How to Become a Loan Officer: A Step-by-Step Guide

A loan officer, also known as a mortgage loan originator (MLO), is a licensed professional who helps consumers through the mortgage and lending process. Loan officers work with borrowers to understand their financial situation, goals and credit profile in order to find the best loan options and help them successfully obtain home financing.

If you’re interested in a career as a mortgage loan officer this comprehensive guide will walk you through the step-by-step process of how to become a loan officer including

• Overview of a loan officer’s job duties
• Education and licensing requirements
• Finding a sponsoring mortgage company
• Building your book of business
• Advancing your loan officer career

Follow these key steps to launch a rewarding and lucrative career as a residential mortgage loan officer.

What Does a Loan Officer Do?

A loan officer is the main point of contact for borrowers seeking a mortgage loan for purchasing a home or refinancing their existing home loan. As a loan officer, your primary responsibilities include:

• Meeting with clients to understand their financial situation and goals
• Collecting documentation and information needed for loan applications
• Advising clients on different loan programs and options
• Analyzing clients’ financial profiles to recommend loan products
• Submitting completed applications to underwriters for approval
• Guiding clients through the lending process until closing
• Developing and maintaining relationships with existing clients
• Generating new business by networking, leads and referrals

Strong interpersonal skills are crucial as most of the job involves directly interacting with borrowers. Loan officers must be able to explain complex financial information in easy to understand language. You’ll need expertise in all types of mortgage loans – conventional FHA, VA, USDA – along with various loan programs for first-time home buyers, jumbo loans, and more specialized products.

Education Needed to Become a Loan Officer

While a college degree is not required, having one in a relevant field like finance, accounting, economics or business can help provide foundational knowledge for a career as a loan officer.

Some key educational steps to becoming a licensed mortgage loan officer include:

• Prelicensing education – All states require loan officers complete 20 hours of NMLS-approved prelicensing education. Courses cover topics like ethics, lending standards and regulations.

• State-specific education – Most states require additional educational hours focused specifically on state lending laws.

• SAFE Mortgage Licensing Act Test – You must pass the national SAFE exam with a score of at least 75% to become state licensed.

• Continuing education – Ongoing annual continuing education courses are required to maintain your state licenses.

Many loan officers obtain formal training through professional associations like the Mortgage Bankers Association (MBA) which offer specialized designations.

Becoming a Licensed Loan Officer

To originate mortgages legally, loan officers must become state licensed by passing the national SAFE exam and meeting all other state-specific licensing requirements. Here are the key steps:

• Request an account through the Nationwide Multistate Licensing System (NMLS).

• Complete required prelicensing education courses.

• Pass the SAFE Mortgage Loan Originator Test.

• Submit state license application along with fingerprints and background check.

• Disclose your employment history, credentials and personal background.

• Pay required state licensing and renewal fees.

Each state has its own criteria for initial mortgage loan officer licensing and renewals. Most states require annual renewal along with timely completion of continuing education.

Finding a Mortgage Company to Sponsor You

Once you’ve completed education and passed your SAFE exam, the next vital step is getting sponsored by a mortgage lender or mortgage broker company. As the sponsoring entity, the lender or broker essentially vouches for your qualifications to originate mortgages in compliance with all regulations.

You’ll submit your license application through the NMLS and the sponsoring company will provide their corporate information. Typical sponsors include:

• Mortgage lenders like banks and credit unions
• Mortgage brokers and mortgage bankers
• Online lenders and fintech providers

Conduct extensive research to find the best sponsor fit for your goals and work style preferences.

Building a Book of Business as a Loan Officer

As a commissioned sales role, your income as a loan officer directly corresponds to your productivity – namely the volume of loans you originate.

Here are some proven ways to build your book of business:

• Leverage past professional networks – Reconnect with your existing contacts and let them know about your new mortgage career. Offer your help as a trusted resource.

• Ask for referrals – Request introductions and referrals from past clients, colleagues, friends and family.

• Build realtor relationships – Partner with real estate agents who can refer clients to you for financing. Offer co-branded open houses or seminars.

• Online marketing – Create a website, content and social media presence to attract and engage potential borrowers.

• Community involvement – Join local business groups, nonprofits and boards to meet new people.

• Events and seminars – Host educational events and workshops to establish yourself as an expert.

The most successful loan officers continually prospect for new business and receive ongoing referrals by providing exemplary customer service to each borrower.

Advancing Your Career as a Loan Officer

As you grow your expertise and book of business, there are a few potential career development paths to consider:

• Specialize in niche markets – Focus on specific products like VA loans, jumbos, or self-employed borrowers. Develop a reputation as a subject matter expert.

• Open your own mortgage brokerage – Starting an independent mortgage brokerage allows you to build a team while retaining commission splits.

• Move into management – Seasoned loan officers may transition into roles like producing branch manager, overseeing a team of loan originators.

• Account executive – Work internally at a lender managing portfolio accounts and relationships with external brokers/loan officers.

• Mortgage trainer – Leverage your experience to train new loan officers.

• Mortgage consultant – Work independently as a loan officer contractor or consultant.

With hard work and persistence, a career as a mortgage loan officer can be quite financially rewarding while also allowing you to help consumers achieve the dream of homeownership. If you have the drive, perseverance and relationship-building skills required, following this guide can put you firmly on the path to success as a mortgage loan officer.