How to Obtain a Mortgage Loan Originator License: A Step-by-Step Guide

Becoming a licensed mortgage loan originator (MLO) is an exciting career path if you enjoy sales and helping people realize the dream of homeownership. As a mortgage loan officer, you get to walk borrowers through the loan process, advise them on the best mortgage products, and close loans to purchase or refinance real estate.

But before you can start originating mortgages you need to obtain the proper licensing by passing exams and meeting legal requirements. Here is a comprehensive step-by-step guide to getting your mortgage loan originator license.

Overview of Mortgage Licensing

All states require licensing for mortgage loan originators under the federal SAFE Act law. To obtain a license you must

• Register on the Nationwide Mortgage Licensing System (NMLS)
• Complete 20 hours of NMLS pre-licensing education courses
• Pass the National SAFE MLO test and any required state exams
• Submit to background checks and meet other state requirements
• Maintain your license with continuing education

This same process applies whether you want to become a broker or work as a loan officer under a brokerage or lender. Let’s look at each step in more detail.

Step 1: Register for an NMLS Account

The first thing you need to do is set up your account on the NMLS website. This central system tracks licensing and education for mortgage professionals across the United States.

Visit the NMLS website and submit the online registration form to get your unique NMLS ID number. This process only takes a few minutes. The NMLS ID will be used to track your specific licensing and education progress.

Step 2: Complete Pre-Licensing Education

Before you can apply for a license, you must complete 20 hours of NMLS-approved pre-licensing education courses. These courses cover important information like ethics, federal laws, loan products, the origination process, and more.

You can take these courses either online or in physical classrooms from approved course providers. The cost is typically $100 to $200. Take your time and focus on understanding, as this education prepares you for the licensing exam.

Some states also require 1-2 hours of state-specific pre-licensing education that covers state mortgage regulations. Check your state’s requirements on the NMLS website.

Step 3: Pass the SAFE MLO Test

After completing pre-licensing education, you’ll need to pass the National SAFE Mortgage Loan Originator Test. This consists of 125 multiple choice questions and you must score at least 75% to pass.

The exam tests your knowledge of general mortgage concepts as well as specific laws and regulations. You can schedule the test at local testing centers through the NMLS system.

Be sure to thoroughly study ahead of time using flashcards, practice exams, and Prep xL course from OnCourse Learning. The initial exam costs $110 and retakes are $95 each time.

Step 4: Submit Your License Application

Once you’ve passed the SAFE exam, you can submit your state license application electronically through the NMLS system. You’ll need to:

• Provide personal and employment history
• Submit fingerprints for an FBI background check
• Pay license fees (varies by state, often $300 to $500)
• Authorize a credit check
• Upload any required documents

The state agency will review your application and notify you if any additional items are needed. Most states take 2-4 weeks to process and issue an approved license. You cannot originate mortgages until this license is issued.

Step 5: Maintain Continuing Education

Your work doesn’t stop after getting licensed! You must complete at least 8 hours of NMLS-approved continuing education each year before your license renewal date. This ensures you stay current on regulations, laws, and ethics requirements.

You can find a wide range of mortgage CE courses on the NMLS website or through private course providers. Carefully track your progress in meeting annual requirements to avoid any lapse in your license.

Additional State Licensing Requirements

While the above steps outline the standard NMLS licensing process, some states have a few additional requirements:

• Passing a state-specific section on the SAFE exam
• Meeting minimum experience levels in the mortgage industry
• Providing letters of recommendation or a business plan
• Maintaining bonds and surety insurance

Always thoroughly review your state’s checklist on the NMLS website to ensure you comply with all policies. Requirements can vary significantly by state.

Helpful Tips for Licensing Success

Here are some tips as you work through getting your mortgage loan originator license:

• Study early and often for the SAFE exam using a variety of test prep materials
• Join a professional association like the Mortgage Bankers Association for support
• Find a mentor already licensed as an MLO who can offer advice
• Take detailed notes in your pre-licensing courses to boost retention
• Double check that all NMLS applications and profiles are submitted properly
• Don’t cut corners – follow every step outlined by the NMLS and your state

Originating Loans as a Licensed MLO

The ability to legally originate mortgages makes a loan officer highly valuable and versatile within the mortgage industry. You can choose to:

• Work for a bank, credit union, or mortgage company
• Open your own mortgage brokerage business
• Partner with real estate firms as an in-house lender
• Specialize in niche mortgage products like non-QM or reverse mortgages

Regardless of your desired path, an active mortgage loan originator license issued through the NMLS is essential. Follow the steps above to obtain your license and unlock your career potential.