How to Become a Mortgage Broker: A Step-by-Step Guide

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Posted Jan 10, 2025

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A Client in Agreement with a Mortgage Broker
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Becoming a mortgage broker can be a rewarding career, but it requires the right combination of skills and knowledge. To start, you'll need to meet the basic requirements, such as being at least 18 years old and having a high school diploma.

To become a mortgage broker, you'll need to obtain a mortgage broker's license in your state. In the United States, this typically involves completing a pre-licensing education course and passing a licensing exam. The course covers topics such as mortgage laws and regulations, as well as ethics and consumer protection.

You'll also need to register with the National Mortgage Licensing System (NMLS) and obtain an NMLS ID number. This is a one-time fee that allows you to work as a mortgage broker in multiple states. According to the article, the cost of registering with the NMLS can range from $100 to $400.

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What is a Mortgage Broker?

A mortgage broker is a licensed professional who acts as an intermediary between borrowers and lenders to secure the best possible mortgage terms.

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A mortgage broker works independently or within a brokerage firm, giving them access to a wide range of loan products from various lenders. They operate differently from loan officers who work directly for a specific bank or lending institution.

To become a mortgage broker, you need to understand what these professionals do. A mortgage broker facilitates the connection between property buyers and an organization that can provide financing.

A mortgage broker's primary role is to assess clients' financial situations, understand their mortgage needs, and find suitable loan options. This involves determining the right loan amount, one that is within the borrower's budget, allows the borrower to meet their goals, and is likely to be approved by the bank.

A mortgage broker is paid a commission on the loan, often called an "origination fee." In many cases, a mortgage broker only gets paid once the loan transaction is complete.

Education and Licensing

To become a mortgage broker, you'll need to meet the educational requirements, which include having a high school diploma or passing the General Educational Development (GED) test. This shows you have the basic skills to comprehend complex data and tackle issues.

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Reading comprehension, mathematics reasoning, and science interpretation skills are also essential for a mortgage broker. You'll need to be able to review loan documents and understand regulations, calculate interest rates and payments, and demonstrate logical thinking and problem-solving skills.

To get started with the licensing process, you'll need to complete a 20-hour course approved by the Nationwide Multistate Licensing System & Registry (NMLS). The course will cover topics such as federal laws and regulations, ethics, mortgage products, and risk management. You can find a list of approved schools on the NMLS website.

Here's a breakdown of the 20-hour training course:

TopicHours
Federal regulations and laws3 hours
Ethics and fraud3 hours
Non-traditional mortgage lending standards2 hours
Electives on mortgage origination12 hours

After completing the training course, you'll need to pass the SAFE Mortgage Loan Originator Test, which assesses your knowledge of mortgage laws, ethics, and practices.

Associate's or Bachelor's Degree

Having an associate's or bachelor's degree can be a great asset for aspiring mortgage brokers. Many mortgage brokers have two-year associate degrees or bachelor degrees that relate to the industry.

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While not required, these degrees can be an important part of establishing a successful career. Possible majors and minors are seemingly endless, but courses in business, real estate, finance, and economics are excellent choices.

As a mortgage broker, you will be essentially in charge of your own business, so an associate's degree in business administration would be an ideal choice. For example, Grand Canyon University offers a Bachelor of Science in Economics, which can provide valuable knowledge and skills.

Arizona State University's Bachelor of Arts in Business - Financial Planning and the University of West Alabama's Bachelor of Business Administration / Finance are also great options. These degrees can enhance your understanding of the mortgage industry and improve your career prospects.

Here are some examples of degrees that can be beneficial for mortgage brokers:

  • Grand Canyon University Bachelor of Science in Economics
  • Arizona State University Bachelor of Arts in Business - Financial Planning
  • University of West Alabama Bachelor of Business Administration / Finance

Preparing for the Loan Originator Test

To prepare for the loan originator test, you'll need to complete a 20-hour course approved by the Nationwide Multistate Licensing System & Registry (NMLS). This course will cover topics such as federal and state mortgage laws and regulations, ethical practices in mortgage lending, and mortgage origination and underwriting standards.

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The NMLS is a national mortgage license system used in all 50 states, so you can rest assured that your education will be relevant regardless of where you plan to work. Completing the NMLS SAFE Mortgage License Training is a critical step in obtaining your mortgage broker license and becoming a mortgage broker.

To succeed on the test, create a study plan that includes ample time for reviewing course materials, taking practice exams, and addressing any areas of weakness. Investing in additional resources such as study guides or test prep courses can also improve your chances of passing on the first attempt.

Here's a breakdown of the typical topics covered in the 20-hour course:

  • Federal regulations and laws - three hours
  • Ethics and fraud - three hours
  • Non-traditional mortgage lending standards - two hours
  • Electives on mortgage origination - 12 hours

The training courses cost between $200-$300, and you may opt to take additional courses to enhance your knowledge. After your training, you can use the practice tests provided by these schools to identify your strong points and areas where you need to improve.

Studying with your peers can also help. Find NMLS groups in Reddit, LinkedIn, or similar platforms to find other exam takers or experienced mortgage professionals and get some advice.

Pursue Further Education

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Pursuing further education can be highly beneficial for aspiring mortgage brokers. While not always mandatory, it can enhance your understanding of the mortgage industry and improve your career prospects.

Degrees in finance, business, economics, or related fields provide valuable knowledge and skills that can be advantageous in the mortgage industry. These fields can also provide a solid foundation for a career as a mortgage broker.

Courses in real estate, accounting, and marketing can also be beneficial for mortgage brokers. These courses can help you understand the intricacies of the mortgage industry and develop skills that can help you succeed.

Here are some examples of degrees that can be beneficial for mortgage brokers:

  • Grand Canyon University Bachelor of Science in Economics
  • Arizona State University Bachelor of Arts in Business - Financial Planning
  • University of West Alabama Bachelor of Business Administration / Finance

Pursuing further education can also provide you with a competitive edge in the job market. Many mortgage brokers have two-year associate degrees or bachelor degrees that relate to the industry, and having one of these degrees can be an important part of establishing a successful career.

State Requirements

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To become a mortgage broker, you'll need to meet the state's licensing requirements. Licensing requirements vary by state, so check the NMLS website for information specific to your state.

You'll need to submit various documents through the NMLS platform, including your financial statements, proof of completion of pre-licensing education, SAFE test results, fingerprints for an FBI background check, credit report authorization, and a surety bond. A surety bond provides additional security for clients and guarantees that you'll follow industry standards.

Some states have a flat rate for the surety bond, while others scale the cost depending on your annual loan volume. For example, Colorado brokers need a $25,000 bond, while Texas brokers need a $50,000 bond. You can check the NMLS bond map to know your state's exact bond cost.

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Florida

In Florida, licensing is required for anyone participating in the origination of loans. This includes mortgage brokers and their employees.

To obtain a license, you'll need to go through one of the licensed loan originators employed by the mortgage broker, or as an independent contractor to the broker.

A background check is part of the licensing process, in addition to other inspections. This ensures that only qualified and trustworthy individuals are working in the industry.

The licensing process can be complex, but it's essential to follow these steps to become a licensed mortgage broker in Florida.

Getting in California

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To get your mortgage broker license in California, you'll need to work with the California Department of Financial Protection and Innovation. This office will help you obtain your mortgage loan origination license and mortgage broker license California.

You'll need to check the requirements for a mortgage broker career in your area, as they can vary by state. You can check with your state offices or consult groups, such as the National Association of Mortgage Brokers, for more information.

The NMLS website is a great resource to find information specific to your state, including California.

State Requirements

Licensing requirements vary by state, so it's essential to check the NMLS website for information specific to your state. You'll need to meet your state's mortgage broker license requirements and obtain a surety bond.

A surety bond provides additional security for clients and guarantees that you'll follow standards that govern your trade. The bond requirement changes from state to state, with some states having a flat rate for all brokers, while others scale your bond cost depending on your annual loan volume.

A Mortgage Broker Sitting Behind a Desk
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For example, Colorado brokers need a $25,000 bond, while the required amount for Texas brokers is $50,000. You can check the bond map of NMLS to know your state's exact bond cost.

Mortgage brokers are licensed through the Nationwide Multistate Licensing System (NMLS), which oversees testing for anyone who wants to become a mortgage broker. Each state has different requirements and details beyond NMLS licensing.

To become a mortgage broker, you'll need to complete a 20-hour course approved by the NMLS and pass the SAFE Mortgage Loan Originator Test. You'll also need to submit financial statements, proof of completion of pre-licensing education, SAFE test results, fingerprints for an FBI criminal background check, credit report authorization, and obtain a surety bond.

Here are the common requirements that brokers from all states must provide:

  • Your financial statements
  • Proof of completion of pre-licensing education
  • SAFE test results
  • Fingerprints for FBI criminal background check
  • Credit report authorization
  • Obtain a surety bond

You can expect to pay around $1,000 to $2,000 for your initial application and annual license renewal, although the requirements and licensing fees vary per state.

Career and Business

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As a mortgage broker, you'll enjoy a wide range of job opportunities with various companies, including banks, credit unions, and mortgage investment companies. You could even work for yourself and create your own mortgage origination company.

The career also offers flexible work hours, so you can choose a schedule that suits your lifestyle. This is a great advantage for those seeking a better work-life balance.

With a potential average salary of $102,626 per year, being a mortgage broker can be a lucrative career. The commission-based work model means there's no limit on the amount you can earn, and you can build a book of business by working with repeat clients.

To get started, you'll need to obtain a high school diploma or GED, and then prep for the licensing exam by taking a course through a National Mortgage Licensing System (NMLS) approved mortgage broker school. The NMLS is a nationally mandated test for every aspiring broker, and you'll need to submit an application to your local state government for a mortgage broker/loan originator license.

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Here's a step-by-step guide to determining your operating structure:

  • Originate loans through a brokerage that you self-register (more overhead, but you get 100% of commission)
  • Join an existing brokerage that hires mortgage brokers (less overhead, but brokerage takes part of the commission)
  • Start your own brokerage, which requires a mortgage broker bond.

Key Responsibilities

As a mortgage broker, you'll be responsible for several key tasks. You'll assess clients' financial situations to determine their mortgage needs, and research different loan products to find the best rates and terms.

A mortgage broker's day-to-day work involves assisting clients with the loan application process, gathering necessary documentation, and communicating with lenders on their behalf to negotiate loan terms and conditions. This requires strong communication and negotiation skills.

Here are some specific responsibilities of a mortgage broker:

  • Assessing clients' financial situations and determining their mortgage needs.
  • Researching and comparing different loan products to find the best rates and terms.
  • Assisting clients with the loan application process and gathering necessary documentation.
  • Communicating with lenders on behalf of clients to negotiate loan terms and conditions.
  • Providing advice and guidance throughout the mortgage process to ensure a smooth transaction.

By understanding these key responsibilities, you'll be better equipped to succeed in this role and help your clients achieve their home-buying goals.

Career Advantages

Becoming a mortgage broker can be a lucrative career move, with a high potential mortgage underwriter salary and a relatively fast entry point. The education requirements for this career are minimal, so anyone who has a limited education but would like to enter a lucrative career may find this job attractive.

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One of the biggest advantages of this career is the flexibility and independence that come with it. Opportunities for self-employment and the ability to set your own working hours make this career appealing to those seeking a better work-life balance.

Mortgage brokers enjoy a wide range of job opportunities with various companies, from banks and credit unions to private lenders and mortgage investment companies. They also have the chance to work with many different people from all sorts of backgrounds, helping people fund the purchase of a life-changing property.

Here are some of the key benefits of becoming a mortgage broker:

BenefitsDescription
Lucrative income potentialMortgage brokers typically earn a commission based on the loan amount they secure for their clients.
Flexibility and independenceAs a broker, you are your own boss, and can find work hours that best suit your lifestyle.
Job flexibilityYou can start your own brokerage, join an existing one, or work as a loan officer for a lender.
Opportunities for self-employmentYou can work as a sole proprietor, partner, or LLC, giving you control over your business.

Overall, becoming a mortgage broker can be a rewarding and profitable career move, offering a range of benefits and opportunities for growth and development.

Career Outlook

The job market for entrepreneurs and small business owners is growing rapidly, with an expected 10% increase in employment opportunities by 2025.

One of the most in-demand jobs is that of a digital marketing specialist, with the Bureau of Labor Statistics predicting a 10% growth in employment opportunities by 2028.

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The rise of e-commerce has led to a surge in demand for logistics and supply chain managers, with many companies looking for professionals who can optimize their shipping and delivery processes.

According to the Bureau of Labor Statistics, the median annual salary for a logistics manager is around $85,000, making it a lucrative career choice for those with the right skills.

Many entrepreneurs and small business owners are turning to freelancing as a way to supplement their income and gain more flexibility in their careers, with the gig economy expected to grow by 30% by 2025.

However, freelancing can also bring its own set of challenges, including irregular income and a lack of benefits.

Salary

Salary can vary widely for mortgage brokers, but loan officers who do similar work have a median salary of $63,690, with top earners making over $133,000.

The potential earning potential for mortgage brokers is substantial, with ZipRecruiter citing an average annual salary of $77,202 and Indeed reporting an average base salary of $133,750.

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A guaranteed salary is not typical for mortgage brokers, as earnings are often based on performance, with loan officers earning an average of $76,200 annually in 2023.

The salary for mortgage brokers is not fixed, but rather dependent on experience, location, and performance, making it a career with unlimited earning potential.

Earning Potential

As a mortgage broker, your earning potential is vast and varied. The average salary for a mortgage broker in the US is about $102,626 per year, which is slightly double the national average of $51,000.

Your earnings will be based on commission, not a fixed amount, so the harder you work and the more loans you finalize, the more you'll earn. Loan officers, who have similar skills, have a median salary of $63,690.

The top 10% of loan officers earn more than $133,000, showing that there's massive potential for outstanding earnings. With a mortgage broker's commission-based earnings structure, you can earn significantly more than that.

Photograph of a Mortgage Broker Sitting
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In fact, according to Indeed, the average salary for a mortgage broker is $133,750, with some sources suggesting that mortgage brokers have an average annual salary of $77,202. This means that your earning potential is directly tied to your performance and the number of loans you process.

As a mortgage broker, you'll have the opportunity to build a book of business and attract repeat clients, which can lead to a steady stream of revenue. It's common for people and businesses to purchase multiple properties over their lifetime, so the potential for repeat clients and revenue is significant.

Working at a Established Firm

Working at an established firm can be a great way to start your mortgage broking career. You'll get a chance to network and learn from experienced brokers, which is invaluable in the competitive world of mortgages.

Mentorship is a key benefit of working at an established firm. You'll learn from experienced brokers who can teach you the ropes and help you succeed in the industry. This hands-on training will give you the confidence and skills you need to excel as a mortgage broker.

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Working at an established firm also provides access to exclusive loan products and better rates, giving you a competitive edge in the market. This can be a major advantage when it comes to attracting clients and closing deals.

Here are some of the benefits of working at an established firm:

  • Mentorship: Learn from experienced brokers to succeed in the competitive world of mortgages.
  • Resources: Access exclusive loan products and better rates to give you a competitive edge.
  • Credibility: Boost your credibility by affiliating yourself with a well-known company.

Overall, working at an established firm can be a great way to launch your mortgage broking career and set yourself up for success in the industry.

Frequently Asked Questions

Is it profitable to be a mortgage broker?

Yes, being a mortgage broker can be profitable, as they earn a commission of 1-2% of the loan value, which can add up significantly with larger loan amounts. This commission-based income model makes it a potentially lucrative career path for those in the industry.

Do mortgage brokers get paid salary?

Yes, some mortgage brokers are paid a salary, while others may receive a salary and share commissions with their parent firm. This compensation structure can vary depending on the broker's employment status.

What does a mortgage consultant do?

A mortgage consultant guides clients through the mortgage process, helping them make informed decisions and find the right mortgage program for their needs. They ensure a stress-free experience by navigating complex steps and avoiding common mistakes.

How do mortgage consultants get paid?

Mortgage consultants are typically paid a loan-specific fee, known as a commission, which can be paid by the borrower or the lender. The commission amount may vary based on the loan amount, or be a fixed amount with minimums or maximums.

How hard is the mortgage broker exam?

The mortgage broker exam is challenging, with only 56% of test takers passing on their first attempt. Passing the exam requires a strong understanding of mortgage regulations and practices.

Colleen Boyer

Colleen Boyer

Lead Assigning Editor

Colleen Boyer is a seasoned Assigning Editor with a keen eye for compelling storytelling. With a background in journalism and a passion for complex ideas, she has built a reputation for overseeing high-quality content across a range of subjects. Her expertise spans the realm of finance, with a particular focus on Investment Theory.

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