How to Become a Loan Originator

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Last Updated: May 16, 2023 Approved

A loan originator connects potential borrowers with lenders. Loan originators may work on car loans, student loans and other debt. The majority of loan originator jobs involve home mortgages. As a loan originator, you help the borrower complete loan applications and assess which loans are most appropriate for the customer. Learn how to become a mortgage loan originator for a rewarding career in the finance industry.

Part 1

Part 1 of 5:

Getting Hired by a Lender

A loan originator gathers all of the required loan documentation from a borrower. This includes a completed loan application and a credit report. The originator helps the borrower determine the right type of loan for their needs. A loan originator works with the underwriter to get the loan approved.The underwriter makes the decision about loan approval.^{[1]
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Obtain the proper registration. If you want to work at a covered financial institution, you will need to register as a federal mortgage loan originator. For all other companies, you will need register as a state-license mortgage originator.^{[2]
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- You can register both through Nationwide Mortgage Licensing System and Registry.^{[3]
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The process of applying for a loan can be stressful. You'll need good people skills to help borrowers feel at ease. Many loan originators work with a small salary and on commissions. Others work exclusively on commission income. Successful loan originators are good salespeople. They are willing to work long hours to find customers who need loans.
To become a mortgage loan originator, you need to be hired by a lending institution. Banks and credit unions provide mortgage loans. You can interview with small, local lenders or large national institutions. Mortgage lenders may be subject to both federal and state lending laws. Commercial loan originators are often freelance and package loans to multiple institutions.

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Part 2

Part 2 of 5:

Working with the Federal Mortgage Registry

To properly register as a loan originator, you need to know how your employer operates. Most lenders are federally chartered or insured institutions. If your company fits this description, you will use the Federal Registry Resource Center to register.^{[4]
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Federally chartered or insured institutions must comply with two primary sets of rules. The Consumer Financial Protection Bureau (CFPB) exists to protect borrowers from unfair lending practices. The SAFE Act enhances consumer protections by setting minimum standards for state-licensed mortgage loan originators.^{[5]
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Individuals who meet the definition of a mortgage loan originator may have to register using the NMLS system. This system is required for loan originators who are employed by a federal agency-related institution. You can confirm the type of institution with your employer. The primary document you will complete for registration is a Form MU4R.^{[6]
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Part 3

Part 3 of 5:

Completing the Form MU4R

The Form MU4R is submitted through the National Mortgage Licensing System and Registry. The form is completed by either the employing institution of the individual loan originator. An loan originator answers questions about personal and employment history. The individual must also answer questions about any past legal issues or industry disciplinary action.^{[7]
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Wait for your employer to create your account at NMLS. When they do, you'll receive a user name and password. Change the user name and password.
Your form must be initiated, then filled out completely. Once the form is complete, it needs to be submitted. Either the employer or the loan originator must pay a fee when the form is submitted. If the employer initiates the form, submits the document and pays the fees, the loan originator must attest that the form is correct.^{[8]
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Review the NMLS website find your state's licensing requirements. If you register through only through your state, you will complete Form MU4. Agencies within your state may also require you to apply for a specific license. The license you need will depend on how your employer operates. Banks, credit unions and independent mortgage companies may each have a different state licensing process.^{[9]
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Part 4

Part 4 of 5:

Complying With Professional Standards

The SAFE Act requires all state licensed loan originators to pass a written qualified test. The loan originator must also complete pre-licensure education courses and take annual continuing education courses. Use the NMLS site to find the specific requirements for your state.^{[10]
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Every loan originator must complete the CBC. Form MU4 (state licensing) and Form MU4R (federal licensing) require a CBC Authorization Request. This request gives the licensing officials permission to perform a background check.^{[11]
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Once the individual or employer has paid for the CBC request through NMLS, the loan originator must schedule a fingerprint appointment. If you have provided fingerprints within the last 3 years, you have already met this requirement. Fingerprints must be taken within 180 days of the date they were scheduled. The FBI reports the results to the NMLS system with 48 hours of submission.^{[12]
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The SAFE Act provides a Uniform State Test that many states have adopted for their loan originator licensing process. If your state has adopted the UST, you will take the National Test Component with Uniform State Content. States that have not adopted the UST may have other testing requirements.^{[13]
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Part 5

Part 5 of 5:

Starting Your Career

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Understand how loan originators manage their office. Many states allow loan originators to operate from a home office. That's because a growing amount of work in this field is transacted over the Internet.
- If you choose to set up a home office, make sure that you have a separate business phone line, as well as high speed Internet.
- Whether you work in an office building or at home, you'll spend a great deal of your day on the phone or online.
- Keep in mind that customers are better informed about loans than ever before. Most customers shop for loans by doing research on the web. Your fees and level of service must be good to secure their business.
Your business objective is to find customers who need loans. Once you locate a potential borrower, you manage the process of applying for the loan. Your last step is to work with an underwriter to get the customer's loan approved. You are paid a commission based on the dollar amount of the loan.^{[14]
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Find referrals and leads. As a loan originator, you may work for a commercial bank, credit union or a mortgage company. Your primary sources of business are leads and referrals.
- You may get leads from your employer. Say that a banker, for example, finds out that a customer is interested in a mortgage loan. That banker can refer the client to a loan originator at the bank.
- Real estates agents are another great source of business. As an agent finds interested homebuyers, they can refer those clients to you for a loan.
- Your best referral source is a satisfied customer. It's critically important to provide a high level of service to your clients. If they like their experience, they may refer other borrowers to you.
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Question

Can I become a loan originator on my own?

Community Answer

No; a lender or broker must sponsor you. You may get your license on your own, but to do the actual loan origination, you must be sponsored.

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Question

Are there any reasons I might be disqualified? Like bad credit?

Community Answer

Credit worthiness is a determinant in whether or not you are able to be licensed. A history of fraud, dishonesty, and/or money laundering will 100% prevent someone from being licensed.

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Would a past bankruptcy disqualify me from getting a license?

Community Answer

Bankruptcy will remain on your credit from 7 to 10 years. Credit worthiness is a big determinant as to whether you are licensed or not. As long as bankruptcy happened more than 10 years ago, this fact will not affect whether or not someone receives a license.

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