How Does a Loan Officer Get Paid?

Find out how loan officers get paid, how much they make, and how you can become one.

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The Basics of Loan Officer Compensation

Loan officers typically get paid 1% of the loan amount for closing a loan. So, if you close a $100,000 loan, your compensation would be $1,000. In addition, loan officers may also receive a salary or an hourly wage. Some loan officers may work on commission, which means they only get paid if they close a loan.

How Much Does the Average Loan Officer Make?

Loan officers typically earn a base salary plus commissions on the loans they originate. The amount of the commission depends on the type of loan and the terms of the loan, but it is typically a percentage of the loan amount. Loan officers may also receive bonuses based on the volume or quality of loans they originate.

How Does Loan Officer Compensation Work?

Loan officers typically get paid one of two ways: via a salary + commission basis, or purely on commission. The method of compensation usually depends on the type of lender they work for.

Banks and credit unions typically pay loan officers a salary + commission structure. For example, a loan officer at a bank may earn a base salary of $50,000 per year, plus 0.25% commission on the loans they originate. So, if that loan officer originates $400,000 worth of loans in a year, their total compensation would be $62,500 ($50,000 base salary + $12,500 in commissions).

Mortgage companies and other lenders that primarily rely on wholesale funding to provide financing to their customers usually pay loan officers purely on commission. In these cases, the loan officer’s compensation is typically a percentage of the total loan amount, ranging from 0.50% to 1.00%. So, if a loan officer originates a $400,000 loan at 0.75% commission, their total compensation would be $3,000 ($400,000 x 0.0075).

The Different Types of Loan Officer Compensation

Loan officers can be paid in a few different ways. The most common way is through a commission, which is a percentage of the loan amount. Some loan officers may also receive a salary and/or bonuses. In some cases, a loan officer may receive a combination of these types of compensation.


Loan officers typically get paid a salary, which is a set amount that you earn each pay period. Your salary may be supplemented by commissions, which are based on the loan products you sell. For example, you may earn a higher commission for selling a more complex loan product, such as a jumbo loan. In some cases, your entire compensation may be based on commission.


Commission is the most common form of loan officer compensation. In fact, most mortgage loan officers are paid solely on commission. Commission compensation is calculated as a percentage of the loan amount. The industry standard for commissions is between 2% and 3%, although some loan officers may be paid more or less, depending on their experience and the type of loan they are originate. For example, government-backed loans such as FHA and VA loans usually have lower commission rates than conventional loans.

In addition to base commissions, many loan officers also receive production bonuses based on the number of loans they close per month or year. These bonuses can range from a few hundred dollars to several thousand dollars, and provide a significant boost to a loan officer’s income.

Some lenders may also offer their loan officers draw against future commissions. This means that the loan officer can receive a portion of their commission upfront, before the loan closes. Draws can be helpful for new loan officers who are still building their pipelines, but they can also create problems if not managed correctly. Loans that go into default can end up costing the loan officer more money than if they had not taken a draw in the first place.


Loan officers may receive a bonus for every loan that they originate. The amount of the bonus will vary from company to company and may be based on the loan amount or other factors. Some companies offer a draw against future commissions as an incentive for loan officers to stay with the company.

The Pros and Cons of Loan Officer Compensation

Loan officers typically get paid one of two ways: salary plus commission or commission only. The salary plus commission model is less common because it can create an ethical conflict of interest. A loan officer could be tempted to steer a borrower to a loan with a higher interest rate so they can make more money. In this article, we’ll discuss the pros and cons of loan officer compensation so you can decide what’s best for you.


LO compensation is often a draw for the industry. Many loan officers are able to earn a good living while working reasonable hours. Commission-based pay can also be motivating, as it can result in high earnings for those who close a lot of loans. In addition, many loan officers appreciate the autonomy that comes with the job, as they are typically able to set their own schedules.


Perhaps the most controversial aspect of loan officer compensation is the potential for what’s called “reverse churning.” This happens when a loan officer refinances a consumer’s mortgage more often than necessary in order to increase his or her commission. While this may not always be done with malicious intent, it can result in significant financial harm to the consumer. What’s more, it can create an unrestrained conflict of interest for the loan officer, who may be tempted to prioritize their own interests over those of their client.

How to Maximize Your Loan Officer Compensation

Loan officers typically get paid one of two ways: commission or salary. The majority of loan officers are paid commission, which means they make a percentage of the loan they close. Some loan officers are salaried, meaning they are paid a set salary regardless of how many loans they close.

Get Paid What You’re Worth

As a loan officer, you have the potential to earn a six-figure income. Your exact compensation will depend on the type of job you have, your level of experience, and the company you work for. In general, loan officers are paid a base salary plus commission. The commission is based on the loans you originate and can range from 0.5% to 2% of the loan amount.

If you work for a bank or credit union, you may also receive benefits such as health insurance and a 401(k) retirement plan. To maximize your earnings potential, it is important to understand how loan officers are paid and what factors can affect your compensation.

Base salary: Most loan officers start out earning a base salary. The amount of your salary will depend on your level of experience and the company you work for. As you gain experience and originate more loans, your salary will increase.

Commission: In addition to a base salary, most loan officers earn a commission on the loans they originate. The commission is typically a percentage of the loan amount and can range from 0.5% to 2%. For example, if you originate a $100,000 loan with a 1% commission, your total compensation would be $101,000 ($100,000 x 1%).

Loan volume: The number of loans you originat

Be Efficient

Loan Officers are typically paid a salary plus bonuses and commissions. The more loans they originate, the more income they can earn. The best Loan Officers are very efficient in their origination process and have a strong pipeline of potential borrowers. They also have a good network of referral sources, such as real estate agents and financial planners.

Stay Up-To-Date on Industry Changes

The most important thing you can do to maximize your loan officer compensation is to stay up-to-date on industry changes. Federal and state housing finance agencies are constantly changing the rules governing loan origination, and these changes can have a big impact on your income. Keeping abreast of these changes and modifying your origination practices accordingly will help you stay ahead of the game and earn more money.

In addition, new products and programs are constantly being introduced by lenders, and these can also provide opportunities to increase your income. By staying informed and keeping your ear to the ground, you can ensure that you are always in a position to take advantage of new opportunities to increase your compensation.

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