A guide on mortgage broker licenses

Are you interested in becoming a mortgage broker? Here is a complete guide on how to get your mortgage broker license in the US

A guide on mortgage broker licenses

For many prospective homeowners, finding the right mortgage broker is a critical step in the home buying process. This enables clients to buy a home without working directly with a lender or a bank. In other words, mortgage brokers play an integral role in the industry.

But what does a mortgage broker do exactly? How do you get a mortgage broker license? And how much do mortgage brokers earn? In this article, we will answer these questions and more.

Here is your guide on how to get your mortgage broker license.

What do mortgage brokers do?

Mortgage brokers act as intermediaries between borrowers and lending institutions, working on behalf of clients to find the best terms and rates. This is different from a mortgage loan officer, who typically works on behalf of their lender. As a broker, you will spend a significant amount of time assessing your client’s income statements and credit background.

One of the major responsibilities as a mortgage broker is to ensure your client can afford to repay the mortgage without being forced to live paycheck to paycheck.

Mortgage brokers typically work with dozens of mortgage lenders to find home loan products that match their clients’ financial needs. This is different from being a mortgage loan officer, who usually represents the bank or lender they work for and only offers the products their financial institution carries.  

The average mortgage broker deals with roughly 30 or more mortgage lenders. This means that, if you become a broker, you will have to familiarize yourself with all of them. Why? To be able to think on your feet to find the best loan options for your clients.

Being a mortgage broker is essentially like having a career in sales. You often work with clients who are in an exciting stage of their lives—as prospective home buyers. Your role as a mortgage broker is to lead them to a product that meets their financial situation and housing needs.

How do I get a US mortgage license?

To get a US mortgage license, you do not need to have a college degree. Not only that, but everyone starts on equal footing. You have to pass the same exams and meet your state’s licensing requirements.

Typically, there are six steps to get a US mortgage broker license:

  1. Get your high school diploma or GED
  2. Take pre-licensing training
  3. Pass the NMLS exam
  4. Establish/register your mortgage brokerage
  5. Meet your state’s mortgage broker license requirements
  6. Maintain license, undergo more brokerage training

Here is a closer look at each so you know the requirements to get a US mortgage broker license:

1. Get your high school diploma or GED

While you do not need a college degree to become a mortgage broker, you do need a high school diploma. If you do not have your high school diploma, you can earn your General Education Development (GED) with a score of 145 in its four exams. Your GED serves as your diploma even if you did not graduate from a conventional high school.

While not required, it can also help to finish a two- or four-year course in the following disciplines:

  • Finance
  • Accounting
  • Marketing
  • Economics
  • Business administration

The principles that you acquire from these disciplines will serve as a solid foundation for your day-to-day work as a mortgage broker.

Like a college education, previous work experience is not necessarily required. However, having some form of relevant training is recommended. For example, working at an established mortgage company before striking out on your own would be a good idea. After all, many mortgage brokers are simply former loan officers or bankers that decided to work independently.

2. Take pre-licensing training

To prepare for licensing, you must follow the Secure and Fair Enforcement Act (SAFE), which requires every state to license all mortgage loan originators. (This act is also known as Title V of the Housing and Economic Recovery act for 2008.) For this, you must secure an individual license from the Nationwide Multi-State Licensing System and Registry (NMLS).

To begin your licensing process under NMLS, you must finish a mandatory 20-hour training course, which includes the following subjects and breakdown hours:

  • Federal regulations and laws: three hours
  • Ethics and fraud: three hours
  • Non-traditional mortgage lending standards: two hours
  • Electives on mortgage origination: 12 hours

3. Pass the NMLS exam

After completing your pre-licensing courses and personal preparation, you will have to pass the NMLS exams, also known as the SAFE exam. This tests you in the following major categories:

  • Federal law
  • General knowledge of mortgage origination
  • Ethics
  • Loan origination activities
  • Uniform state content

Most states have adopted the uniform state content (UST) to be included in the national test. These are 25 questions that gauge the applicants’ knowledge of state-specific facts and policies related to the SAFE Act.

Before taking the test, you need to create an online account in NMLS for enrollment. Once you’ve enrolled, you have 180 days (about six months) to schedule an exam appointment.

A test appointment has a strict time allocation of 225 minutes. You will have 190 minutes to answer 120 questions and 30-35 minutes for a tutorial and an optional applicant survey. Keep in mind that most people find the test difficult. Only 58% of aspiring brokers who took it for the first time passed in 2020, according to the NMLS. The passing rate is slimmer for second timers, at 47%.

4. Establish/register your mortgage brokerage

After passing the NMLS exam, you must register your mortgage brokerage as a legal entity in your state. Here are the steps for registration, according to the US Small Business Administration (SBA):

  • Choose broker business name
  • Pick business location
  • Choose business structure
  • Register the business with federal/state/local agencies
  • Get federal and state tax ID numbers
  • Apply for licenses and permits

5. Meet your state’s mortgage broker license requirements

The next step to getting your mortgage broker license is to get a business license to operate in your state. While requirements and licensing fees are different in every state, you can expect to pay between $1,000 and $2,000 for your initial application and your annual license renewal.

Here is a list of the common requirements that mortgage brokers must provide in all states (which all must be submitted through the NMLS platform):

  • Financial statements
  • Proof of completion of pre-licensing education
  • SAFE test results
  • Fingerprints for FBI criminal background check
  • Credit report authorization
  • Obtain surety bond

Getting a surety bond is one of the more common licensing requirements for mortgage brokers in the US. It provides added security for clients and guarantees that you will follow certain standards.

Getting your mortgage broker license can help your clients land their dream home—with the best mortgage rate and terms

6. Maintain license, undergo more brokerage training

With your NMLS license, you can now practice your profession in your state of registration. At this final step in the process, you will want to build and cultivate connections with lending institutions and real estate agents, among other partners.

To maintain your license, you must renew it yearly, which you can do through the NMLS platform and paying the renewal fee. You should also take the annual training hours required by your state.

For additional brokerage training, you can take optional courses and obtain certifications to enhance your knowledge of the mortgage industry. These can also boost your confidence and credibility in the eyes of prospective clients.

Do mortgage brokers need a license in Florida?

Yes. Mortgage professionals in the state of Florida need a mortgage broker license to start practicing. The Florida Office of Financial Regulation (OFR) is the authority that oversees mortgage broker licensing in the state. The actual procedure to gain a mortgage broker license in Florida (or any other state, for that matter) is handled by the NMLS.

How much is a mortgage broker license in California?

According to the California Department of Real Estate, a mortgage broker license in California costs $300. The examination fee, meanwhile, costs $95, and there is no fingerprint fee. This means that, overall, it will likely cost you $395 to get a mortgage broker license in California.

How much do licensed mortgage brokers earn?

If you are considering a career as a mortgage broker, you will likely want to know how much money a mortgage broker earns. The average annual pay for a mortgage broker in the USA is just over $84,000 per year, according to ZipRecruiter. While that figure represents the average, yearly salaries for mortgage brokers have been reported as high as roughly $119,000.

Mortgage brokers get paid by either the borrower or the lender. Typically, brokers can decide the way in which they want to be compensated.

For instance, you might want to charge a commission on each home loan you close. Another option is to charge an origination fee, or a yield spread premium (YSP), which is the commission the lender or bank provides in exchange for an above-market mortgage rate. 

Mortgage brokers are essential to the mortgage industry, acting as intermediaries between borrowers and lending institutions to fulfill the dream of their clients: homeownership. Mortgage brokers work on behalf of their clients to find the best mortgage terms and rates to make that happen. While the process of getting your mortgage broker license can be stressful, there are also many perks and benefits.

If you're truly interested in becoming a mortgage broker, take the time to look at the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals, including mortgage brokers, across the USA.

Any tips to share on how to get a mortgage broker license? Let us know in the comment section below.