Imagine this: You’re staring at your closing documents and you’re trying to figure out where all your fees are going. Oddly, you can’t find the amount that your mortgage officer is paid. How is that? How does a loan officer get paid if it’s not there in the closing documents?
It’s not a mystery, but it’s not exactly clear how their compensation works, either. The short version? There are a couple of places where the mortgage loan officer could be paid: from the origination fees on the front end or from the cost of the mortgage itself on the back end.
It’s important to know where your money is going, so we’re here to help. In this article, we’ll discuss:
• The average salary for a mortgage loan officer
• How a mortgage loan officer gets paid
• The payment structure for mortgage loan officers
• Earning potential, benefits, job prospects
Table of Contents
Key Points
• Loan officers are typically paid through a combination of salary and commission.
• The commission is based on the loan amount and can vary depending on the lender and loan type.
• Loan officers may receive higher commissions for loans with higher interest rates or fees.
• Some loan officers may also receive bonuses or incentives based on performance.
• It’s important for borrowers to understand how loan officers are compensated and to ask questions about fees and costs.
What’s the Average Salary of a Loan Officer?
A mortgage loan officer, or mortgage loan originator, makes an average of $63,380 per year according to the Bureau of Labor Statistics.
It’s worth noting, however, that the Bureau of Labor Statistics includes other types of loan officers in that category, such as those who originate auto or personal loans. They also do not differentiate between a loan officer and a loan processor.
In contrast, data from Indeed.com shows the average mortgage loan officer salary at $181,344. Glassdoor.com also estimates the total average salary of a mortgage loan officer in the neighborhood of $217,593, with $153,554 in base pay and $64,040 in additional pay from cash bonuses, commissions, and profit sharing.
Since the pay for mortgage loan officers is usually commission-based, it’s easy to see why average numbers can vary so widely.
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How Is a Mortgage Loan Officer Paid?
A mortgage banker or other mortgage loan officer is typically paid after your home mortgage loan has closed and funded. They’re often paid on commission, meaning a percentage of the loan amount will go to the mortgage loan officer. This amount can come from one of two places: either the loan originator (like the bank or mortgage seller), or from a loan origination fee paid by the borrower. (Laws do not allow for payment to come from both sources.)
If the commission comes from the lender rather than the borrower, you won’t see it in your closing documents. This is why you probably won’t know how much the lender is getting paid from your transaction.
It’s also possible that the mortgage loan officer’s pay comes primarily from a salary instead of a commission. This is more common with larger lenders, such as banks, credit unions, and other financial institutions.
Either way, the money paid to the mortgage loan officer comes from the lender’s profits. A lender’s profits, in turn, come from origination fees, income from interest, income from mortgage servicing, and proceeds earned from secondary mortgage market sales.
Payment Structure for MLOs
Mortgage loan officers may be paid entirely on commission, a combination of salary and commission, or a salary. Bonuses or incentives may also be paid out. Their pay is usually incentivized by how good they are at closing home mortgage loans.
Mortgage Loan Officer Earning Potential
Mortgage loan officers have high earning potential. As noted previously, compensation can exceed $200,000.
Mortgage Loan Officer Benefits
Benefit packages for mortgage loan officers tend to be very comprehensive, but can vary depending on the different types of mortgage lenders. This can include:
• Medical
• Dental
• Vision
• Retirement plans
• Life insurance
• Vacation time
• Parental leave
• Sick leave
You may also see flexible schedules, bonuses, wellness benefits, company retreats, and more on the menu of benefits offered to a mortgage loan officer.
Mortgage Loan Officer Job Prospects
The U.S. Bureau of Labor Statistics expects employment of mortgage loan officers to rise 4% between 2021 and 2031. This is an average rate of growth; however, the BLS does note that the decline of bank branches and increase in technology is expected to slow the growth for mortgage loan officers.
Recommended: Mortgage Brokers vs Direct Lender: What’s the Difference?
Mortgage Loan Officer Pros and Cons
The job of a mortgage loan officer has some serious earning potential, but there are also some drawbacks to the job as well.
Pros
• High salary potential
• High commission and bonus potential
• Can help individuals and businesses obtain financing for desired properties
• Regular, consistent schedule (though may work more than 40 hours on occasion)
Cons
• Loan officers only offer financial products from their employer
• Likely has no ability to adjust price
• Lots of paperwork, regulation, and details
• High barrier to entry-level jobs, such as a bachelor’s degree or related work experience
• Opportunity for employment and commission payments are affected by market conditions
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The Takeaway
Mortgage loan officers are an important part of the homebuying process for many buyers. Their knowledge is invaluable and can help guide you in the right direction. How much they get paid usually depends on how many mortgages they originate throughout the year. Top earners can earn $200,000 or more.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
How is loan officer commission calculated?
Loan officers either earn commission from an origination fee or from the lender. The mortgage loan officer can’t receive compensation both ways, as this is considered illegal as per Regulation Z of the 2010 Dodd-Frank Act.
How do you make money as a loan officer?
Loan officers make money by closing loans, and, as there is often some type of commission structure in place, loan officers who close more loans generally make more money.
What does a mortgage loan officer do on a daily basis?
Mortgage loan officers process loan applications, interviewing applicants and analyzing loan documents to determine an applicant’s eligibility for a loan. They also calculate debt-to-income (DTI) and loan-to-value (LTV) ratios to make sure the numbers for the borrower and the property are within the guidelines set by the lender. Additionally, they spend time looking for new prospective customers and attending closings.
Photo credit: iStock/skynesher
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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