How Does a Mortgage Loan Officer Get Paid?

How Does a Mortgage Loan Officer Get Paid?

1. Your own best interest

It’s fair for consumers to question whether mortgage loan officers are acting in their best interests. A useful starting point is to ask: How are these loan officers compensated?

Loan officers typically get paid in two ways: 1. Commission, calculated as a percentage of the total loan amount 2. Incentives for selling certain financial products or reaching quotas

Both sources of compensation can create a conflict of interest. Let’s think about commission. Since it’s a percentage of the total loan amount, the bigger the loan they sell you, the bigger the commission. This issue played itself out for years leading up to the 2008 subprime mortgage crisis. Banks and mortgage brokers aggressively pushed mortgages that borrowers couldn’t afford, while loan officers got paid handsomely to intermediate. If you’ve seen the 2015 film The Big Short, you’ll be familiar with this scenario.

In the case of sales incentives, you’ve probably seen that Wells Fargo was ordered to pay over $185 million “to resolve allegations that the bank’s sales quotas and incentives pushed employees to open millions of unauthorized accounts” and now faces an inquiry by the U.S. Department of Justice. While this case does not involve mortgages, it clearly demonstrates the problem with sales incentives.

What happened is this — the company set very aggressive goals to cross-sell other Wells Fargo products. For example, bank employees who cross-sold a certain number of checking accounts received incentive pay. To cash in on these incentives, over 5,300 employees set up more than 2 million fake accounts without customer consent. Customers got duped, the employees got fired, and Wells Fargo got in serious trouble.

It’s clear that both commission and incentives are horrible at aligning a loan officer’s interests with your own. To avoid any such conflicts, Better Mortgage pays loan officers a fair salary with no commission. Our staff offers support, not sales, to ensure alignment with your best interest.

2. How Much Do Loan Officers Make?

Feb 22, 2021 — The income of a loan officer depends largely on whether their employer pays a flat salary or has a commission-based structure in place. As a (4)

5 days ago — Most mortgage loan originators receive a commission on the loans they originate. The size of the commission and how it is calculated differs Do mortgage loan originators receive a commission?How much do similar professions to mortgage loan originator get paid?(5)

Feb 28, 2009 — For loan officers who work at mortgage banks (also sometimes referred to as “correspondent lenders”) or mortgage brokers, the vast majority of (6)

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Loan Officer Salary Can Vary Widely

Similar to a real estate agent’s salary, a l

  • Similar to a real estate agent’s salary, a loan officer’s take home pay can range dramatically
  • It all depends on how much you sell/close in a given year
  • If you’re a top loan officer, you can make a ton of money (even $1 million+ annually)
  • If you’re just an average or underperforming LO, expect comparably lower salaries

Wondering how much a loan officer makes an hour? Or what the average mortgage loan officer salary is?

Well, take note that most loan officers do not receive a base salary, only commission, so they are paid for performance. Sales performance.

The median income for a loan officer in the United States was $63,650 in 2016, according to the Bureau of Labor Statistics (BLS). That works out to an hourly wage of $30.60 per hour, which isn’t terrible by any stretch.

My assumption is that the number won’t change a great deal in 2017 or beyond, not that I would focus on the numbers from the Bureau of Labor Statistics anyway.

A better gauge might be the quarterly reports from a company called LBA Ware, which has a ton of data on loan officer compensation.

They said the average LO produced 51% more in volume during Q3 2020 ($2.6M per month) versus $1.7M per month in the same period in 2019.

And per-loan commission was 106 basis points in the third quarter of 2020, meaning the average LO made over $27,000 per month.

That works out to over $300,000 annually if they’re able to keep that up consistently.

But while the salary may seem super high, the average pay could well be skewed by the sheer number of loan officers who do very little, or are simply unsuccessful.

So you might have some big shots closing tons of jumbo loans while others languish and close next to nothing. These types of loans can pay a ton because of the large loan amounts.

Ultimately, loan officers have the ability to earn several hundred thousand dollars a year (or more) if they work hard and make the right connections.

If you break that down as an hourly wage, it could be very high if loan volume is solid and efficiency is high as well (aka not a lot of wasted hours chasing bad leads).

5. 4 Perks to Being a Mortgage Broker or Loan Officer

Thinking about getting involved in the mortgage loan industry? It just might be the career move you’ve been waiting to make!(14)

Jun 12, 2019 — How do mortgage loan officers make money? The mortgage company compensation/fee is built into your mortgage interest rate as a percentage of (15)

Feb 26, 2021 — If the MLO is a broker, they may be paid by their clients or by commission from the lender they partner with to close the loan. If the MLO is a (16)

Best-paid skills and qualifications for Loan Officers

Most recommended licenseNMLSearn +28.08% more The jobs requiring this license have increase by 9.99% since 2018. Loan Officers with this license earn +28.08% more than the average base salary, which is $182,113 per year.2011201220132014201520162017201820192020Job Trend Job TrendYearNumber of job openings on Indeed requiring this licenseChange from previous year201111increase by 11201211638increase by 105700.00%201344369increase by 281.24%201465840increase by 48.39%201522251decrease by 66.20%201623720increase by 6.60%201719551decrease by 17.58%201816762decrease by 14.27%201918436increase by 9.99%

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Top fields of study
Medical Degree
+21.81%salary

Top skills Sales Experience +10.60%salary

More critical skills and qualifications that pay well

Salaries by qualifications

Top Licenses Salary Job openings Companies 870 jobs 3,325

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How to Be a Top Producing Loan Officer

  • It’s simple really and there’s no secret formula
  • Work hard and close as many loans as possible
  • You can accomplish this by solid networking and putting in the time
  • There’s nothing magical about it, just strong work ethic

While there might be gimmicks and top 10 lists and classes that teach you “how to sell,” it really comes down to hustling. Honestly.

If you’re committed to the business, you can be really successful and earn a ton of money. When I worked for a wholesale lender, there were Account Executives who sat around and complained, and others who just put their heads down and dialed the phone.

That latter group made a lot of money, while the complainers made average salaries and eventually quit. Ultimately, it’s about work ethic and drive.

All the other stuff, like education and the art of selling, will come with experience. You can’t teach someone how to sell in a class, nor can you teach them everything about mortgages in a day or a week.

It takes time and real-life experience to master those things. But without motivation and hard work, it will mean very little.

So if you want to be successful as a loan officer, you need to work hard and network. Don’t be shy, make calls, visit real estate offices and link up with real estate brokers, and eventually it will get easier and easier.

Sure, you might have some nervous calls and meetings early on, but once you gain confidence, it’ll become second nature and pay dividends.

What Is the Average Salary for a Loan Officer Assistant?

There isn't an average salary for a loan officer assistant, as it depends on too many factors from the company where the assistant is employed, if they work hourly or for an annual salary, and experience. According to the BLS, financial clerks who may do similar work as an assistant to a loan officer earn a median salary of $41,520.

Years of Experience

Loan originators can expect to earn more as they gain job experience, however, most do move on to other careers after awhile. A survey by PayScale.com showed the following correlation between years on the job and compensation:

  • 0-5 years: $40,000 
  • 5-10 years: $70,000 
  • 10-20 years: $81,000 
  • 20+ years: $51,000

Loan Officer Benefits

Most full-time loan officers receive standard benefits like health, vacation, and access to retirement accounts. Most loan officers work for a bank or private company, so the benefits vary depending on their employer.

How to Compare Mortgage Loan Offers

When you apply for a loan, the lender must give you a loan estimate—a government-mandated form that details the terms of the mortgage it is offering you. That includes the amount, type, and term of the loan, as well as projected closing costs, your monthly payment, and the annual percentage rate.

You can ask for loan estimates from multiple lenders and compare their offers side by side. But note that loan estimates are typically valid for just 10 days, after which the terms may change. A mortgage calculator can be a good resource to see how different rates affect your monthly payment.

If your loan officer works for a large FDIC bank

Many of the larger, nationally known banks pay their loan officers differently than the smaller mortgage banks/brokers. They will pay the loan officer a base salary and a small bonus amount based on the loan amount, not the total fees on a file.

Or, simply put — if a loan officer helps you with your mortgage and your loan amount is $200,000 and the loan officer is paid “30 bps”, the loan officer would make 30 basis points on $200,000 or $600.

One advantage to working with these loan officers is that they usually have a large brand behind them — so you have probably “heard of” the lender that they work for. Another advantage to working with these loan officers is that often times, their lender will be willing to “originate at a loss” mortgage loans so that they will have the ability to cross-sell a checking account, savings account, credit card or other bank-related products.

One disadvantage to working with a loan officer who works for a large FDIC bank is that they usually have relatively little rate and fee flexibility. Their rates and fee structures by and large “are what they are.”

5. You can do better

We’ve established four reasons why it’s bulls#!t for you to get stuck with higher rates and origination fees to effectively pay for loan officer commission. But the very best reason is — you don’t have to.

You can choose to work with Better Mortgage. We have industry-leading rates. We don’t charge origination fees. And our loan officers don’t get paid commission, ever.

As a Better Mortgage borrower, you can complete your entire digital mortgage process online. You have direct access to our systems, which:

  • Match you to the largest mortgage end investors in the world (including Fannie Mae).
  • Find the best mortgage at the lowest rate for your specific situation.
  • Guide you through the application process with 100% transparency.

Our loan officers are here to support you with any questions or concerns you may have (which is what humans are actually good at). But they don’t get paid commission. You deserve better than that.

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  1. Frey, Carl Benedikt and Osborne, Michael A. (2013), “The Future of Employment: How Susceptible Are Jobs to Computerisation?”

  2. Philippon, Thomas, “Finance vs. Wal-Mart: Why are Financial Services so Expensive?”

  3. Bogle, John (2016), “The Index Mutual Fund: 40 Years of Growth, Change, and Challenge”

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