Like many commission-based employees, mortgage loan officers can earn tremendous amounts of money. They can also go for long periods without seeing enough income to cover their household expenses and other obligations. If you're thinking about going into the mortgage industry as a loan originator, broker or banker, you'll need to come to terms with this reality. Once you've accepted that you'll be working in a boom-and-bust industry, you'll be able to set some reasonable earnings expectations for yourself.
Even so, you'll probably need to work for at least two years before getting a clear sense of your long-term earning potential. During this "trial period," you'll have to deal with a volatile budget and sacrifice some creature comforts in the process. If you have a family to feed and clothe, you might find this to be unacceptable. Timing is also an issue. Since turnover rates among loan officers can be quite high, banks and brokers hire these employees on a continuous basis. Accordingly, it's possible that you'll enter the profession at a nadir in the housing-market cycle. If this is the case, you could face several difficult years right out of the gate. As you might imagine, turnover rates are especially high under such circumstances.
If you're able to survive the initial phase of your career, it's likely that you'll settle into a comfortable routine and enjoy steadily-appreciating earnings. Your exact annual income will depend upon several factors. While you'll be able to control some of these, you'll find it difficult to deal with others.
According to the latest statistics, the average American mortgage loan officer makes $42,000 per year. This total income typically comes from two sources: a base salary and a post-closing commission. Most loan officers earn the bulk of their incomes through commissions. In fact, some firms may pay only a token salary or require their loan officers to take "draws" against their commissions. Since draws function as low-interest loans, the officers who take them must eventually pay them back in full. Officers who routinely require draws to offset their relative lack of commission income may eventually be dismissed from employment.
If you work in a booming housing market, your commission income will be ample. During such times, it's a good idea to sock away some money for the future. Since booms rarely last for more than a few years, you'll appreciate having a robust store of savings to fall back on during future busts.