Are you interested in learning about how to become a mortgage officer? Known in the industry as a mortgage loan originator, or MLO, these professionals play a key part in the process of helping buyers find homes that are right for them — typically, they are the primary contact person when a borrower completes a mortgage transaction.
More specifically, they help buyers find home loans that are right for them — mortgages that fit their budget and will allow them to stay in the homes they purchase for the long term.
Not only do MLOs support homebuyers, they serve a vital function in the real estate industry. With responsible MLOs, mortgage fraud and foreclosures drop significantly. Great MLOs are on the front lines in maintaining a stable home-buying market.
Many people find this to be an attractive career path. Mortgage loan officer is listed #14 in U.S. News & World Reports rankings for business jobs. The median salary for the position is $64,660 and it doesnt require any graduate-level education.
A mortgage loan officer plays a critical role in helping homebuyers obtain financing to purchase real estate. If you’re interested in a career guiding clients through one of the biggest financial transactions of their lives, becoming a mortgage loan officer may be a great path for you.
In this comprehensive guide we’ll walk through the step-by-step process of how to become a mortgage loan officer from education requirements to licensing to gaining experience.
What Does a Mortgage Loan Officer Do?
A mortgage loan officer, also referred to as a mortgage broker or mortgage originator, works with clients to help them get home loans. Their primary duties include:
- Meeting with clients to understand their financial situations and homebuying goals
- Analyzing clients’ finances, assets, income, debts, and credit to determine loan eligibility
- Educating clients on different loan options and programs available to them
- Gathering and verifying documentation needed to approve loans
- Submitting loan applications and supporting documents to underwriters for approval
- Serving as the main contact for clients throughout the home loan process
- Maintaining strong relationships with real estate agents and other partners
Mortgage loan officers work at banks, mortgage companies, credit unions, and mortgage brokerages. They spend much of their time in an office, but also meet clients at their homes or other locations convenient for the client.
Step 1: Earn a High School Diploma or GED
The first step to becoming a mortgage loan officer is making sure you have a high school diploma or GED. While a college degree is not strictly required, having one can make you more competitive, especially if it’s in a relevant field like finance, accounting, economics, or business administration.
Coursework in math, statistics, finance, and communications is also helpful. Gaining sales experience can also be beneficial.
Step 2: Consider an Entry-Level Job
One route to gain experience in the mortgage industry is to get an entry-level job at a bank mortgage company or brokerage. Examples of introductory roles include
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Loan officer assistant/associate – Support loan officers by assembling documents, conducting research, interfacing with clients, etc.
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Loan processor – Review documentation, verify information, and prepare loan files to submit to underwriting.
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Mortgage clerical role – Perform administrative tasks like answering phones, filing paperwork, data entry, etc.
These positions provide on-the-job training and help build your knowledge of mortgage lending from the ground up.
Step 3: Complete Mortgage Education Requirements
To become a licensed mortgage loan officer, you must complete a series of mortgage education courses. Requirements are set by the Nationwide Multistate Licensing System and Registry (NMLS).
You must take 20 hours of NMLS-approved pre-licensure education covering topics like ethics, federal laws and regulations, mortgage origination, and non-traditional mortgages.
Each state also has additional educational requirements you must meet based on local laws.
Step 4: Pass the SAFE Mortgage Loan Originator Test
After completing education, you must pass the SAFE Mortgage Loan Originator Test, also known as the National Test Component with Uniform State Content.
The 100-question multiple choice exam covers general mortgage knowledge as well as information specific to the state you plan to be licensed in. You must score at least 75% to pass.
Step 5: Apply for Your Mortgage License
Once you pass the SAFE exam, you can apply for your mortgage loan originator license through the NMLS. This involves:
- Submitting an application with personal information, employment history, etc.
- Completing a background check including fingerprinting
- Paying required license fees (costs vary by state, usually $300-$500)
State regulators will review your application and grant your license if approved. You must have an active license to originate mortgages as a loan officer.
Step 6: Meet Continuing Education Requirements
To maintain your mortgage loan originator license, most states require you complete 8-10 hours of NMLS-approved continuing education each year. Subjects include recent regulatory changes, ethics, lending standards, and emerging mortgage products.
Step 7: Seek Employment as a Loan Officer
With your new license in hand, you can start applying for mortgage loan officer positions! Look for open roles at banks, credit unions, and mortgage lending companies.
Independent mortgage brokerages can also be a good place to start as you may have more flexibility to establish your own clientele.
Step 8: Build Your Skills on the Job
Once hired as a loan officer, request opportunities to shadow experienced coworkers to learn best practices for meeting with clients, collecting documents, navigating the underwriting process, and closing loans.
Ask questions and soak up as much hands-on knowledge as possible. Take detailed notes you can reference as you start working directly with clients.
Step 9: Market Yourself to Real Estate Partners
A key to success as a loan officer is establishing relationships with real estate agents, home builders, attorneys, and other professionals involved in real estate transactions.
Introduce yourself, explain your services, provide business cards, and find ways to add value for potential referral partners. Strong word-of-mouth networks lead to more client opportunities.
Step 10: Provide Exceptional Service to Clients
Nothing builds your reputation faster than consistently delivering top-notch service to mortgage clients. Be responsive, patient, transparent, and willing to go the extra mile to meet client needs throughout the homebuying process.
Exceeding expectations leads to happy clients, positive reviews, and referrals that fuel your loan volume.
Is Being a Loan Officer Difficult?
Becoming a successful mortgage loan officer does involve effort. You’ll need sales skills for bringing in new business, technical mortgage knowledge, organization to handle piles of paperwork, and patience working through complications that arise.
However, the rewards of helping clients realize their homeownership dreams makes the challenges worthwhile for many loan officers. Finding an area of real estate you’re passionate about, whether it’s first-time homebuyers or luxury properties, also helps keep you motivated.
How Much Do Mortgage Loan Officers Make?
Many mortgage loan officers earn commission as a percentage of each loan they originate. This means your earning potential is driven by your productivity.
According to the U.S. Bureau of Labor Statistics, the median annual salary for loan officers as of 2021 was $66,490, with the top 10% earning $131,780 or more per year.
With hard work and commitment to serving clients, six-figure incomes are attainable for successful mortgage loan originators.
Ready to Begin Your Mortgage Career?
Now that you know the steps to get started as a mortgage loan officer, you can begin mapping out your path. With proper licensure, perseverance, and a passion for helping clients finance real estate purchases, you’ll be well on your way to a rewarding career in the mortgage industry.
Before You Get Licensure
If you want to become a mortgage loan officer, you probably have a number of questions about what the position entails.
Lets go over everything you need to think about before you close your first loan.
In terms of personal qualities, MLOs need to be detail-oriented people.
As an MLO, you will be collecting a range of information from potential borrowers and submitting this information to lenders. This information needs to be handled carefully and presented accurately. Staying organized is critical because the clients you work with will often be making the most important buying decision of their lives.
It is also beneficial if you are an outgoing person. You will be working with a wide range of people, and referrals tend to make up a large portion of your business. Making a good impression is key.
Knowledge of the real estate industry — or at least willingness to learn — is another important quality. MLOs need to stay up to date on how mortgage lending is evolving. New products, innovations, and regulations are always part of the mix.
If you are the kind of person who is always learning something new, you may want to become a mortgage loan originator.
MLOs deal with potential homebuyers sensitive financial information every day. They also act as a liaison between lending institutions and potential borrowers. Lenders need to have loans repaid; borrowers need to stay in their homes — and the MLO is a cornerstone to ensuring that both are in the best situation possible.
For anyone who wants to become a loan originator, it is a career that requires you to have financial character and stability. This is to prevent bad actors from becoming involved in the industry, which was one of the main problems that led to the 2008 financial collapse.
This means you need to meet certain financial requirements and have a clean criminal history. Any of the following scenarios are likely to result in licensure rejection:
- Criminal conviction related to fraud
- Poor credit history
- History of foreclosure or other significant unpaid debts
- Previously revoked licensure in other states
It is always best to disclose as much as possible on your application. There are instances where regulators will accept an applicant even though they have potential red flags. For example, many states have legal exceptions for applicants with unpaid medical debt. A criminal conviction unrelated to fraud, such as a DUI, also might not result in licensure rejection.
At this point, you might be asking the question: how long does it take to become a loan officer? The answer is that it all depends on how you approach it, but rest assured if you begin investing time and money in the process, you will want to complete it.
Doing your research before diving into pre-licensure courses is important.
The National Mortgage Licensing Service (NMLS) is the main regulatory body for MLOs and has a wealth of useful information, including state-specific requirements for licensure. Here at The Coop, we have information on everything from Online CE and Live CE to a community of professionals tackling a range of questions and a list of resources for MLOs. Taking the time to understand exactly how to become a mortgage loan originator in the first place will mean you are confident going into training.
One piece of good news is that you dont need a specific degree to become involved in this field. MLOs typically come from a background in business, banking, economics, or finance, but it isnt required. Instead, MLOs must obtain licensure through passing a test, taking pre-licensure education courses, and submitting information for approval by the NMLS.
Lets say you have decided mortgage loan origination is the career path for you. What are your next steps?
The first and most important step is obtaining a valid mortgage origination license. It is illegal to practice mortgage loan origination without a state-issued license. The following will detail the steps you need to take for licensure.
One thing to remember is that each state has specific guidelines that apply to MLO licensure, and state agencies are the ones to actually issue licenses.
But there are a number of requirements listed in federal legislation that are applicable across the board. It is worthwhile to become familiar with the federal Secure and Fair Enforcement Act for Mortgage Licensing of 2008 (i.e. SAFE Act), a major bill passed by Congress in the wake of the mortgage lending crisis.
Per the SAFE ACT and the NMLS, MLOs are required to:
- Obtain licensing from their respective states
- Register with the NMLS
- Provide authorization to obtain a credit report
- Provide a variety of identifying information
- Provide fingerprints for a criminal background check
- Provide a financial services employment history for the past 10 years
- Disclose any financial regulatory body charges against them
- Attest to the completeness and accuracy of the information provided
One key step in how to become a mortgage originator is to complete courses as required by the NMLS. Applicants are required to take 20 hours of pre-licensure education courses, including the following:
- Three hours of Federal law and regulations
- Three hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- Twelve hours of undefined instruction on mortgage origination
In addition to this, each state has specific requirements for education, typically on state-specific topics. This can range from education on alternative lending products like reverse mortgages, to how to spot red flags on a mortgage application.
Applicants should refer to their respective states guidelines on how to become a licensed loan officer.
Applicants for MLO licensure are required to pass the SAFE MLO test with a score of at least 75%. The test evaluates candidates on their knowledge of state and federal mortgage lending law. Many states have adopted the Uniform State Test, which applicants only need to take once. This makes it easier for licensees to apply for licensure in other states.
Per SAFE Act requirements, there is a waiting period between retaking the SAFE MLO test. On the first and second failures, applicants must wait 30 days each between test retakes. If an individual fails the test three times, they must wait 180 days before taking the test again.
Some other NMLS requirements include:
- Sponsorship: An individuals MLO activities must be sponsored and supervised by their employer. State regulators must approve sponsorships.
- NMLS Unique Identifier: An NMLS Unique Identifier is a number permanently assigned to each company, branch, and individual with an NMLS account. This system was designed for the purpose of better tracking each company and licensee, and is required to appear in all advertisements for mortgage origination services.
- Payment of fees: Applicants are required to pay fees in order to obtain licensure. The amount of these fees varies by state.
After You Get Licensure
Once you receive your license, you can begin work as a home loan originator. Some MLOs work independently, but newbies often prefer to begin with an established business that has an existing client base, such as a bank, mortgage lending institution, or credit union.
With all the bureaucracy involved in the licensure process, it is important to keep your focus on the goal you had in mind when you first started looking into how to become a loan officer — helping people move into their dream homes.
Buying property can be a complicated and stressful process for your average person, but a qualified and supportive MLO can make the experience easier, allowing homebuyers to enjoy their investment with the knowledge they have secured the best home loan possible.
The work doesnt end here, though. It is important that MLOs keep up with professional development to keep their license and stay current with mortgage lending practices.
Once you have a license, you must meet requirements to maintain active licensure status. An active status shows you meet all requirements of the federal registration process. You will need to renew your license annually, take continuing education courses, and keep all information filed with the NMLS up to date.
For example, if you plan to switch and work for a new company, you have to inform the NMLS of this move. The NMLS website includes helpful resources for licensure renewal, including handbooks, checklists, and information on fees, deadlines, and other requirements.
MLOs are required to complete eight hours of NMLS-approved continuing education annually to qualify for license renewal. It is the MLOs responsibility to complete this education and the renewal process. If you fail to do so, you could end up losing your license.
Continuing education is required to include:
- Three hours of federal law and regulations
- Two hours of ethics instruction on fraud, consumer protection, and fair lending issues
- Two hours of training related to lending standards for the nontraditional mortgage product market
- One hour of undefined instruction on mortgage origination, which may be fulfilled by completing a state-specific course depending on the states requirements
How to Become a Mortgage Loan Officer in 2024! (Step by Step)
FAQ
Is it hard to make it as a loan officer?
How long does it take to become a loan officer in California?
How do I become a mortgage loan officer?
Here are the steps you can follow to be an MLO: 1. Meet the basic requirements To become a mortgage loan officer, you need to be at least 18 years old and have a high school diploma or GED. While in school, try to take math- and finance-based classes to start gaining some knowledge and skills needed to be an MLO.
How do I become a mortgage loan originator?
Whether you graduate with a bachelor’s degree or go the working route, you must obtain a mortgage loan originator (MLO) license to become a fully qualified mortgage loan officer. To get your MLO, you’ll have to complete 20 hours of pre-licensure education and pass the Nationwide Multistate Licensing System & Registry (NMLS) exam.
Do you need a mortgage loan officer certification?
While it’s not required, you may want to obtain a mortgage loan officer certification to propel yourself to the top of a prospective employer’s list. Several postsecondary schools and banking associations, such as the American Bankers Association and the Mortgage Bankers Association, offer courses, training programs, and certifications.
How much does it cost to become a Morty loan officer?
For loan officers joining the Morty platform, Morty covers the costs of test prep materials which costs about $100. To obtain your MLO license, you’ll need to pass the NMLS’s SAFE Mortgage Loan Originator Test with a score of 75% or higher. This exam is meant to test your understanding of core concepts in mortgage lending.