United States
Hong KongWhat mortgage loan originators earn
The Bureau of Labor Statistics publishes wage data for loan officers, but most originator income is commission and the reported wage understates a productive originator while overstating a new one with no pipeline.
This is a question with a bad answer available everywhere and a good answer that is less satisfying.
What the published data covers
The Bureau of Labor Statistics reports wages for Loan Officers under occupation code 13-2072. It is the figure everyone quotes.
Two problems with using it as an answer. The occupation is broader than mortgage originators, taking in commercial and consumer lending. And it reports wages, while a large share of originator income is commission.
A commission-paid role has no typical income in the way a salaried one does. The same job, at the same firm, in the same year, produces very different results for two people, and averaging them describes neither.
How the money actually works
Most originators are paid basis points on volume they originate. Close more, earn more. Close nothing, earn close to nothing.
Some roles carry a draw against future commission, which is an advance rather than a salary and is recovered from later earnings.
What determines the number
- Whether leads are provided or you build your own pipeline
- The referral relationships you bring or develop - agents, builders, past clients
- Rate environment, because volume moves with rates and nothing you do changes that
- Your compensation plan, which cannot vary with the loan terms but can vary with volume
The first year
Usually the hardest financially. A pipeline takes months to build and commission arrives after closing, so early months can be very thin.
Anyone considering this move should ask a prospective employer what proportion of last year's new originators are still there. The answer is more informative than any salary figure.
Common questions
How much do mortgage loan originators earn?
It varies enormously because most pay is commission on volume. Published wage data covers loan officers broadly and largely reports base pay.
Are loan originators salaried?
Usually not. Most are paid basis points on volume, sometimes with a draw that is recovered from later commission.
What is a draw?
An advance against future commission, recovered from later earnings. It is not a salary.
What is the first year like?
Financially hard for most. Pipelines take months to build and commission arrives after closing.
Can compensation vary with the interest rate?
No. Compensation may not vary with a term of the transaction under 12 CFR 1026.36(d)(1).