Mortgage loan officers play a crucial role in the home buying process. They meet with prospective homebuyers, assess their financial situations, educate them on loan options, guide them through the application process, and ultimately help them secure financing.
But how are mortgage loan officers themselves paid for this important work? Specifically, how much does a mortgage loan officer make per loan they close?
The Basic Payment Structure
Most mortgage loan officers are paid on commission This means their earnings come directly from closing loans, not from a set salary
The typical commission structure is
- 1% of the loan amount for purchase mortgages
- 1.5-2% of the loan amount for refinances
So for example:
- On a $300,000 purchase mortgage, the loan officer would make $3,000
- On a $250,000 refinance, they may make $3,750 to $5,000
Commissions are paid out when the loan closes and funds. If a loan application falls through before closing, the loan officer does not get paid.
This commission-focused payment model means that loan officers’ earnings go up as they close more and bigger loans. There is effectively no cap on how much they can make.
Do All Loan Officers Get Paid This Way?
The commission structure described above is most common for loan officers working at mortgage brokerages or independent mortgage banks.
Loan officers at banks and credit unions sometimes receive a lower base salary plus smaller commissions, bonuses, or profit sharing.
For example, a bank loan officer may make:
- Base salary: $50,000
- Commission per loan: 0.25%
- Annual bonus based on performance
So on a $300,000 mortgage, they would earn $750 in commission plus their salary and any bonuses.
The compensation models can vary, but commission is almost always a significant component.
How Much Do Top Loan Officers Earn?
The average mortgage loan officer makes around $76,000 per year, but top producers can earn over $200,000:
- Top 10% of loan officers earn $110,000+
- Top 5% earn $154,000+
- Top 1% earn $237,000+
To reach these top levels requires closing a high volume of loans at healthy loan amounts.
For example, if a loan officer closes 40 loans per year at an average of $250,000, that’s $10 million in total volume. At 1-1.5% commission, this produces an income of $100,000-$150,000.
The very top loan officers close $25-50+ million per year, generating $250,000+ in commissions.
How Much Do Loan Officers Make Per Month?
With commission-based earnings, mortgage loan officers’ monthly income fluctuates. In busy times, they may make $15,000+ in a month. In slower months, this may dip to $5,000.
To estimate monthly earnings, consider:
- Target number of loans per month (example: 4)
- Average loan amount (example: $250,000)
- Commission rate (example: 1.25%)
In this case, the monthly earnings would be approximately:
- 4 loans x $250,000 each = $1,000,000 total volume
- $1,000,000 x 1.25% commission = $12,500
So this loan officer would average around $12,500 per month. Higher volumes and bigger loans could push monthly earnings over $20,000+.
Do Loan Officers Get Base Salaries?
Some mortgage loan officers, especially at banks, receive base salaries in addition to commissions. But this is less common for loan officers at independent brokerages.
When base salaries are paid, they provide steady income as the loan officer builds their business. Common base salary ranges are:
- $30,000 to $50,000 for junior loan officers
- $50,000 to $75,000 for experienced loan officers
Over time, commissions tend to overtake the base as the loan officer closes more loans. Many senior loan officers are 100% commission-based.
Other Potential Earning Opportunities
Beyond commissions on closed loans, mortgage loan officers may boost their earnings through:
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Referral fees: Getting paid for referring clients to real estate agents, title companies, or other lenders.
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Mortgage brokerage profits: Some brokerages share company profits with top-producing loan officers.
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Fee income: Collecting upfront fees for services like credit reports and appraisals. This income is in addition to commissions.
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Paired loans: When two loan officers team up on a loan, they may split the commission.
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Mortgage sales: Selling additional products like credit insurance.
Taken together, these can potentially add 10-20%+ to a loan officer’s annual income. But commissions from closed loans make up the bulk of earnings.
How Much Do Beginner Loan Officers Make?
In the first year, a new mortgage loan officer who’s just starting out can expect to earn:
- Base salary (if offered): $30,000 – $50,000
- Commissions: $20,000 – $40,000
- Total first year income: $50,000 – $90,000
It takes time to build a book of business, so beginner loan officers will start slow. Within 2-3 years, six figure earning potential opens up with increasing experience.
Patience, persistence, and networking are key to ramping up loan volume and commissions over time.
Does the Loan Amount or Loan Type Matter?
Two main factors influence how much a loan officer makes on a particular loan:
1. Loan amount – Higher loan amounts mean bigger commissions. That’s why purchase loans are most lucrative, as they are generally bigger than refinances.
2. Loan type – Refinances often pay 1.5-2% commission vs. 1% for purchases. Cash-out and VA/FHA refis may pay even higher commissions.
Additionally, some lenders offer incentives for specific products, like a bonus for every VA loan closed.
Overall, bigger loans and refinances tend to be the most profitable for loan officers.
The Bottom Line
While base salaries are offered in some cases, the bulk of mortgage loan officer pay comes from commissions on closed loans. This creates uncapped earning potential for those who excel at sales and networking.
With commissions of 1-2% on loan amounts, successful loan officers can comfortably earn over $100,000. Top producers close $25-50+ million annually, generating $200,000+ in income.
Salary ranges are guidelines. For current mortgage loan officers – what has your experience been? Feel free to share in the comments!
How To Negotiate The Best Mortgage Rate
When you shop for a home loan, compare offers from different competing lenders. There isn’t usually much to be gained by working over an individual loan officer and trying to beat a better deal out of him or her.
However, lenders are rarely allowed to reduce your fees slightly (“deviate,” as they say in the industry) under certain conditions. They may be allowed to do so in order to compete with another lender’s pricing, if they have a policy in place that meets guidelines established by the Consumer Financial Protection Bureau.
Second, any discount can’t be taken from the loan officer commission, except “to defray certain unexpected increases in estimated settlement costs.”
Fortunately, these days it’s easy to get a fistful of quotes online without putting on your boxing gloves.
How Much Do Mortgage Lenders Make From Your Loan?
One thing most consumers can agree on is that mortgages are not cheap.
The typical origination fee, one percent of the balance, can come to thousands of dollars.
There may be risk-based surcharges for those with low credit scores, small down payments, or riskier properties like high-rise condos or manufactured homes.
In addition, there are usually expenses for third party services like home appraisals, title insurance, escrow officers and home inspection.
If you feel as though everyone is making a ton of money from your home purchase or refinance, it’s understandable.
But not necessarily true.
The slew of new mortgage regulations and consumer protections, while generally regarded as a positive thing for the industry, did increase lender costs. Banks, brokerages and non-bank originators implemented new procedures and hired more personnel to comply with new rules.
Debra Still, President of Pulte Mortgage, claimed in a recent presentation that in 2006, the average loan file had 302 pages. Now, the average mortgage file (book?) is 806 pages.
This caused the cost of originating a new home loan to increase by an average of $210, upping the total cost to over $7,700 per mortgage.
By the end of 2015, dealing with increased regulation, personnel costs, and loan buy-backs (foreclosures, etc.) had dropped lenders’ per-loan profit, according to the Mortgage Bankers Association (MBA), to $493 per loan.
However, as lenders got better at dealing with the new rules, and brought in new technology, costs came down again and profits rose — to an average of $1,686 per loan in the second quarter of 2016.
There is definitely money on the table when you shop for a home loan. But that money is under the lender’s control, not the loan agent’s.
According to the US Bureau of Labor Statistics (BLS), the median pay in 2015 for loan officers of all kinds — commercial, consumer, and mortgage — was $63,430 per year. The lowest ten percent earned less than $32,870, and the highest ten percent earned more than $130,630.
Loan agent compensation varies widely. Some receive a flat salary, but most are paid on commission. The poll results below from Inside Mortgage Finance show the range of commissions paid. 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.
Most mortgage loan professionals work on commission. That means they may spend hours to work through loan scenarios for you, help you improve your credit score, pull your needed documentation together, complete your application, order title reports and verify your employment, assets and other pertinent details.
They don’t usually get paid if you decide not to buy or refinance, or the application is denied, or you change lenders. Working for free is a big part of this business.
Commissions vary between banks, brokerages and originators. What’s not allowed, however, is that the commission for your loan depend on the terms of the mortgage — no bonuses for giving you a higher rate, or bigger fee, and no penalties for cutting you a discount.
If loan agents want your business, they will offer you the best deal allowed by their employer – the mortgage bank or brokerage.
How much can a loan officer make per loan
FAQ
Why do mortgage loan officers make so much money?
What is the origination fee for a loan?
How much does a mortgage loan officer make in Ohio?
How much does a loan officer make?
They will pay the loan officer a base salary and a small bonus amount based on the loan amount, not the total fees on a file. Or, simply put — if a loan officer helps you with your mortgage and your loan amount is $200,000 and the loan officer is paid ’30 bps’, the loan officer would make 30 basis points on $200,000 or $600.
How much does a mortgage loan originator make?
Check the below Indeed career pages for the detailed pay ranges for the similar professions to mortgage loan originator here: Was this answer helpful? The average salary for a Mortgage Loan Originator is $167,983 per year in United States. Learn about salaries, benefits, salary satisfaction and where you could earn the most.
How do mortgage loan officers get paid?
Mortgage loan officers are typically paid in two ways—or a combination of the two—which are on the front or on the back. If you are a loan officer paid on the front, you receive money from the charges the clients see, such as for processing the home loan, otherwise known as settlement costs.
How much does a mortgage loan officer make in 2024?
What your skills are worth in the job market is constantly changing. The average salary for a Mortgage Loan Officer is $54,542 in 2024. Visit PayScale to research mortgage loan officer salaries by city, experience, skill, employer and more.
Where do loan officers make the most money?
The metropolitan areas that pay the highest salary in the loan officer profession are Atlanta, Boulder, Detroit, Savannah, and Kennewick. The states and districts that pay Loan Officers the highest mean salary are District of Columbia ($141,180), Georgia ($117,460), Michigan ($111,070), New York ($104,850), and Nevada ($101,470).
What companies pay a mortgage loan officer?
Below is the total pay for the top 10 highest paying companies for a Mortgage Loan Officer in United States. Employers include Homebridge Financial Services, RP Funding and Paramount Residential Mortgage Group. What are total pay estimates for a Mortgage Loan Officer at different companies? Is this salary info helpful? Let’s pay it forward!