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 navigate the complex process of obtaining home financing. If you’re interested in a career as a mortgage loan officer, you may be wondering – what exactly do you need to pursue this path?
In this comprehensive guide, we’ll outline the key requirements and steps to become a licensed mortgage loan officer.
What is a Mortgage Loan Officer?
A mortgage loan officer, also referred to as a mortgage broker or mortgage originator, works with clients to help them find the right home mortgage loan for their needs.
The primary duties of a mortgage loan officer include:
- Meeting with clients to understand their financial situation and goals
- Collecting documentation and running credit checks on applicants
- Calculating debt-to-income ratios to determine loan eligibility
- Explaining different loan options like fixed-rate, ARMs, FHA, VA, etc.
- Preparing and submitting completed loan applications to underwriters
- Serving as the main contact for borrowers throughout the lending process
Mortgage loan officers typically work for banks, credit unions, mortgage companies or independently. Their income consists mainly of commissions based on the loans they originate.
Step 1: Earn a High School Diploma or GED
The first educational requirement to become a mortgage loan officer is earning a high school diploma or passing the General Education Development (GED) test
Taking finance, accounting, economics, and computer courses in high school can provide a solid base of knowledge for this career Business math skills are also essential.
Some employers may prefer candidates with an associate’s or bachelor’s degree in a relevant field like finance, business, or economics. But this is not strictly required in most states.
Step 2: Complete Mortgage Licensing Courses
To work as a mortgage loan officer, you must take mortgage licensing education courses covering topics like:
- Federal mortgage regulations and laws
- Ethics and fraud prevention
- Lending standards and mortgage products
- Loan origination processes
You must complete 20 hours of NMLS-approved pre-licensure education. The Nationwide Multistate Licensing System (NMLS) provides approved course providers.
Each state also requires additional instruction focused on their specific regulations. These state-specific courses range from 2-12 hours.
Step 3: Pass the SAFE Mortgage Loan Originator Test
All aspiring mortgage loan officers must pass the SAFE (Secure and Fair Enforcement for Mortgage Licensing Act) national test.
The 100 multiple-choice question test covers general mortgage knowledge and laws. Key topics include:
- Ethics and fraud prevention
- Federal law and regulations
- Loan product knowledge
- Uniform State Content
You must score at least 75% to pass. The $195 test fee includes two attempts. If you fail twice, you must wait 30 days before retesting.
Step 4: Apply for Your Mortgage License
Passing the SAFE exam makes you eligible to apply for a state mortgage loan originator license through the NMLS.
Licensing requirements vary by state but generally include:
- Submitting fingerprints for an FBI background check
- Providing employment history
- Disclosing any actions against you by regulators
- Authorizing a credit check
- Paying licensing fees
You’ll also need to maintain active NMLS registration by updating your information annually and renewing your license.
Step 5: Seek Employment and Gain Experience
Once licensed, seek a mortgage loan officer role at a bank, credit union, or mortgage company. Many beginners start as loan officer assistants to learn on the job before originating loans independently.
Look for a supportive team that will train you on:
- Origination and underwriting software
- Building relationships with real estate agents
- Communicating with underwriters and processors
- Explaining loan options to diverse clients
- Managing a loan pipeline from application to close
On average, it takes 1-3 years of steady experience to become proficient. Stay updated on mortgage regulations and trends as you build your skills.
Step 6: Consider Specialty Certifications
Voluntary specialty certifications can help mortgage loan officers showcase expertise and advance their careers.
Popular options include:
- Certified Mortgage Banker (CMB)
- Residential Construction Certified (RCC)
- Certified Mortgage Planning Specialist (CMPS)
Earning these credentials requires passing exams, meeting experience requirements, and taking continuing education courses.
Step 7: Maintain Your Mortgage License
To keep your mortgage loan officer license current, you must complete 8-10 hours of NMLS-approved continuing education annually.
Subjects include law, ethics, lending standards, and product knowledge. States may have additional CE requirements.
You’ll also need to pay renewal fees, update your NMLS record, and meet your state regulator’s renewal criteria to maintain active status.
Key Skills for Mortgage Loan Officers
To succeed as a mortgage loan officer, these essential skills and traits are vital:
- Strong communication and listening abilities
- In-depth knowledge of mortgage products and regulations
- Ability to analyze client finances and documentation
- Comfort explaining complex information clearly
- Organization and attention to detail
- Persistence and work ethic to follow up and convert leads
- Motivation to continually improve mortgage knowledge
Developing expertise and earning clients’ trust is critical – a mortgage loan officer’s income is directly tied to their productivity.
Is Becoming a Mortgage Loan Officer Worth It?
A career as a mortgage loan officer offers good earning potential but also some downsides:
Pros
- First year earnings can exceed $60k; highly successful MLOs can make over $100k
- Opportunity to help people achieve homeownership goals
- Flexible schedule with ability to be entrepreneurial
- Continuous learning about new mortgage programs and laws
Cons
- High-stress especially when rates fluctuate or refinance volume drops
- Commission-based pay leads to inconsistent income
- Requires disciplined self-motivation and sales skills
- Lead generation and marketing is a constant necessity
- Must keep up with ever-changing regulations and stay licensed
If you enjoy sales, have a driven attitude, and are good at establishing relationships, a mortgage loan officer career can be extremely rewarding, both financially and in terms of the positive impact you have on clients.
Just be ready to put in the work upfront to obtain your license and be mentored, as well as stay motivated throughout your career. Your success will largely depend on your work ethic, knowledge, and persistence.
Frequency of Entities:
mortgage: 33
loan: 32
officer: 29
mortgage loan officer: 15
license: 14
loans: 11
clients: 7
credit: 6
nmls: 6
test: 5
originator: 5
lending: 5
regulations: 5
education: 5
experience: 4
requirements: 4
state: 4
national: 4
courses: 4
safe: 4
pass: 3
ethics: 3
products: 3
finance: 3
underwriters: 3
steps: 3
origination: 3
income: 2
process: 2
documentation: 2
ratios: 2
options: 2
arms: 2
va: 2
fha: 2
submitting: 2
applications: 2
maintaining: 2
information: 2
licensing: 2
employment: 2
history: 2
actions: 2
authorizing: 2
paying: 2
fees: 2
bank: 2
union: 2
assistants: 2
independently: 2
software: 2
agents: 2
communicating: 2
diverse: 2
pipeline: 2
application: 2
close: 2
certifications: 2
planning: 2
specialist: 2
criteria: 2
skills: 2
communicating: 2
analyzing: 2
complex: 2
detail: 1
conversions: 1
impact: 1
worth: 1
potential: 1
entrepreneurial: 1
fluctuate: 1
inconsistent: 1
self-motivation: 1
sales: 1
necessity: 1
rewarding: 1
financial: 1
mentored: 1
persistence: 1
largely: 1
ethic: 1
knowledge: 1
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?
Do you have to be good at math to be a mortgage loan officer?
How much does a mortgage loan officer make in Alaska?
What is the demand for mortgage loan officers?
Do Loan officers need a license?
The licensure and certification requirements for loan officers can vary by state. Typically a Mortgage Loan Originator (MLO) license is required for processing mortgage loans. The American Bankers Association (ABA) offers certifications that will need to be renewed every three years. Common loan certifications to obtain are as follows.
How do I become a loan officer?
How Do I Get Started? To become a licensed loan officer, you’ll need to be registered with the National Mortgage Licensing System and Registry (NMLS), complete 20 hours of pre-licensure education courses, and pass the NMLS mortgage license exam, amongst other requirements determined by your state.
How do I get licensed as a Mortgage Loan Officer?
To become a licensed Mortgage Loan Officer, you must pass the SAFE (Secure and Fair Enforcement Act) MLO test with a minimum score of 75%. This exam measures your knowledge of both federal and state mortgage lending laws. You may retake the test, but there is a 30-day waiting period for retakes.
Do you need a degree to be a mortgage loan officer?
A degree is not necessary for a job as a mortgage loan officer with most smaller lenders. However, if you decide to earn a degree for your loan officer career, majoring in areas like finance, accounting, business, or economics will likely be the most beneficial.