How Much Does a Mortgage Loan Originator Make Per Loan?

If you’re considering a career as a mortgage loan originator one of your biggest questions is likely – how much money can I make in this role? Loan originators can earn a nice income but pay structures vary. In this comprehensive guide, we’ll dig into the details on compensation models and average earnings per loan for mortgage loan originators.

What is a Mortgage Loan Originator?

First let’s quickly define what a mortgage loan originator is and what they do.

A mortgage loan originator, also referred to as a loan officer or mortgage broker, is responsible for initiating mortgage loans for home buyers. Their primary duties include:

• Meeting with prospective borrowers to understand their financial situation and goals
• Educating clients on different loan types and programs
• Collecting documentation and completing loan applications
• Submitting loans to underwriting and supporting the approval process
• Serving as the main point of contact for borrowers throughout the lending process

In essence, loan originators are salespeople who match home buyers with mortgage products from banks and lenders. Their role is critical in moving deals forward.

Compensation Models for Loan Originators

Mortgage loan originators generally earn money in two ways

1. Commission from Lenders

Most commonly, originators make commission based on the loans they help close. This commission comes directly from the lender, typically based on a percentage of the loan amount. On a $200,000 loan for example, the lender may pay commission of 0.5-1.5% of the loan amount.

Commission structures vary by lender, but 1% is fairly standard. Higher producing loan officers can sometimes negotiate a higher split.

2. Origination Fees from Borrowers

In some cases, originators will collect origination fees directly from borrowers. This may be an application fee, doc prep fee, or other administrative origination charges built into the loan.

Originators who work for banks and lenders will typically make money from both commission and fees. Brokers mainly earn through borrower-paid fees.

How Much Do Mortgage Loan Originators Make Per Loan?

With commission-based pay, earnings per loan come down to two variables:

1. Average Loan Amount Originated – Generally $200,000-$300,000

2. Commission Percentage – Typically 0.5% to 1.5%

Based on those averages, here is an estimate of commission per loan:

• $200,000 loan at 1% = $2,000 commission
• $300,000 loan at 1% = $3,000 commission
• $250,000 loan at 0.5% = $1,250 commission

To earn higher commissions per loan, originators want to aim for higher loan amounts and negotiate a favorable split with their lender.

Besides commission, originators may also earn $500-$2,000 or more in origination fees per loan if charged to the borrower.

Average Earnings for Mortgage Loan Originators

While individual commissions will vary, the average national salary for mortgage loan originators is $63,000 according to Indeed.com. Top producers can earn well into six figures.

Here’s a look at average base salaries and total compensation for loan originators:

• Average Base Salary: $63,000
• Average Total Compensation: $85,000
• Top 10% Earners Salary: $109,000+

Producing more loans will lead to higher overall earnings. A loan originator closing 4-5 loans per month at an average of $2,500 commission per loan could make $120,000 or more per year. Origination fees also boost annual income.

Factors That Impact Earnings

There are a few key factors that influence how much an individual mortgage loan originator will earn:

• Experience level – More experienced originators tend to have higher production and earn bigger commissions. It takes time to build referral networks.

• Loan volume – Originating more loans directly translates to higher commissions. Ideal is 4+ loans per month.

• Sales skills – Strong salesmanship leads to converting more prospects into borrowers.

• Loan type – Complex loans like jumbos may pay higher commissions than conventional loans.

• Geographic market – Competitive markets with higher home prices typically result in bigger loans and commissions.

If you excel in sales and marketing, you can maximize your mortgage loan originator income by closing more and bigger loans.

Salary Considerations for New Loan Originators

If you’re just starting out in origination, don’t expect to earn big right away. Here are some considerations around salary as a new mortgage loan originator:

• Expect base salary only initially until you begin closing loans. This is often $40,000-$60,000.

• Build your pipeline early. It takes time (at least 6-12 months) to establish referral networks and get loan volume.

• Be prepared to work mainly on commission. Base salaries often transition lower over time while commissions increase.

• Consider a tiered commission structure where your split improves at certain volume levels to boost earnings.

• Get training on purchase loans – higher volume opportunity vs just refis.

It takes hard work and patience to build your book of business as a new loan originator. But within a few years, six figure incomes are achievable for the top producers.

How Mortgage Loan Originator Commissions Work

To help you understand exactly how mortgage loan originators get paid commissions, here is a quick overview:

• An originator takes a borrower’s application and submits the completed loan to the lender for underwriting.

• Once the loan is approved and closes, the lender funds the mortgage.

• The lender then pays an agreed upon percentage of the total loan amount to the loan officer as a commission. For example 1% of a $300,000 loan would be a $3,000 commission.

• Commission rates typically range from 0.5% to 1.5% based on factors like loan type, lender policies, and officer production levels.

• The commission gets paid out in a lump sum after closing or split into monthly installments over 6-12 months.

• Higher producing loan officers can sometimes negotiate a higher split from the lender.

The more loans you originate and close as a loan officer, the more you can earn in commissions.

Wrapping Up

While wide ranges exist, on average, mortgage loan originators can expect to earn around $2,000-$3,000 per funded loan in commissions, depending on loan size and commission rate. Through high sales volume, six figure salaries are achievable.

Just remember that when starting out, it takes consistent effort over months or years to build your referral networks and pipeline. But once established, mortgage origination can be a lucrative sales career with nice upside earnings potential from both commissions and borrower-paid fees.