan officer, they can expect to earn around $3,000 for every home loan they originate.
However, commissions often make up only a portion of a loan officer’s total compensation. Many also earn a base salary.
Salary vs Commission Pay Structures
There are two main pay structures for mortgage loan officers:
Commission-Based
This is the most common pay structure Loan officers earn a percentage commission per funded loan. They may earn a very small base salary, but the bulk of pay comes from commissions.
Pros: Unlimited earning potential. Compensation tied directly to performance.
Cons: Inconsistent paychecks depending on lending volume. Requires closing a high number of loans.
Salary + Commission
Some loan officers earn a set base salary plus commissions on top This provides stable income even when lending volume is low
Pros: Consistent pay and benefits. Less pressure to close loans.
Cons: Caps on earning potential. Lower commissions than commission-only roles.
According to the Bureau of Labor Statistics, the average base salary for mortgage loan officers is around $63,000 per year. But salaries can range from $30,000 for entry-level roles up to over $100,000 for experienced loan officers working for large banks and lenders.
So a loan officer’s total earnings will depend on their base salary + average commission per loan closed.
How Many Loans Can a Loan Officer Close Per Month?
The total income for mortgage loan officers depends largely on loan volume – specifically, how many loans they can originate each month. This will vary based on:
- Experience level
- Lead generation skills
- Loan types and amounts
According to data from the Mortgage Bankers Association, the average number of loans closed per month is:
- Entry-level LO: 5 loans
- Experienced LO: 8 loans
- High producers: 12+ loans
Based on average commission rates, this translates to potential monthly earnings of:
- Entry-level: $15,000
- Experienced: $24,000
- High producers: $36,000+
Of course, earning at the high end requires strong sales skills and an established book of business.
Top Earners Can Make 6 Figures
While the average mortgage loan officer earns around $80,000 to $100,000 per year, top producers can make up to $200,000 or more.
This is especially true for loan officers that specialize in high ticket loans like jumbo mortgages. For example, a 2% commission on a $1 million jumbo loan would result in a $20,000 payout.
Top earning loan officers separate themselves by:
- Establishing referral partnerships with real estate agents and other professionals
- Leveraging marketing and social media to generate a high volume of leads
- Developing a niche in a specific loan type or market segment
- Consistently exceeding sales goals month after month
The most successful mortgage loan officers fine tune their sales process to convert leads and close loans at a high rate. This takes motivation, persistence, and an entrepreneurial mindset.
While it takes hard work, the earning potential as a mortgage loan officer makes it an attractive career choice. It offers a path to 6-figure income for those willing to put in the effort.
Key Factors That Impact Loan Officer Earnings
Many variables impact how much loan officers can potentially earn. Here are some of the key factors:
Experience level – It takes time to build referral relationships and a pipeline of repeat customers. New loan officers generally close fewer and smaller loans.
Lead generation – Strong marketing and networking skills are required to continually generate new mortgage leads. Relying solely on company-provided leads limits earning capability.
Loan types – Complex loans require more work but have higher payouts. Jumbo and commercial loans pay higher commissions than standard mortgages.
Loan volume – Total annual compensation is directly tied to how many loans an officer can originate. This requires sales skills and persistence to convert prospects.
Lender pay structure – Large banks tend to offer lower commissions but steady base salaries. Small lenders and brokers provide higher commission rates.
Additional licenses – Earning licenses to arrange more complex loan types expands a loan officer’s capabilities and potential client base.
Geography/market – Commission rates and earning potential can vary greatly based on location, cost of living and competitive landscape.
Steps to Become a Mortgage Loan Officer
If you’re interested in entering the mortgage industry, here are some quick steps to get started:
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Research mortgage license requirements for your state. Most states require LOs to have a license.
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Take loan officer training courses and earn required credentials. The Nationwide Mortgage Licensing System (NMLS) provides approved classes.
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Get sponsored by a bank or lender to take the NMLS license exam.
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Pass a background check and meet other state requirements for licensure.
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Apply for open mortgage loan officer positions once licensed. Look for roles that offer competitive commission rates.
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Build your skills and work towards closing 5+ loans per month. This will boost your earnings potential.
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Continue expanding your lending knowledge and business network throughout your career.
While it takes dedication, mortgage lending offers six-figure income potential for top performers. Use the earning potential to stay motivated as you build your loan origination business.
Frequently Asked Questions
How much do mortgage loan officers make per year?
Average total compensation is $80,000 to $100,000 per year. Top earners can make over $200,000 annually.
How many loans can you close a month?
5+ for entry level, 8+ mid career, 12+ for high producers. Monthly volume impacts total earning potential.
What is the average commission on a mortgage loan?
Most loan officers earn 0.5% to 2% commission per funded loan. The average commission rate is around 1% of the mortgage amount.
Do mortgage loan officers get a base salary?
Some lenders pay a base salary + commissions. But most operate on commission only, with minimal base pay.
What loan types pay the highest commissions?
Jumbo mortgages, commercial loans, construction loans, and complex refinances provide higher payouts per loan.
How long does it take to start earning commissions?
Most loan officers begin earning commissions immediately after receiving licensing, taking 1-3 months.
The Bottom Line
While loan officer salaries fluctuate, the earning potential is strong for those able to originate a high volume of loans each month. This makes it a rewarding career choice for sales-driven individuals.
With commission rates averaging around 1%, loan officers can expect to earn $3,000 on a $300,000 mortgage. Through hard work and persistence, six-figure incomes are attainable.
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 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.