How to become a mortgage loan officer in 6 steps + Q&A about MLOs

Move over, real estate agents, and make way for the person who gives homebuyers the financial ability to buy a home – mortgage loan officers (MLOs). Also known as mortgage loan originators or mortgage brokers (although the roles differ slightly —  we’ll talk about it), MLOs are the key to financially connecting people to the properties of their dreams.

Starting a career as an MLO is lucrative if you’ve got the skills to consistently deliver value to your clients. You must be organized with paperwork, a clear and concise communicator, patient and educational toward clients, good with financial analysis and an effective negotiator to get the best terms on behalf of their clients.

Does this sound like the job for you? Then, you’re in the right place. We’re going to break down the step-by-step process of how to become a mortgage loan officer and answer all your questions about what exactly an MLO is, how it differs from brokers, what the NMLS is and salary information.

Step 1: Check your eligibility and register with NMLS

Your first and easiest step will be to register with the NMLS, also known as the Nationwide Multistate Licensing System. It started in 2010 when the Federal Housing Financing Agency (FHFA) mandated that Fannie Mae and Freddie Mac include identifiers for loan originators or loan origination companies as a way to regulate and monitor mortgage transactions.

Now, NMLS is a national licensing system for state-licensed mortgage companies and MLOs. To be very clear, your MLO license is not issued by the NMLS. All mortgage licensee applicants must register on the NMLS to get their ID number and profile. The NMLS will also be used to schedule your exam, complete your background checks and complete your application.

Simply go to the NMLS website and input your information to register.

Step 2: Complete mortgage loan officer prelicensing education

After registration, it’s time to head back to school and knock out your prelicensing coursework. Almost all states require at least 20 hours of coursework before you can get your license. Those hours cover different topics that will benefit you in your MLO career.

Here’s a general breakdown for your average prelicensing course:

• 3 hours of federal law
• 3 hours of ethics
• 2 hours of non-traditional mortgage lending
• 12 hours of elective coursework, which can vary based on your state

Check out this chart that details NMLS prelicensing and continuing education course hour requirements by state:

Becoming a mortgage loan officer or becoming a mortgage broker has never been easier with online education. The CE Shop offers a self-paced learning experience with progress tracking so your courses can fit your schedule. The NMLS-approved courses include interactive elements and real-world applications that will prepare you for your future as a loan originator. The CE Shop also has exam prep and continuing education for mortgage professionals.

At the end of your course, you’ll take a prelicensing exam from your chosen mortgage school. Once you pass (and we know you will), go ahead and pat yourself on the back. But, don’t take too long. NMLS only opens the registration window for a short period of time once you complete your prelicensing work.

Step 3: Pass the SAFE MLO exam

Your prelicensing course should’ve taught you a lot about working as an MLO in your state. However, you’re not out of the classroom yet. According to the SAFE Mortgage Licensing Act of 2008, all aspiring mortgage loan officers have to pass the SAFE MLO exam to get a NMLS license.

You’ll register for the exam on the NMLS website. The exam is designed to test your understanding of what you studied in class. The exam has a time limit of around three hours with 120 questions (115 scored and five unscored). The questions will cover federal mortgage laws, general mortgage knowledge, MLO activities and more. The cost of the SAFE MLO exam is $110.

You’ll need a score of 75% to pass the NMLS exam. Sounds easy, right? It can be, if you prepare and study enough ahead of time. Keep in mind, only 53% of exam takers pass the NMLS exam on the first try, so make flashcards, quiz yourself and feel confident going into the test.

Step 4: Get background checks

Next up is getting state and FBI criminal background checks, which are required for all MLO applicants. Log back into the NLMS and click on the Filing tab, then the Criminal Background Check tab. Authorize a Federal criminal background check by completing the information fields and clicking Attest.

From there, you’ll need to schedule and complete a fingerprint appointment to finish the security and ID portion of the registration process. The cost varies depending on your location, but typically ranges from $20 to $70.

The last step will be allowing the NMLS to perform a credit check to ensure your record is relatively clean. As mentioned in step 1, the NMLS does take a close look at your background history and credit report and may ask you for further information if any issues arise.

Step 5: Submit an NMLS application 

Log in to the NMLS website portal to submit your application. You or your employer will need to complete a detailed form called the MU4 Form. You’ll need to provide identifying information, including your name, social security number, date of birth, etc. The form will also ask for information about your past employment and details related to your work history. The NMLS processing fee is $30, but there are further fees that differ per state (typically $0 to $500).

For more details on the MU4 Form, download the PDF below:

Step 6: Find an employer sponsor

Last, but not least, in order for a person to have an approved mortgage loan officer license, they must have an employer as a sponsor. The sponsorship ensures that all MLOs are supervised. The NMLS also allows licensees to be sponsored by more than one company. The company must confirm sponsorship through the NMLS portal. After this is complete, you’re ready to go!

Becoming a mortgage loan officer: FAQs and definitions

To make sure we cover all of our bases, we wanted to include some frequently asked questions about MLOs so you’re fully prepared to take the next step. Dive in below.

What is a mortgage loan officer (MLO)?

Simply put, a mortgage loan officer is a licensed professional who helps individuals navigate the mortgage process and secure financing to purchase a property. This could be for residential or commercial property or even an empty lot of land. Their goal is to assist people in assessing their current financial situation to ascertain how much money they can borrow from a lending institution to finance their newest purchase.

Different names for mortgage professionals

There are a bunch of different names used to refer to mortgage professionals, so let’s set the record straight. The funny thing is, no matter what you call a mortgage professional, they are still performing the same function of finding financial institutions for clients to borrow money. And, they are all required to complete the same licensing process. Here’s a breakdown of the differences.

• Mortgage loan officer: Colloquial title of the profession, works with one institution.
• Mortgage loan originator: Legal title of the profession, works with one institution.
• Mortgage broker: Still an LO, but coordinates with multiple lenders to find the best options for borrowers.

Regardless of what you call them, all of the abovementioned mortgage people must be licensed through and answer to the NMLS – so what’s the NMLS? Keep reading, and we’ll cover that too.

What is the NMLS, and what is its function in the MLO process?

When you become a mortgage loan officer, you will repeatedly hear about the NMLS, also known as the Nationwide Multistate Licensing System. As we mentioned in step 1, the NMLS is the governing agency of MLOs and ensures all MLOs are well-qualified to handle transactions. It will be your main website portal for all things while getting and renewing your license.

Customers may also look up your license info via NMLSConsumerAccess.org to ensure you’re legit before doing business with you. Many agents include their NMLS number on their business cards, websites and other branding tools.

Mortgage officer salaries

Mortgage loan officers generally make a salary-based income with commission. However, some make solely commission or solely salary. Commonly, MLOs earn 1% to 2% commission based on the loan amount and then split that commission with their broker. Work with your employer sponsor to determine a wage you feel comfortable with.

MLOs often have flexible work hours and can work independently or with a bank or mortgage broker. According to ZipRecruiter, the national average salary for mortgage loan officers is $79,825, and for mortgage brokers it’s $87,416. Obviously, salaries can vary based on your location and work ethic. Mortgage officers who generate leads consistently will close more deals.

The full picture

Becoming a mortgage loan officer or broker is a lucrative career that gives you a front-row seat to the homebuying process. Simply follow the steps above, and you’ll be on your way to getting your MLO license.

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