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Last updated November 2026
Terms
- Retail
- You work as an employee of a lender. The lender sets your pay plan, products, and pricing. Pay is usually commission per funded loan, sometimes with a draw or a minimum-wage floor.
- Broker
- You don't lend the money. You shop the loan to wholesale lenders, and the lender funds and closes it in its own name. You're paid a commission.
- Correspondent
- Your company closes the loan in its own name, funds it, and then sells it to an investor. On your own, that takes a warehouse line, more capital, and investor approvals.
- Platform
- A licensed company you work under while running your own brand. It handles licensing sponsorship, compliance, payroll, and lender access. You pay a flat fee per file instead of a percent of your commission.
- Team Lead / Branch Manager
- A leader who runs a team of LOs. On some platforms, Team Leads / Branch Managers can set the pricing margins for their team.
- Sponsoring broker
- The licensed company your individual loan officer license is attached to in NMLS. Under a platform or another broker, that's their company. In your own shop, it's yours.
- Comp split
- A shop or broker keeps a percent of your commission on each loan. The bigger the loan, the bigger their cut.
- Flat per-file fee
- A set dollar amount per closed loan, no matter how big the loan is.
- bps (basis points)
- One bps is 0.01%. 100 bps = 1%. So 275 bps on a $400,000 loan is $11,000.
- LPC / BPC
- Lender-paid comp (the lender pays you) or borrower-paid comp (the borrower pays you directly). On one loan it's one or the other. Federal rules ban getting paid by both on the same loan.
- Margin
- The amount added on top of the lender's or investor's price. It's how a loan earns money for you and the company.
- Rate sheet
- A lender's daily list of rates and prices by loan type. Brokers compare rate sheets across lenders to find the best deal for a borrower.
- 1099 vs W-2
- 1099 means you're paid as an independent business. You pay your own self-employment taxes and benefits. W-2 means you're an employee with taxes withheld. Which one is allowed varies by platform and by state.
- NMLS sponsorship
- Your individual license must be sponsored by a licensed company before you can originate for it. When you move, the new company sponsors you.
- Surety bond
- A bond the state requires so consumers can be paid if a licensee breaks the rules. You pay a yearly premium. Colorado, for example, requires a $25,000 individual loan officer bond or a $100,000 group bond for fewer than 20 licensees. (Colorado DRE)
- Net worth requirement
- The minimum capital a company must hold to get certain licenses or approvals. A broker shop usually needs little or none. Correspondents and lenders need much more. For example, Arizona's mortgage banker license needs $100,000, and FHA lender approval needs $1 million. (A.R.S. 6-943, HUD Handbook 4000.1)
- LOS (loan origination system)
- The software you take applications in and run loans through. Arive is one example. Some platforms charge a monthly fee for it.
- Third-party processing
- An outside processor gathers documents and moves the file to closing. Some platforms charge their own processing fee. Where there's no platform fee, you can use a third-party processor and charge it to the borrower as a disclosed fee.
- EPO (early payoff)
- If a loan pays off or refinances within an early window the investor sets, the investor may take back part of what it paid.
- Wholesale lender exclusivity
- Some wholesale lenders require brokers who use them to stop sending loans to certain competitors, with penalties per loan. Ask any shop or platform whether you're bound by an agreement like this. For example: can you use both UWM and Rocket?
10 steps to open your own shop
The usual order. Every state differs; confirm anything marked [verify] for your state.
- Form your business entity. Register an LLC or corporation, get an EIN, open a business bank account, and check your name is available in every state. Some states require DBAs listed in NMLS. [verify by state] Talk with a CPA and attorney.
- Apply for your NMLS company license. File Form MU1 for the company and Form MU2 for each control person. Each state publishes its checklist in the NMLS Resource Center. Your company name and NMLS ID must appear on certain loan documents.
- Meet state requirements. License type, background and credit checks for control persons, office rules, sponsoring your MLO licenses, and fees. [verify by state] Colorado: overseen by the Colorado Division of Real Estate. [verify at dre.colorado.gov]
- Get a surety bond. Most states require one; the amount depends on the state and sometimes volume. You pay a yearly premium. [verify amount by state]
- Net worth and financials. Some states and lenders set a minimum net worth or require audited statements. [verify by state and lender]
- Name a qualifying individual. Many states require a responsible person with set experience, often you. [verify by state]
- Get approved with wholesale lenders. Each has its own package (licenses, financials, org chart, E&O). Start with a few that cover your core products. Read each comp plan: pay can't vary by loan terms.
- Set up your tech. LOS and application portal, pricing engine, CRM, credit vendor, e-sign, secure storage, and a website with your licensing disclosures. [Tim to provide vendor picks]
- Build compliance and AML. A written AML program with training, testing, and suspicious activity reporting; a written information security program (FTC Safeguards Rule); TRID, RESPA Section 8, fair lending, and advertising rules; state reports and mortgage call reports. [verify with a compliance professional]
- Market your shop. Tell past clients and referral partners, set up a compliant website and Google Business Profile, and have advertising reviewed for compliance. [verify]
Last reviewed: [date, reviewer] · Printable checklist and templates: Shop
FAQ
How much does it cost to open my own broker shop?
Vendor estimates run about $50,000 to $200,000+, including several months of working capital. Licensing, the bond, insurance, tech, and marketing are part of that. It varies a lot by state. (Morty, StartPermit) [verify by state]
What does it cost to join a platform?
It varies by platform; get the total in writing. Example (Altamont): $750 per file, plus $295 on correspondent loans only, and $99 a month for Arive (loan software). There's no processing fee. At 3 loans a month that's about $783 per loan; at 10 loans a month, about $760. You keep 100% of the rest.
How long does it take to open my own shop?
One lender's playbook says most states average about 30 days after you submit a complete company application. (lender guide) Lender approvals can take another 30–90 days each (vendor estimate). (StartPermit) Joining a platform or team skips the company license; ask how long their onboarding takes.
Do I need my own company license?
For your own shop, yes: a company license in each state you do business in, plus your individual license. When you join a platform or go retail, your license is sponsored under their company.
I've been originating less than 2 years. Should I go broker?
Not yet. Build your experience and your own referral base first. Owning a shop or running on a platform works best when the business is already yours.
Who should NOT go broker?
LOs who rely on company-provided leads, close only a few loans a year, need a steady paycheck, or have under 2 years of experience. There are no company leads on the broker side.
Will I make more money as a broker?
Usually only if you bring your own business. Many lenders cap broker comp at 2.75% of the loan amount, and federal rules set a 3% points-and-fees limit for most qualified mortgages. (GMFS comp agreement) Your take-home depends on your volume and costs.
Can I get paid by both the borrower and the lender?
No. On a single loan it's either lender-paid or borrower-paid comp, not both. Your pay also can't change based on the loan's rate or terms. (Reg Z §1026.36)
Can I keep my own brand on a platform?
Usually, within the platform's branding rules. Many require a small "powered by" line in the fine print.
Will I be W-2 or 1099?
It varies by platform and state. Ask before you sign.
What's the difference between broker and correspondent loans?
On a broker loan, the wholesale lender closes in its name. On a correspondent loan, the loan closes in the company's name and is then sold to an investor. Some platforms offer both.
Can I set my own pricing?
In the broker channel, you pick your comp level from each lender's plan, and it can't vary by loan terms. On some platforms, Team Leads / Branch Managers can also set the pricing margins for their team.
Am I tied to one lender?
It depends on the shop's lender agreements. Some wholesale lenders bar brokers from using certain competitors. Ask any platform or team which lenders you can and can't use.
What happens to my clients and brand if I leave?
Ask before you sign: contract term, exit fees, who keeps the client list, and whether your DBA goes with you.
Pros and cons of each path
Start your own broker shop
Pros
- You own the company and its long-term value
- Full control over brand, lenders, pricing, and hiring
- No per-file fee or split to anyone
Cons
- Highest startup cost: vendor estimates of about $50,000 to $200,000+
- You handle licensing, the bond, insurance, compliance, audits, and payroll
- Weeks to months before you can close loans
- You get each lender approval yourself
Join a platform
Example shown: Altamont
Pros
- Your own brand, without running a company
- Flat per-file fee, not a percent of your commission
- Often both broker and correspondent channels
- Licensing sponsorship, compliance, and payroll handled
- Little or no startup cost
Cons
- A fee on every loan, often plus monthly software fees
- Branding rules, such as a "powered by" line
- Correspondent loans: some partners charge an early-payoff (EPO) penalty
- If you're 1099, you cover your own taxes and benefits
- No company leads; you bring the business
- You use the platform's lender list [verify: can LOs request other lenders?]
Go retail
Pros
- No startup cost
- Company brand, systems, and compliance in place
- Often company-provided leads
- W-2 employment
Cons
- Usually commission-only, often with no base pay
- A company-set comp plan and one lender's products and pricing
- Your clients and brand usually stay with the company
Educational only. Not legal, tax, or compliance advice. Confirm requirements with NMLS and your state regulator.