If youre shopping for a home loan, you might choose to go through a mortgage broker. The main service a broker offers is to find home loans and help you compare them. And a broker will typically help you with submitting your loan application and let you know how to prepare for closing.
Before you agree to work with a broker, youll want to find out if you owe them any money for those services. The answer depends on how the broker is paid.Â
There are a couple ways mortgage brokers earn money, and their pay generally works out to a percentage of each loan they close.
Guiding consumers through the borrowing process is a big responsibility, so the law requires brokers to get licensed before they can work in this field. For those who are able to jump through the necessary hoops and grow a client base, the commissions can add up to a lucrative annual income.
Mortgage brokers play a key role in the home buying process. As intermediaries between borrowers and lenders, they help clients find and secure financing for purchasing a home or refinancing an existing mortgage. But how exactly are mortgage brokers compensated for their services? Typically, they earn a commission based on each loan they facilitate.
Mortgage Broker Commission Structure
Mortgage brokers are primarily paid on commission. The standard commission rate is 1% to 2% of the total loan amount This means on a $300,000 mortgage, a broker would earn $3,000 to $6,000. The exact percentage may vary based on factors like the broker’s experience, local market conditions, and the complexity of the loan
Commissions are usually paid out at closing once the loan is funded The fee may be paid by the borrower or the lender, but not both under current regulations When the borrower pays, the commission is often rolled into the mortgage amount.
For brokers working at a firm or franchise, part of the commission goes to their parent company. So an individual broker’s take-home pay may be less than the full 1-2%. Solo practitioners get to keep their entire commission.
Commission Scales with Loan Size
A mortgage broker’s income on any given transaction depends largely on the size of the loan. Bigger mortgages equal bigger commissions.
For example:
- On a $200,000 loan, a 2% commission would be $4,000
- On a $500,000 loan, a 2% commission would be $10,000
- On a $1 million loan, a 2% commission would be $20,000
Brokers working in high cost-of-living areas like New York City and San Francisco often earn more thanks to the larger loan amounts required for expensive properties.
Average Earnings
It’s difficult to pin down an average income for mortgage brokers given the commission-based pay structure. Earnings vary widely based on experience, location, clientele, and other factors.
That said, here are some reported averages:
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$98,162 base salary according to Indeed based on limited user-submitted data. Total pay with commissions averaged $141,240 in the San Francisco area.
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$64,630 base salary according to Payscale based on limited data. Total compensation ranged from $47,000 for beginners to $69,000 for veterans.
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$136,620 base salary according to Glassdoor. Total pay with bonuses and profit share averaged around $192,000.
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$129,346 average salary according to ZipRecruiter, with a range from $11,500 to $297,500
So while base salaries appear fairly consistent, total earnings including commissions demonstrate high variability.
Income Factors
A mortgage broker’s earning potential depends on several key factors:
Experience level – Veteran brokers tend to have more extensive referral networks and lending relationships. This can translate into higher sales and commissions.
Geographic location – As mentioned earlier, higher home prices equal bigger loans and bigger fees. Brokers in cities like San Francisco tend to earn more than small town brokers.
Reputation and referrals – Well-known brokers with lots of repeat and referral business close more deals. Closing more deals means higher income.
Loan volume – Brokers who handle a high volume of loans per month or year earn multiples of what lower volume brokers make. Volume is key.
Specialization – Brokers skilled with niche loans like jumbo mortgages or low-doc loans can earn higher commissions on those products.
Sales and marketing ability – Successful lead generation and sales skills result in more clients and closed loans.
Work status – Solo brokers keep 100% of commissions earned, while brokerage employees split earnings with the company.
Efficiency – Streamlined operations and technology usage helps brokers handle higher volumes more efficiently.
As you can see, a high-performing mortgage broker has plenty of levers to increase their earning potential over time.
The Bottom Line
Mortgage brokers primarily earn money through commissions on the loans they help originate. A 1-2% commission split on each funded loan is typical. This means those handling higher loan volume in more expensive real estate markets can earn $100,000+ per year. However, individual earnings vary widely based on experience, skills, referral networks, and other factors. While commissions are not guaranteed, a motivated broker has multiple ways to boost their income over time.
How much do mortgage brokers earn in a year?
As with any job where people earn commissions, pay for mortgage brokers can vary widely. Brokers who help clients close on large loans will typically earn more than those who oversee smaller transactions. And brokers who drum up a higher volume of business might earn more than others.
Location can also make a big difference. Brokers working in upscale, high-cost areas can likely command higher earnings.
Then theres years of experience. A broker who has built up a strong network over time and who gets lots of word-of-mouth referrals can probably earn more than someone whos just starting out.
To get an idea of the possible range, lets check some pay reporting websites.
Glassdoor estimates that the median total pay for a mortgage broker in the United States is $153,324 per year. That figure combines $108,016 base pay and $45,308 in additional pay, which could come from a bonus, commissions, or profit sharing.
The site also reports that the “most likely range” for a mortgage brokers total pay is $89,000 to $307,000 per year.
Payscale shows total pay for mortgage brokers typically ranging from $30,000 to $137,000 per year.Â
The site also breaks down earnings by type of pay. It finds that mortgage brokers can earn between $36,000 and $124,000 in base salary, $2,000 to $36,000 in bonuses, and up to $1,000 from profit sharing. It also shows commissions amounting to $12,000 to $178,000 a year.Â
Salary.com reports that a mortgage broker in the United States makes $87,127 on average. It finds a range of pay from $78,780 to $104,031 a year.
If youre considering a career as a mortgage broker, you might want to dig deeper than these broad estimates. You could search these sites for broker salaries in your city to narrow down the numbers. Or, you could try to get an informational interview with a mortgage broker in your area and ask them what pay range they think is realistic.
Is it worth it to go through a broker?
Whether a brokers services are worth the fee depends on how much comparison shopping youre going to do on your own.Â
The Consumer Financial Protection Bureau (CFPB) finds that almost half of homebuyers dont shop around before applying for a mortgage. If youre in that group, youll probably leave a lot of money on the table. Often, different lenders will offer the same borrower different mortgage rates, and there could be a gap of 0.5% between the most expensive home loan youre offered and the least.Â
The savings from finding the cheaper option can be significant. The CFPB reports that taking out a $200,000 mortgage loan with a 4.0% interest rate instead of a 4.5% rate leads to savings of $3,500 in the first five years of the loan.Â
So, should you pay a broker to find the lowest rate for you? If the broker charges a 1% fee, that works out to $2,000 on a $200,000 loan, and you come out ahead. If the broker charges 2%, youre paying $4,000, and the cost outweighs your savings.Â
If you arent going to research a bunch of lenders yourself, it may make sense to pay a brokers fee as long as they arent taking an especially large cut.Â
Learn the difference between mortgage brokers and lenders.
How Much Does a Mortgage Broker Make?
FAQ
What percentage of a loan do mortgage brokers make?
Is being a loan broker profitable?
Is it hard to be a successful Mortgage Broker?
Are mortgage brokers a good idea?
How much does a mortgage broker make?
Mortgage brokers can work independently or belong to a brokerage. They typically earn a commission of around 1%-2% of the loan value, which the borrower or the lender can pay. When you take out a larger loan, your mortgage broker makes more money.
How much does a mortgage broker charge?
On average, mortgage brokers charge a commission of 2.25% for each loan. While the loan terms might vary, federal regulations prohibit brokers from charging more than 3% of the total loan amount. For example, a mortgage broker might charge 2.25% of a $500,000 loan, which is $11,250 in commission.
How much Commission does a mortgage broker make?
This commission can be paid by either the borrower or the lender, and it is typically around 2% of the loan value. Larger loans result in higher commissions for brokers, creating a financial incentive for them to secure larger loan amounts for their clients.
How much do mortgage brokers make in San Francisco?
In specific areas like the San Francisco Bay area, the average salary was notably higher at $141,240, although based on a small sample size of just three brokers. PayScale reports an average salary of $64,630 for mortgage brokers based on 57 reports, with commissions ranging from $12,000 to $178,000.