The Guide to Becoming a Mortgage Loan Officer

How to Become a Mortgage Loan Officer (MLO) in 2022

Loan officers are the critical human connection between a lender and a borrower. Mortgage loan officers (MLO’s) do more than just collect documents and fill out forms. They enable homebuyers to finance the homes that will house their families and serve as a stable investment for years to come.

This Article Covers: 

  • How to get started as a loan officer
  • Factors to consider when becoming a loan officer
  • Laws that you need to know

What do loan officers do?

According to the United States Bureau of Labor Statics, “loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.”
In the mortgage industry, it is best to think of loan officers as gatekeepers who evaluate the borrowers’ eligibility to proceed through the loan underwriting process.
Loan officers complete this process by meeting and engaging with their loan applicants to procure the information needed to determine credit worthiness before guiding them through the many steps of loan approval.

A large portion of a mortgage loan officer’s job is customer service and sales-related. Most of these mortgage originators must find their own clients to generate new business for the bank or financial institution that they work for. Working as a Loan Officer (also known as a Mortgage Loan Officer or MLO) means working for a licensed mortgage broker. Mortgage brokers are distinct businesses that are licensed to act as middlemen between lenders and borrowers. Learn how to become a mortgage broker here!

Mortgage loan officers are often responsible for marketing their own business even when their license is with a corporate lending institution. Learn more about mortgage marketing in Top of Mind’s Mortgage Marketing University.

What kind of training does a mortgage loan officer need?

While some community colleges offer certificate programs for mortgage loan originators, there are no four-year degree programs currently offered for loan origination.  

Most loan officers with a bachelor’s degree studied accounting, finance, or business administration.  

Organizations like the American Bankers Association’s American Institute of Banking offer certification programs through approved training providers. In these programs, prospective loan officers learn about real estate, ethics, and loan structuring.  

The only required training for becoming a loan officer is 20 hours of approved pre-licensure courses followed by passing the NMLS Mortgage License Examination.  

The bulk of training loan officers receive will come post-licensure  in the form of on-the-job training from the bank, mortgage company, or credit union that they work with. This training varies from company to company, and often have a focus on the different types of software they use to manage prospective home buyers, organize client information and documents, underwrite loans, and ensure compliance with federal and state lender regulations.

What will my first year be like as a loan officer?

After completing the process of acquiring your state licensure and finding a job, there is a high probability that you will be assigned to work with a more seasoned loan officer for your first year as a loan officer.  

During this time, 50% of your day will be spent growing your sales pipeline and the other 50% will be devoted to learning regulations and guidelines so that you know how to quickly and effectively guide your borrowers through the loan approval process.  

What are the key requirements to becoming a loan officer?

As previously mentioned, you are required to pass the National NMLS Mortgage License Exam. But there are a few other federal and state requirements that vary depending on where you will work. 

First and foremost, you must be at least 18 years of age to register with the Nationwide Mortgage Licensing System and Registry (NMLS), which requires a background check.  You’ll be able to take the exam once you’ve provided proof of your 20 hours of education.  Upon passing the exam you’ll have the necessary qualifications to become a loan officer!

But it doesn’t stop there. The SAFE Act mandates that state-licensed mortgage loan originators complete eight hours of continuing education annually which must include: three hours of federal law and regulations and two hours of ethics, including instruction on fraud, consumer protection and fair lending.

Can mortgage loan officers make a lot of money?

The answer is yes, you can make a lot of money as a loan officer.  But, like all career paths, you have to put your nose to the grindstone.  

Loan officers are paid either “on the front” and/or “on the back.” 

If a loan officer makes money on the front, it means they get paid for fees associated with processing a mortgage, often categorized as settlement costs or processing fees. 

Getting paid “on the back” means that the bank filing for the loan gives money to the originator as commission. 

You may notice that regardless of which structure you are paid as a loan officer, both require that you are closing loans correctly and efficiently.  

If you are can balance a growing network of referral partners while properly vetting and educating your customers, a career as a loan officer can be quite lucrative. So how much money does a loan officer make? The answer, more so than in many other jobs, is that your income is up to you!

Get to know our top-producing lenders from their start in the industry through their rise to the top.

What are the main associations for Mortgage Brokers and Loan Officers?

How long does it take to become a Loan Officer?

States have varying requirements and your personal schedule has an impact on how quickly you can complete all the training and licensing. Of course, you must have a strong understanding of mortgage regulations and pass the tests on the first try, a feat that not every applicant accomplishes. Expect the process to take approximately 30-60 days depending on location and your own efforts.

What is the S.A.F.E. Act?

A result of the 2008 financial crisis, the S.A.F.E Mortgage Licensing Act is a federal law that governs the requirements for issuing a license to any individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application.  

The law also establishes standards for loan officers to maintain their license with stipulations which dictate circumstances for which the licensure may be revoked. 


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