How to Become a Loan Originator in Texas: A Step-by-Step Guide

Becoming a licensed loan originator in Texas can be a rewarding career path, but there are several steps you need to take to get your mortgage loan originator (MLO) license. In this comprehensive guide, we’ll walk you through the entire process, from getting your NMLS ID to passing the SAFE exam and finding a sponsoring mortgage company.

What is a Mortgage Loan Originator?

A mortgage loan originator (MLO), also known as a loan officer or mortgage broker, is a licensed professional who helps consumers find and obtain mortgage loans. As an MLO, you’ll meet with clients, collect documentation, assess their financial situations, educate them on loan options, guide them through the application process, and much more. It’s a customer-facing role that requires strong communication skills.

Texas Mortgage Loan Originator License Requirements

To legally work as a loan officer in Texas, you must

• Complete 20 hours of NMLS-approved pre-licensing education
• Complete 3 additional hours of Texas-specific education
• Pass the National SAFE Mortgage Test
• Submit fingerprints for an FBI background check
• Authorize a credit report through NMLS
• Receive your MLO license through the Texas Department of Savings and Mortgage Lending

We’ll break down each of these steps in detail below

Step 1: Create Your NMLS Account

The first thing you need to do is create an account on the Nationwide Multistate Licensing System (NMLS) This is the platform that regulators use to license MLOs across the country

Go to NMLSConsumerAccess.org and click “Create an Account.” You’ll need to provide some basic personal information.

Once your account is set up, you’ll receive your unique NMLS identification number. Make note of this – you’ll need it throughout the licensing process.

Step 2: Complete 20 Hours of NMLS-Approved Education

Texas requires MLO license candidates to complete 20 hours of pre-licensing education approved by the NMLS. These courses cover topics like:

• Federal mortgage regulations
• Ethics
• The loan process from application to closing
• Fraud prevention

You can take these courses online, in a classroom setting, or through a combination of online and in-person classes. Just make sure the course provider is NMLS-approved.

Here are some reputable providers offering NMLS-approved pre-licensing courses:

• Champions School of Real Estate
• OnCourse Learning
• 360training

Make sure to save your course completion certificates. You’ll need to upload them to the NMLS system later.

Step 3: Complete 3 Hours of Texas-Specific Education

In addition to the national requirements, Texas has a state-specific education requirement. You must complete a 3-hour course focused specifically on Texas mortgage laws and regulations.

Some course providers bundle this in with the national pre-licensing education. Others offer it as a standalone course. Either option is fine, as long as the provider is NMLS-approved.

Step 4: Pass the National SAFE Mortgage Loan Originator Test

After completing all your pre-licensing education, you’ll need to pass the National SAFE Mortgage Loan Originator Test developed by the NMLS. This exam consists of 125 multiple choice questions, and you must answer at least 89 questions correctly to pass.

Here are some tips for passing the SAFE exam:

• Thoroughly study the pre-licensing material
• Take practice exams to identify weak areas
• Read exam questions carefully – don’t make assumptions
• Pace yourself during the test
• Flag questions you’re unsure of to revisit later

You can schedule the SAFE exam through Prometric. It costs $110 to take the test each time. If you fail your first attempt, you must wait at least 30 days before retaking it.

Step 5: Submit Your License Application in NMLS

Once you’ve passed the SAFE exam, it’s time to submit your license application through the NMLS system. You’ll need to:

• Complete the Individual Form (MU4)
• Pay the license application fee
• Upload your pre-licensing education certificates
• Authorize an FBI criminal background check
• Authorize a credit report through NMLS

The application fee is $195. The background check and credit report together cost $51.25.

NMLS will review your application and notify you if any additional information is needed. Expect the review process to take around 30 days.

Step 6: Get Sponsored by a Mortgage Company

The final requirement is sponsorship from a licensed mortgage company. This could be a mortgage lender, bank, or credit union.

Many companies won’t sponsor you until you’ve passed the SAFE exam and filed your license application. However, it’s a good idea start networking and applying to companies earlier in the process.

Here are some tips for finding a sponsor:

• Ask colleagues if their companies are hiring
• Search job boards like Indeed, ZipRecruiter, and LinkedIn
• Reach out to mortgage companies directly
• Attend local mortgage industry association events

Once a company agrees to sponsor you, they will submit their sponsorship request through NMLS.

Additional Requirements for Loan Officers in Texas

Here are a few other requirements to keep in mind if you want to work as a loan officer in Texas:

• You must be at least 18 years old
• You must have a high school diploma or GED
• You’ll need to complete 8 hours of continuing education annually
• Your license must be renewed each year through NMLS

How Long Does It Take to Get a Loan Officer License in Texas?

If you already meet the education and age requirements, you can get licensed in as little as 45 days. However, it usually takes 2-3 months for most candidates.

Here’s a breakdown of the estimated timeframes:

• Pre-licensing education: 2 weeks – 2 months
• Studying and taking the SAFE exam: 1-2 weeks
• NMLS application review: 30 days
• Finding a sponsor: 2 weeks – 2 months

So in total, you’re generally looking at a timeframe of 6-12 weeks.

Is a Mortgage Broker License Different than a Loan Officer License in Texas?

In Texas, a mortgage broker license and a mortgage loan originator (MLO) license are essentially the same thing. The terms are used interchangeably.

If you want to start your own mortgage brokerage, you will still get an individual MLO license first. Then you can apply for your company to be licensed as a mortgage brokerage.

How Much Do Loan Officers Make in Texas?

According to the Bureau of Labor Statistics, the average annual salary for a mortgage loan officer in Texas is $73,640 as of 2022. Those working for mortgage brokerages tend to earn more than loan officers at banks.

Commission is also a major portion of income for most loan officers in Texas. It’s common to earn 25-50 basis points of each funded loan amount. So for a $300,000 mortgage, that would equate to $750-$1500 in commission.

Experience level, sales skills, and geographic location impact earning potential. The top 10% of loan officers in Texas make over $119,000 per year.

The Benefits of Becoming a Loan Officer in Texas

There are many appealing reasons to start a mortgage loan originator career in the Lone Star State:

• High earning potential – Texas offers lucrative opportunities for talented loan officers. The growing population means plenty of purchase mortgage demand.

• Low barriers to entry – Texas has relatively low education requirements compared to many other states. You can get licensed with just 20 hours of classes.

• Flexible work arrangements – Many mortgage lenders and brokers allow remote work options. You can avoid a daily commute.

• Transferrable license – Once you complete the licensing process, your MLO license is transferrable between companies.

• Rewarding work – Helping homebuyers achieve the dream of homeownership is incredibly fulfilling!

If you’re interested in starting a rewarding mortgage career, Texas is a great state to build your loan originator business. Just make sure to follow all the proper licensing steps. With some diligence and determination, you can join the ranks of successful Texas-licensed MLOs!