So you need a job and you’re thinking about becoming a residential mortgage loan officer? Or a mortgage loan originator (MLO) as they’re now known.
Well, there are probably job openings right this very second, but it’s not for the faint of heart.
It’s true, loan officer jobs pay more than most any other occupation out there, assuming you haven’t passed the bar or made your way through medical school. Or happen to be a financial advisor or a pro athlete.
But it can’t be that easy, could it? To make six figures without a high school diploma you would think you’d have to invent something or start your own business.
Not so – the prospect of being a loan officer has changed conventional thought, especially as the housing market shot off in recent years like a bottle rocket.
Jump to loan officer topics:
– Loan Officer Job Description
– Loan Officer Educational Requirements
– Loan Officer Salary
– Loan Officer Career Advancement
– How to Be a Top Producing Loan Officer
– What the Future Holds for Loan Officers
So now as we lie in the wake of another possible housing bubble bust, are loan officers still making money? The answer is MAYBE.
But the number of loan officers has probably been cut in half, if not more in the past year or so.
At the same time, the quality (and quantity) of mortgage loans at the moment isn’t what is once was a few years ago.
It seems most of the smart money already refinanced, or made home purchases before values went up. And many of the remaining deals are tricky and/or riddled with hurdles and low credit scores.
In truth, it can always feel that way when you’re trying to get a home loan approve. A mortgage loan originator’s typical day will never be easy.
But there’s always an opportunity for a loan officer, even if the market is in a down cycle or a lull. Even if mortgage rates aren’t as low as they once were.
Being a Loan Officer Can Be Really Lucrative
- There are few jobs other than doctors, lawyers, and sports stars
- That pay several hundred thousand dollars a year in salary
- Top loan officers have the potential to make that kind of money too
- And even average ones can make six-figures annually during good years
If a mortgage loan officer gets just one of those deals to go through, it often equates to a huge payday.
Sometimes as much as a few months’ salary working a minimum wage job or another low-paying job.
So that’s the incentive, big money. But there are a number of questions you need to ask yourself before setting out in the mortgage industry as a loan officer.
First and foremost, it is not an easy job. Sure, a mortgage broker or bank may tell you that it’s simple.
And you may not have to work very hard in the traditional sense. Or take part in any back-breaking work.
But factor in the stress, the near misses, lost deals, the shots to your ego, and the wheel-spinning and it isn’t as effortless as they may make it out to be.
There Will Be Ups and Downs
You will see deals fall through and you will waste a lot of time. There will be mental breakdowns as loans slip through your fingers, and brokers and real estate agents scream at you as deadlines close in.
You will undoubtedly make mistakes, which require a phone call to the borrower to let them know you can’t do the deal. It will be embarrassing and unpleasant.
But if you can handle all that, being a loan officer can be quite lucrative, and fairly easy if you get yourself organized and educated on mortgages and the many loan options available to homeowners.
It’s not for everyone, and there is definitely a lot you need to learn before starting a career in mortgage. But once you get a taste of the money you may have trouble walking away, no matter how high the stress and quality of your life.
Trust me, I know lots of people who can’t leave. They want to leave, but they can’t because they know they won’t earn as much elsewhere. And they’ll probably hate that other job too.
Loan Officer Job Description
- Sell, sell, sell! Always be closing!
- That’s pretty much the job description of a loan officer
- But you also have to be well-versed in customer satisfaction, mortgage lingo, and product knowledge
- And stay up-to-date on the many rules/regulations involved
First off, a loan officer may be referred to as a mortgage planner, lending officer, MLO, mortgage specialist, dedicated lending associate, loan consultant, loan agent, mortgage professional, senior of any of these, or junior of any of these.
There are lots of creative names for the position depending on the company in question, but the job description will likely be the same regardless.
A loan officer may come into work in the late morning around 9 or 10am and work until 6-9pm.
The time may be structured to work around when companies are allowed to solicit consumers in their homes. The traditional peak hours for sales calls take place in the early evening, between 6pm and 9pm.
Of course, you could also be a go-getter who arrives at 6am and only works until the early afternoon. There is certainly flexibility when it comes to working hours, though it does depend on the type of company you work for.
It Could Be a 9 to 5 Job
If you work for a large company, such as a depository bank, credit unions, or a mortgage banker, chances are you’ll work the typical 9-5 schedule since bank branches are only open during those hours.
If you work for a smaller mortgage company, or a broker, you might be able to set your own hours and do whatever you please.
This has to do with compensation, as the former will likely get a base salary along with commission, while the latter will likely be a commission-only employee.
Mortgage brokers won’t care when you come in or leave as long as you’re closing loans.
Money aside, the culture will be a lot different at a large lending institution versus a small shop. If you can stomach a dress code and an uber-corporate environment, the bank setting might work out nicely.
If you’re the type who would prefer to run your own business, but don’t have the knowledge or the wherewithal, a small shop could be a desirable place to be. At least to start.
What Does a Loan Officer Do on a Daily Basis?
- Selling is the main focus of a loan officer
- That means bringing in new customers to apply for home loans
- Whether it’s a refinance loan or a purchase loan
- So you can earn a commission when it eventually funds
The broker or bank, or whomever employs the loan officer, may provide sales leads to the loan officer, or they may be completely on their own when it comes to acquiring business, making up their own sales and marketing to pitch potential borrowers.
If you work at a large bank or call center, you may be fortunate enough to just take incoming phone calls.
That means you’ll sit in a cubicle all day and field phone calls. You could also be required to follow-up with customers who expressed interest.
The good part is that you won’t have to find prospects on your own. That can be the hardest part.
If you work for a broker or a small company, you may still be provided with leads, though the quality could be less than desirable. That means you will have to network, make contacts, and market yourself and your services.
This entails trying to get individuals to finance home purchases or refinance their existing mortgages. That’s it. When that happens, you generally get paid.
Often, loan officers will implicitly or explicitly partner with a real estate agent or office so they can provide financing to their home buying prospects.
If you’ve ever purchased a home, you’ve likely had the preferred lender’s contact info thrown your way when it comes time to fill out a loan application.
A loan officer may get these leads and run no-obligation pre-approvals for those clients to win them over. Often, a real estate agent’s recommendation will end up providing financing since borrowers don’t tend to shop around.
Loan Officer’s Job Is to Sell!
In any case, your role as a loan officer is to sell and that’s pretty much it. If I had to sum up a loan officer jobs description, I’d simply say selling.
Sure, you’ll have to put your clients at ease throughout the loan process, and communicate with your staff, but the main objective is sales.
You won’t be doing the loan underwriting, nor will you approve loans that come in the door. That’s not part of your job description.
Loan officers at smaller shops and independent companies need to self-manage their time, and strive to call out up to 100 contacts a day. When demand for loans is low, it can be really tough.
Once a call is successful and a loan officer is able to retrieve a prospective customer’s information, they need to secure financing for their client.
If you work for a broker, you will also need to work with third-party banks and lenders (and Account Executives) to secure financing.
If you work directly for a bank or mortgage lender, you will need to familiarize yourself with the company’s entire product suite so you know what it is you’re selling.
Loan Officer Educational Requirements
- Depending on where you work you may need to be licensed
- It may easier to get started at a big bank than a smaller mortgage shop
- You’ll likely also have to pass a background check and get fingerprinted
- And potentially complete continuing education
Interestingly, you can become a loan officer with no experience. Yep, it’s a potentially high-paying job that also welcomes newbies.
In fact, mortgage loan officers don’t even need a bachelors degree, let alone a high school diploma to gain employment with certain brokers and mortgage lenders.
With the larger financial institutions, a college degree will likely be obligatory without notable sales experience.
In terms of licensing, it depends on the state, company, and specific position. These days, many loan officers need to be licensed, though there are still many positions at large retail banks that don’t require an MLO license.
Loan Officer Background Check
However, most MLOs need to be registered, perform a background check, and get fingerprinted. This is to protect the public from unscrupulous individuals working for mortgage companies.
If you do need to be licensed, it’s not the end of the world. In most cases, you simply need to take 20 hours of pre-licensure education, pass a test, and complete eight hours of continuing education annually.
The takeaway is that it might be easier to get a job at a retail bank, but these loan officers may be less knowledgeable as a result, and they could be lower paying jobs.
Of course, they may also be the ones that tend to work in call centers and simply plug in numbers into a loan application, as opposed to coming up with creative loan solutions. So they may not need to know very much.
Loan Officer Salary Can Vary Widely
- 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.
*Some companies use non-commissioned loan officers like Better Mortgage, but it’s uncommon.
The median annual income for a loan officer in the United States was $63,380 as of May 2021, according to the Bureau of Labor Statistics (BLS). That works out to an hourly wage of $30.47 per hour, which isn’t terrible by any stretch.
And there were about 355,000 loan officers employed as of 2021, which has likely fallen as mortgage rates jumped higher.
My assumption is that the number won’t change a great deal in 2022 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.
There Will Be Good Years and Bad Years
As awesome as those numbers look, the mortgage market has cooled considerably. So loan officer who made six figures in 2020 may now be struggling to make five figures.
They could be even laid off due to the unprecedented rise in mortgage rates.
And while the salary may seem super high, the average pay could 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.
The salary broken down as a hourly wage could be very high if loan volume is solid and efficiency is high (aka not a lot of wasted hours chasing bad leads).
How Much Does a Loan Officer Make an Hour?
- Some loan officers are paid hourly if they work at big retail banks
- And may not actually be paid on their loan volume
- But many loan officers are paid commission-only in lieu of a base salary
- Which you can break down into hourly wages at year-end (it may often be much better than a guaranteed hourly wage)
As noted, MLOs are typically not paid hourly, and are instead paid commission for the loans they bring in and fund.
This means total compensation can range significantly based on the sales performance of the loan officer in question. It also depends on how much a loan officer makes per loan.
If the LO works for a small shop and has very little support, they might make a mortgage point or two per loan. By that, I mean 1-2% of the loan amount, which may or may not be split with their broker or mortgage company.
On a $500,000 loan, we’re talking $5,000 – $10,000, less any costs and splits. As you can see, the money can be really good if you’re even mildly successful in this industry, especially if you operate in an expensive region of the country.
Conversely, those who work at big banks and credit unions and are essentially fed a constant stream of clients via walk-ins, incoming phone calls, and the like, may only receive a small commission relative to those going it alone.
What About a Loan Officer at a Big Bank?
For example, we might be talking about 20-30 basis points, or bps, per loan closed. Represented as a fraction, that’s .20% to .30% of the loan amount.
Using the same $500,000 loan amount, that’s $1,000 to $1,500 per loan. Still good, but not as lucrative as our earlier example.
However, this latter group might get a small base salary, along with benefits like 401k and insurance and so forth. And as noted, they get leads, which can be huge for the individual who is unable or unwilling to chase after new business.
If you work for a wholesale mortgage lender and are an Account Executive (the LO equivalent), the commission might be even lower, sometimes less than 10 bps per loan.
Lastly, let’s talk about quotas. Sometimes the company you work for will have a monthly quota that must be met to get paid the higher rates of commission.
So if you don’t close X million per month, you might get paid a lot less, possibly just a fixed dollar amount per loan, such as $250 or $500.
Loan Officer Career Advancement
- It’s generally a lateral move from one shop to another based on compensation structure
- Other than going from say a junior loan officer to a senior loan officer
- Most LOs just switch companies to get better commissions
- Though it might be possible to open your own shop or become a sales manager as well
Loan officers generally stay in one place and don’t advance internally within a company.
They may change their status to Senior Loan Officer, but usually it means very little aside from the fact that they’ve been around a little longer than typical loan officers. There could be a bump in compensation levels though.
More likely, loan officers can advance externally if recruited by other companies paying higher commissions, or even a base salary. Or a mega bonus to jump ship.
Those who are able to create and manage a large book of business may wind up with a lot of suitors, and it’s not out of the realm of possibilities to be offered a six-figure bonus to change companies.
Many loan officers also apply for a broker’s license as a means for advancement. And eventually employ their own loan officers, and take a cut off everything they earn.
In that sense, there are a variety of advancement opportunities for successful individuals. It’s also possible to shift to the operations side of things (in a mortgage-related occupation) if you turn out to be not much of a salesperson.
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.
What Does the Future Hold for Loan Officers
Lastly, let me point out that because of the way technology is going, the loan officer position might be at risk in the near future.
According to the site willrobotstakemyjob.com, loan officers have a 98% chance of losing their jobs to robots, aka automation.
There are around 355,000 loan officers nationwide, and 4% growth is expected between now and 2031.
So that’s something to keep in mind. Though as mentioned, it might be possible to make moves to related positions that open up as a result of technological advances.
Final Word on Loan Officers
To sum it up, loan officers have the potential to make more money than the majority of the population, including doctors and lawyers.
And even pro athletes if their careers are long enough, but financial situations will vary greatly based on sales performance.
The amount of time and work you put in is paramount, and you must be very driven to excel in the mortgage industry. It can be a very cut-throat field, filled with stress, deadlines, and missed opportunities.
After all, we’re talking about a lot of money and big life moments for the families taking out these loans. So it’s not to be taken lightly.
The job certainly isn’t for everyone, but if you think you’ve got what it takes, it can be very fruitful and lead to other opportunities, such as being a broker, working with a large banking institution, or working in commercial real estate, just to name a few.
Always do plenty of research about the mortgage company or broker you decide to work for to ensure you know exactly how and what you will be paid, and what is expected of you. Good luck out there!