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How to Be a Mortgage Broker in 2023 – The Ultimate Guide

Last updated on September 11, 2023

How to Be a Mortgage Broker The Ultimate Guide

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So you’re thinking of becoming a mortgage broker

We can’t blame you, the idea of independence and starting your own brokerage is exciting. 

The good news?

Becoming a mortgage broker is easy. 

We’ve even got a step-by-step guide for you in this article. 

But just like with any other career, you’d have to face challenges with becoming a mortgage broker too. 

And that’s what we’re going to have a look at today. 

This article is your ultimate guide on how to be a mortgage broker in 2023.

How does it work and what are its pros and cons?

Let’s find out!

Fast Facts on How to Be a Mortgage Broker

Not a lot of time on your hands?

Don’t worry, we can make this quick.

Let’s answer your questions as fast as possible!

What’s a mortgage broker? 

Mortgage brokers are the negotiators between clients who want to buy real estate and those who can offer them loans.

How do you get a mortgage broker license?

There are several steps in getting a mortgage broker license. 

These include complying with state requirements (it’s different for every state), finishing a mandated 20-hour course, passing an exam, securing a mortgage broker bond, registering your brokerage, and submitting your broker application. 


That does sound like a lot of things to accomplish before you get your license. 

But trust us, the total independence of running your own business (and the commission you’ll get from projects) is worth it.

What are the pros and cons of becoming a mortgage broker?

Here’s a quick rundown of the advantages and disadvantages of becoming a mortgage broker:



No degree needed

Flexible schedule + control of your tasks

Opportunity to earn great income

Needs lots of discipline, especially in juggling multiple clients at once. 

Brokers have to be analytical (bonus if they’ve got sales skills!)

Living from commission to commission

We’ll dive deeper into the pros and cons of becoming a mortgage broker later in the article. 

But that’s most of the quick facts you need to know. 

Now let’s talk more about becoming a mortgage broker!

Mortgage Brokers - What Do They Do?

As we said earlier, mortgage brokers are licensed professionals who act as a bridge between borrowers and lenders. 

They analyze a client’s financial documents and expertly match them with lenders who can give them loans to buy the property of their dreams. 

It’s as simple as that!

For clients, brokers are entirely optional. 

They can go straight to the lender and strike a deal. 

But the broker’s expertise in the field and their knowledge in looking for the right mortgage is what makes them important to clients. 

Especially when big-ticket clients don’t have time to DIY their transactions.

Brokers can help from filling out the paperwork to getting the best rates for any property. 

And they have a lot of loan options to choose from.

Unlike with specific institutions where clients’ choices are limited by their offers.

This short video effectively explains what a mortgage broker does for clients as opposed to getting loans from a bank:

However, in recent times, mortgage brokers have earned quite a reputation in the industry and not all of it is good.

You’ve probably already heard of the problem.

There have been far too many brokers who act in their interests and are greedy for maximizing their profit.

Exhibit A: This multi-million dollar mortgage scam in 2019.

Seven professionals decided to use their licenses to commit fraud and smeared the name of all other mortgage brokers in the process.

They took advantage of the process and filed mortgage applications with fake details to mask the buyer’s low credit scores.

In the end, the properties involved in the scam cost $10 million and lost the lenders another $4 million.

Becoming a mortgage broker could be tricky business for instances like these.

Greedy brokers exist and these horror stories cause clients to lose their trust.

But it’s as much a horror story for clients as it is to brokers.

A great broker is there to help people strike the best mortgage deal and get an honest commission off it.

A Step-By-Step on How to Become a Mortgage Broker

With that being said, let’s talk about the step-by-step on becoming a broker!

Before you can become the bridge between a borrower and a lender, you first have to obtain your license as a mortgage broker.

That means sitting through classes and passing exams and assignments.

That sounds easy, right?

The process of getting your license and becoming a professional mortgage broker can be done in a few steps.

But it will require a little bit of dedication.

Here’s what you need to do:

#1: Find out your state’s requirements

To become a mortgage broker, the first step is getting your license from the National Mortgage Licensing System (NMLS). 

These licensing requirements could differ from state to state -- especially on the kind of mortgage broker license you need -- so make sure you take your time to do your research.

Check your state requirements through the NMLS licensing guide here

#2: Get your high school diploma

While there are different requirements for becoming a mortgage broker for each state, obtaining a high school diploma is the most basic one. 

Yes, you don’t need a college diploma for you to become a mortgage broker.

But you are required to at least have graduated high school. 

However, if you don’t have both, you should at least score over 145 points on the General Educational Development Test (GED) and show proof of it. 

While a college-level education isn’t required, a background with courses in finance, economics, accounting, business administration, etc. will teach you the fundamentals of becoming a broker. 

After all, a broker’s job is more than just connecting borrowers and lenders -- it’s running their own independent business too. 

So if you’re already thinking of making a career out of being a broker at an early age, pursue courses that will help build on your foundation in this industry. 

#3 Finish pre-licensing training

Before you earn your mortgage broker license and hustle, you have to complete a 20-hour training course first.

There are a lot of NMLS-approved real estate schools that could help you with that. 

Most of them are even online and let you study at your own pace and your own time.

The top three schools for mortgage pre-licensing we recommend are:

  • The CE Shop - One of the best online schools offering pre-licensing classes in all states.
  • OnCourse Learning - Classes can be taken in different formats: Text-based or interactive.
  • Allied Schools - Offers courses with state-approved hours + exam prep

You can also look through NMLS’ list of approved course providers if you’re looking for a specific school.

The 20-hour course normally covers these topics:

  • Federal law (3 hours)
  • Ethics on fraud, consumer protection, and fair lending issues (3 hours)
  • Non-traditional mortgage lending (2 hours)
  • Electives (12 hours)

But as we said before, since requirements can change depending on the state, sometimes these courses could include additional state-specific laws.

#4 Take and pass the NMLS exam

After you complete the NMLS-required 20 hours of pre-licensing education, you’re ready to take the exam a.k.a. the SAFE test. 

Don’t take this part lightly!Many aspiring mortgage brokers have failed the exam on their first try.

In fact, the current test pass rates are only 55% on the first attempt and 43% on the next attempts. 

This is why you should strongly consider getting a mortgage exam prep like the ones from SAFE MLO Exam.

It gives you practice questions that meet or even exceed the difficulty level of the actual SAFE MLO test so you’ll be totally prepared.

As for the actual exam, you’ll have to answer 125 multiple-choice questions within 190 minutes. 

To pass, you will need to score 75% or higher.

The exam will test you in these categories:

  • Federal mortgage-related laws (23%)
  • General mortgage knowledge (23%)
  • Mortgage loan origination activities (25%)
  • Ethics (16%)
  • Uniform State Content (13%)

Here’s a great video on sample NMLS exam questions to test yourself with:

Once you feel like you’re ready for battle (a.k.a. take that test), you have to create an NMLS account online to register for the exam and pay for fees. 

You’ll have 180 days to schedule your exam.

After that, exam results will be posted at least 72 hours after you take them. 

What if you fail the exam?

Don’t worry, you can retake it in 30 days for your second attempt. 

And if you still haven’t made it through that, you have to wait for 180 days before trying the next attempts.

The passing rate statistics might be scary but if you equip yourself with the proper materials and do your best, you’ll pass with flying colors for sure!

#5 Get your mortgage broker bond

Here’s another important requirement: Mortgage brokers have to get a mortgage broker bond before they are fully licensed. 

A mortgage broker bond is a legal agreement that protects clients and gives them additional security against brokers who violate state laws and regulations. 

If you break any law, it allows your clients to demand that you compensate them for their financial losses. 

The bond amount may vary from state to state but it could be anywhere from $1,000 to $100,000.

To secure a mortgage broker bond, make sure you have a personal good credit standing. 

This would also be a huge deciding factor for your bond premiums or the amount you have to pay annually.

A bond premium can range from .75% to 3% of your bond amount. 

#6 Register your mortgage brokerage

Brokers have a choice to become independent or be part of a brokerage. 

If you choose the first route, you have to register your mortgage broker business. 

Just like with pre-licensing courses, registration requirements are different for each state. 

But generally, you’ll need to pin details such as your business name and location, business structure, and an Employer Identification Number (EIN) to pay your taxes with. 

A brokerage has three options for a business structure and you should pick one depending on which best suits you:

Sole proprietorship

This is the easiest structure to build and it gives you full control of your business. However, a sole proprietorship also means your business assets and liabilities are not separate from your personal assets and liabilities. You alone would be held liable for any debt or obligation of the business. 


Got two or more people on your side?  That gives you an option to form a partnership. It’s a great choice for partners who want to test the waters before eventually forming a formal business.

Limited liability company (LLC)

LLCs can protect you from personal liability. If you’ve got significant assets you don’t want to be involved in case of company bankruptcy, an LLC can solve that for you. But LLCs are limited in many states. Usually, when a member joins or leaves, states will require you to dissolve the LLC and create a new one.

#7 Submit your mortgage broker application

Once you’ve completed the pre-licensing course, passed the exam, registered your brokerage, and have your mortgage broker bond certificate, you’re now ready to send an application.

The application will ask you to provide more information about your business. 

Expect to give them details such as your business name and location, website, registered business agents, and more. 

You should also be ready to undergo a criminal background check. 

Visit the NMLS website for a complete guide and copies of the different application forms you will need to submit.

After you’ve collected all the forms you need and signed them accordingly, it’s time to send them to the state and await the results.

And once the state reviews and approves your application, they will send your license to you.

That means…

Finally, you’re a licensed mortgage broker!

#8 Get more brokerage training

Learning doesn’t stop after you’ve had your license. 

As a mortgage broker, the NMLS will require you to renew your license annually. 

This would mean going through 8 minimum hours of NMLS-approved mortgage broker continuing education (CE). 

The lessons will make sure that you’re updated on the latest industry regulations and policies. 

Ideally, you can enroll for CE courses in the same online school where you had your pre-licensing course. 

But in case you want to explore more options, here are a few recommendations for mortgage broker continuing education:

Advantages - Why Do People Need Mortgage Brokers?

Now let’s talk about the pros and cons of becoming a mortgage broker. 

Before you decide that this is the career path to take, let’s talk about what it’s like for clients and brokers alike.

Mortgage brokers save people energy

You provide people with convenience. 

And from a client’s perspective, that’s exactly what they need.

They just have to give you all the details, kick back in their seats, and wait for your call as you do the legwork of looking for a lender. 

And if you’re an expert broker, that wouldn’t even take a long time since mortgage brokers are known to have lots of connections.

Mortgage brokers can also save borrowers from potential financial ruin from crushing payment terms. 

A great mortgage broker can spot bad lenders and can save people from them.

Plus, while brokers save people energy, they’ve also got the flexibility of a career that can balance work and life.

Mortgage brokers have the time on their hands to schedule their work and then do anything they like in between.

Mortgage brokers already have the connections

Part of a broker’s job is constant networking so they’ve established lots of connections everywhere. 

Hopefully, these connections are helpful when they need to help their borrower look for a lender.

Some lenders also only work with certain brokers.

That means even if a borrower took the DIY route and had a lender in mind, they might not get access to them unless it’s through the broker.

Mortgage brokers know what they’re doing

As a broker, you have to be on top of your field to show potential clients you can take care of them. 

It’s not just the connections either. 

Borrowers going off on their own might discover it isn’t that easy looking for a lender. 

Plus, the number of fees they need to pay might get shocking. 

On the other hand, working with a broker can even lower or completely waive the fees. 

When a mortgage broker knows what they’re doing, they can save the borrower up to thousands of dollars. 

And speaking of money, compensation for a mortgage broker is another pro.

Mortgage brokers can get up to 3% in commission from a single loan. 

So imagine if you closed a $500,000 deal, that’s a $150,000 commission.

Looking good so far?

Check out this video from a mortgage broker from someone who has been in the industry for a long time:

Disadvantages - What Should People Know About Mortgage Brokers?

Now that we’ve talked about the advantages of being a mortgage broker, let’s take a look at its cons for both clients and brokers.

There are fees to be paid

Unfortunately, hiring a broker doesn’t just mean you pay for their commission. 

There are a lot of fees clients need to face: brokers, lenders, application, origination, appraisal, etc. 

As we mentioned before, a great broker can have most of these waived or somehow included with the client’s deal. 

But if not, these individual fees could reach anywhere between a hundred to a thousand dollars.

Mortgage brokers might not have a client’s best interests at heart

Let’s face it, at the end of the day it’s business. 

Brokers get money through commissions and also get paid by the lender to bring in more clients. 

More often than not, they choose mortgages that would inflate their compensation.

Their goal is to maximize profit as much as they can and, unfortunately, sometimes it’s the client that bears the brunt of that. 

Inexperienced brokers will cost you a lot

People hire brokers for their expertise and connections. 

But sometimes, new brokers starting in their field don’t have those connections and can’t give clients the advantage they need.

These kinds of brokers won’t help clients find the best deal and, in the end, will cost them a lot. 

And speaking of inexperience, brokers are also expected to be great analysts and have the skills of a salesperson. 

So if you’re not good with numbers and you don’t like interacting with people, you might want to rethink this career. 

But the good news is, you can definitely train yourself for the job.

That’s what the 20-hour pre-licensing courses are for!

Check out this mortgage coaching video on the pros and cons of being a broker:

Mortgage Broker vs Mortgage Loan Originator - What’s the Difference?

If you’re thinking of becoming a mortgage broker, we’re sure you’ve encountered too many confusing terms along the way. 

Such as…

What on earth is the difference between a mortgage broker and a mortgage loan originator?

Don’t sweat it!

Let’s discuss their differences.

Mortgage broker

If you’ve reached this point in the article, you already know what a mortgage broker does. 

But in case you weren’t paying attention:

Brokers are the professionals tasked to find borrowers or clients the right mortgage and connect them with a lender. 

Brokers make sure everything is going smoothly to complete the whole transaction.

Clients have the option to skip the mortgage broker and go straight to the lender. 

However, they will lose the advantage of a broker’s expertise and wealth of insider knowledge on the best deals in the industry.

Mortgage Loan Originator

There’s only one main difference between a mortgage broker and a mortgage loan originator (MLO): who they work for. 

The former can be independent or work for a Sponsoring Broker while the latter works with a bank or a mortgage company. 

However, both of them are licensed by the NMLS.

Who’s the best choice for clients?

That depends. 

Both brokers and loan originators can offer great rates for clients but the fine print on the financial situation could get tricky. 

Brokers might get to lower certain fees (such as broker’s fee, lender’s fee, etc.) but get a high commission from the deal. 

And since some lenders don’t work with mortgage brokers, this might be a problem when it comes to applying for loans. 

But mortgage brokers are free to look for lenders far and wide, something MLOs don’t have the liberty to do. 

MLOs will only offer mortgage rates from their company.

However, they are experts when it comes to loans and seldom have a problem with processing loan applications.

Here’s a quick pros and cons of mortgage brokers and MLOs:

Mortgage Broker

Mortgage Loan Originator


Works independently or with a brokerage

Gets to choose from several institutions

Can offer rates and fees from multiple lenders

Works for an employer (typically a bank)

Can only offer loans from the institution

Experts in securing a loan

Gets fixed salary from employment


Some lenders don’t work with mortgage brokers

Some mortgage brokers get greedy with commissions 

Can’t work with other lenders or offer loan options outside the bank

Can reduce rates and fees but still only limited to company’s offers

So which one is better for your career?

That choice is up to you. 

Would you rather work independently and live commission to commission or would you prefer to be employed with an institution?

Mortgage brokers and MLOs have their pros and cons but in the end, they’re both brokers. 

So you still win whichever you decide to choose.

If you still want to find out more about the difference between mortgage brokers and MLOs, this video interview will be a huge help:

How to Be a Mortgage Broker FAQ

And that’s it!

That’s about everything you need to know about how to be a mortgage broker in 2023.

But in case you’ve got some more pressing questions, we’ve answered a few below!

Is Mortgage Broker Licenses Different for Every State?

Yes, mortgage broker licenses vary for each state. 

Each state has its own set of requirements. 

Some would require potential brokers to add a few state-specific lessons to their 20-hour NMLS-approved courses. 

However, nothing is stopping you from applying for a license in other states aside from your own. 

Check your state requirements through the NMLS licensing guide here

How Much Do Mortgage Brokers Earn?

And this is the part you’ve been waiting for.

According to Indeed, mortgage brokers earn an average of $97,838 per year in the United States.

A broker’s earnings largely depend on their commissions for every loan transaction.

They typically get a 1%-3% commission from the loan value that the borrower or the lender pays (it’s illegal for both borrower and lender to pay).

Charging anything higher than 3% of the loan amount is against federal law.

So let’s say a broker who charges a 2% commission closed a $150,000 deal. They get to earn $3,000 from that.

This even varies depending on factors like geographical location, real estate market, and the broker’s expertise.

For example, the average annual salary of a broker in Nashville, Tennesse is around $156,744 while in Los Angeles, California, it’s $43,077.

Brokers could also work for a brokerage, in which case they get a fixed monthly salary on top of their commission fees.

But this fee could be split between colleagues depending on the agreement. 

Check out this video for more insight:

Mortgage Broker vs. Real Estate Agent

The main difference between mortgage brokers and real estate agents is that the former works with buyers and lenders while the latter works with buyers and sellers. 

They both help their clients get properties but offer different ways to get that property.

Real estate agents need to do a lot of negotiating and hunting down properties. 

The hours could get demanding, especially since the industry can be competitive.

Real estate agents have to always be on the lookout, host open houses, convince potential clients, and keep negotiating between buyers and sellers. 

It’s more client-facing work. 

On the other hand, mortgage brokers have a little bit more freedom with their time. 

They are tasked to look for the right loan offers or secure rates. 

Instead of working with individuals or welcoming people to an open house, mortgage brokers constantly network with lenders.

But what about the money?

According to Indeed, a real estate agent’s average annual salary is $96,381. 

Compared to a mortgage broker’s average annual salary of $97,838, they aren’t too far apart. 

Here’s a quick video that offers more insight on real estate agents vs mortgage brokers:


And that’s everything you need to know about how to be a mortgage broker this 2023.

Being a mortgage broker is arguably easy. 

Hey, you don’t even need a college diploma for it.

But it would require a lot of effort on your part, especially in putting the state requirements together.

However, once you’re on the field connecting buyers with lenders and watching them get the right mortgage match, it’s a fulfilling job. 

What are you waiting for?

Go ahead and start your mortgage broker career!

If you’re a broker, we’d love to know what your experience is like so far. 

Leave a comment for us below!

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