How to Become a Mortgage Broker

What is a Mortgage Broker

A mortgage broker is an intermediary between a person who wants to get a mortgage loan and mortgage lenders that provide the loan. A mortgage broker’s job is to find the mortgage lender that can finance the loan at the cheapest rate for their client, based on the client’s financial background and credit score. A mortgage broker also plays the role of a salesperson. As a broker, not only are you responsible for sourcing the best mortgages for your clients, you are also guiding your clients through their exciting journey of purchasing a home. The best brokers excel at making their clients feel comfortable and informed about their mortgage decisions. Mortgage brokers can either operate independently or work for an established brokerage, and make money from commissions, which is usually 1% to 2% of the loan amount, according to NerdWallet. 

Why Become a Mortgage Broker

There are three reasons that you should consider becoming a mortgage broker: earning potential, ease of entry, and flexibility.

Earning Potential 

According to Indeed, 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. Unlike salary workers, mortgage brokers operate on a commission-based work model, which means that there is no limit on the amount that can be earned - the more loans processed, the greater the commission.. Another financial advantage of being a mortgage broker is that it allows you to build a book of business. It’s quite common for people/businesses to purchase multiple properties over their lifetime, therefore they will likely need multiple mortgages. As a broker, this is fantastic news, as it introduces the possibility of repeat clients and revenue.  

Ease of Entry

It is also relatively easy to get licensed as a mortgage broker, since no extensive schooling or previous work experience is required. We go through the actual steps you need to take to become a mortgage broker later on in this article, but to keep it brief, you only need a high school diploma or GED to to become a mortgage broker. Unlike other industries such as accounting or construction contracting, there is no years of experience that you must have in the industry before becoming licensed.

Job Flexibility

The last benefit of becoming a mortgage broker is job flexibility. As a broker, you are your own boss. The job is designed so you can find work hours that best suit your lifestyle. Want to run a solo brokerage as a sole proprietor that provides maximum flexibility vs. becoming a larger brokerage that processes huge loan volumes vs. anywhere in between? It’s totally up to you. 

How to Become a Mortgage Broker

It’s a five step process to becoming a mortgage broker, and we’ll do a deep dive into each one. Here is a quick summary of the six steps: 

Step 1: Obtain a  high school diploma or GED if you do not already have one.

Step 2: Prep for the licensing exam by taking a course through a National Mortgage Licensing System (NMLS) approved mortgage broker school.

Step 3: Take the national test administered by the NMLS. This is a nationally mandated test for every aspiring broker regardless of the state they operate out of.

Step 4: Submit an application to your local state government for a mortgage broker/loan originator license. Each state has varying licensing requirements, and you would need to submit a license for each state you intend to operate in.

Step 5: Determine your operating structure. You can either originate loans through a brokerage that you self-register (more overhead, but you get 100% of commission) or join an existing brokerage that hires mortgage brokers (less overhead, but brokerage takes part of the commission). If you choose to start your own brokerage, then you will need a mortgage broker bond.

A Quick Note: Mortgage Loan Originator vs. Mortgage Broker

A quick note here on mortgage loan originators vs. mortgage brokers, since you may come across this a lot during your research. These terms are often used interchangeably, but the specific meaning can vary by state. For example, in the state of California, a ‘Mortgage Loan Originator License’ is the only license required for mortgage brokers. However, in Arizona, there is a ‘Mortgage Loan Originator License’ and a ‘Mortgage Broker License’. The subtle difference between the two here is that ‘Mortgage Broker License’ is meant for a company, while a ‘Mortgage Loan Originator License’ is meant for an individual in Arizona. Be sure to double check your state requirements on this NMLS page to make sure you are getting the correct license. For the intents and purposes of this article, when we say a mortgage broker license, we are referring to a license for an individual, not a company. 

With that out of the way, let’s go into detail about each step you need to take to become a mortgage broker. 

Step 1: Get a High School Diploma or GED

A college degree is not required for mortgage brokers, but a high school degree or GED is required in all 50 states. GED stands for the General Education Development Test, and obtaining a score of 145 in its four exams is enough to give you your diploma if you do not have a conventional high school diploma. You can register to take the GED exam here. The estimated prep time for the GED exam is 1-2 months. 

Although prior work experience is not required, experience in the mortgage industry beforehand can greatly benefit you as a mortgage broker. In fact, many mortgage brokers began as loan bankers or officers. Experiencein the mortgage industry can provide you with the industry knowledge and network that other new mortgage brokers lack. 

Step 2: Take the Necessary Pre-Licensing Training

The next step is to take the necessary coursework at a NMLS pre-approved mortgage broker school. The Secure and Fair Enforcement Licensing Act (SAFE) requires all states to have mortgage brokers obtain a license before being able to work legally in that state. To secure your license from the National Mortgage Licensing System (NMLS), the NMLS requires you to complete a 20-hour training course. The courses include learning about federal regulations and laws, ethics and fraud, non-traditional mortgage lending standards, and electives on mortgage origination. Below is a table that shows how the 20 hours are split up between these different topics.

Topics Amount of Hours
Federal Regulations and Laws 3
Ethics and Fraud 3
Non-traditional Mortgage Lending Standards 2
Electives on Mortgage Origination 12
Total Time 20

The training courses cost between $200-$300 and are a great way to help you prepare for the exam. Along with practice tests, you should be more than ready to take the exam. You can find practice test questions from companies such as Compucram.

One common tip we’ve heard from mortgage brokers is that aspiring mortgage brokers should immerse themselves within the mortgage broker community to see if they really enjoy the job. There are many ways to do this. You can find study groups from online communities such as Reddit and listen to mortgage broker podcasts.

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Step 3: Take the NMLS Exam

Once you’ve finished your pre-licensing courses, it is time to take the NMLS (also known as SAFE) exam! To begin the enrolment process, you must first create an account on the NMLS website. After an account has been created and you’ve enrolled for the exam, you have 180 days to schedule an appointment to take the test. The enrolment fee is $110, and an additional fee may also be required for specific state exams. 

The NMLS exam is a national test that all potential mortgage brokers have to take. Some states, however, require an additional state exam. Here is a list of states that require this additional exam:

  • Arizona
  • Arkansas
  • California
  • Colorado
  • Connecticut
  • Florida
  • Illinois
  • Minnesota
  • Oregon
  • South Carolina
  • Utah
  • West Virginia

Other states, however, have adopted the uniform state test (UST) to be a part of the national NMLS exam. The UST portion requires you to pay $69. The entire test will include 25 questions to gauge your knowledge of state specific rules and SAFE act policies.

The whole test appointment is 225 minutes, but the test itself is meant to take 190 minutes for 120 questions. The rest of the time is for a tutorial and an optional survey. You will receive the results within 72 hours of taking the exam. To pass, you need to get a score of 75%. The exam will cover topics in five major categories:

  • Uniform State Content (aforementioned UST)
  • Loan Originating Activities
  • General knowledge about mortgage loans
  • Mortgage broker ethics
  • Federal law related to mortgage loans

If you do not pass the first time, you can retake the exam for a second time. If you do not pass the second time, you must wait 30 days before your third attempt. If you do not pass the third time, you must wait 180 days before your fourth attempt. By your fourth attempt, the cycle repeats and you must wait 180 days before any further attempts. 

The passing rate for first-time takers is 58% and even lower at 47% for second-time takers. Make sure to prepare by using practice tests. With regards to practice test scores, we recommend that you hold off on taking the real test until you are consistently scoring in the high 80s to low 90s on practice exams; the higher the better obviously. A passing score is 75%, but overachieving on practice exams will leave more room for error when it comes to taking the real exam. 

Step 4: Apply for your License through NMLS

The next step is to actually apply for and get  your license. The fees associated with applying through NMLS is $30 (initial processing fee) + local state fees (usually $100-$200).  

To get started with applying for a license, you can find your state on the NMLS site. Once you’ve selected the state, look for “Mortgage Loan Originator License” or “Mortgage Broker License” and you will find instructions for how to get licensed as a mortgage broker in our state. 

The most common requirements included on the application are:

  • Proof of completion of pre-licensing education
  • NMLS exam results
  • Fingerprint report and criminal background check
  • Credit report or authorization for a credit check

Once you’ve submitted your application to NMLS, you should hear back within 30-60 days. If your application is approved, you will receive a license number indicating your official status as a registered mortgage loan originator/broker. 

Step 5: Join an Established Brokerage or Start Your Own Brokerage

Once you’ve obtained your mortgage broker license number from the NMLS, you will need to get a brokerage that is registered with NMLS to sponsor you. This can be done before, during or after your application to NMLS. Not having a sponsoring brokerage will not result in your application being rejected but your license will show as ‘Approved - Inactive’ on NMLS until you have a sponsoring brokerage and you won’t be able to operate as a mortgage broker. 

Generally speaking, there are two ways to get a sponsoring brokerage. You can either (1) join a “call-center” brokerage, (2) join a “brick and mortar” brokerage, or (3) go independent and register your own brokerage. Each comes with their own pros and cons. 

Joining a “Call-Center” Brokerage 

These are brokerages where leads are provided to you, either inbound or outbound. Typically, brokers at these firms are compensated via a combination of base salary ($25k to $40k) and commission (0.1% to 0.5% of loan amount). The benefit of joining a “call-center” brokerage is that you can hit the ground running and not worry about getting leads, since they are provided to you by the brokerage. However, the downside is that these leads are not yours and you won’t be able to take them with you to another company. Well known “call-center” brokerages include Quicken Loans, and NewRez.

Joining a “Brick and Mortar” Brokerage 

“Brick and Mortar” brokerages are brokerages that provide support to you as a mortgage broker, but do not provide you with leads. Usually there will be a local branch that you can go into and use as an office, but the bulk of your time as a mortgage broker will be spent networking/acquiring leads. Almost all of these brokerages pay via commission only, but they pay much more than the call-center type brokerages do (typically 1% to 3%). “Brick and Mortar” brokerages make money by taking a split of your commission. The specific split will be up to you to negotiate. The value of this type of brokerage is that they (1) provide you access to their network of lenders, (2) help you take care of the documentation involved in processing the loan, and (3) provide training as well as networking opportunities with other brokers. Well known “brick and mortar” brokerages include NEXA, Obsidian Financial and Geneva Financial. 

Going Independent and Starting Your Own Brokerage

We recommend this route for more experienced mortgage brokers, usually after you’ve had a few years of experience. The benefit of this is that you will have full control over every aspect of the brokerage, from which lenders you partner with, pricing, processing and fees. It can also potentially be more profitable, as you no longer have to split fees with a third party brokerage firm. Here are the general steps you will need to get started running your own brokerage firm.

  1. Register your brokerage as a legal business
  2. Apply for a mortgage brokerage license through the NMLS for the newly created business
  3. Purchase a surety bond that provides coverage for your brokerage (check out our comprehensive mortgage broker bond guide if you are unsure about the bonding process)
  4. Register your newly created brokerage firm as the sponsor for your individual mortgage broker license 
  5. You can now start processing loans through the newly created brokerage firm

One of the biggest decisions when it comes to starting your brokerage is deciding the type of business to register. The most common business structures used by mortgage brokerages are sole proprietorship, partnership or a limited liability corp (LLC). Here are the pros and cons of each:

Sole proprietorship: Ideal for independent brokers seeking complete control and easy formation. However, personal liability is unlimited, meaning you may be held personally responsible for business debts.

Partnership: Suitable for simple brokerages with multiple individuals pooling resources and expertise. One partner assumes unlimited liability, while others have limited liability and potentially limited control as specified in the partnership agreement.

Limited liability company (LLC): Provides increased personal liability protection, safeguarding personal assets in case of bankruptcy or lawsuits. Note that LLCs have limited lifespans in most states and may require dissolution and re-registration when membership changes occur.

Corporation (not as common): Corporations are not quite as common for mortgage brokerages; however they can be useful if the brokerage intends to raise outside capital. 

Maintaining a Mortgage Broker License

Lastly, throughout your time as a mortgage broker, you must renew your license every year and in order to do that, you must take at least 8 hours of continuing education (CE) training each year as per the SAFE act of 2008. At the very minimum, you must have 3 hours of federal law training, 2 hours of ethics training and 2 hours of non-traditional mortgage lending. Details about what courses count as CE can be found on the NMLS resource center. 


In conclusion, becoming a mortgage broker can be a rewarding and lucrative career. The steps to become a mortgage broker involves completing pre-licensing training, passing the NMLS exam, applying for a license through NMLS, and then finding a brokerage to sponsor your application. We hope this guide was helpful. Please feel free to give us a call if you have any questions about the process or need a surety bond.