Mortgage License Requirements

In our business, we get a ton of questions basically asking about the requirements to become a mortgage broker across the country. I thought I would write an entry about some of the general requirements we explain to our potential customers in a FAQ format.

A small disclaimer: Each state has its own specific requirements and qualifications, so please just use this as a guideline. If you would like to discuss specific state requirements, check out our website at www.amlicensing.com or give us a call at 866.588.6600.

Q: What is my first step to get my brokers license?
A: Generally speaking the mortgage broker license in each state is a company license, not a personal license. Therefore, the first step is to setup your company. Most people we work with end up establishing a Corporation or LLC.

Q: How much experience do I need in the industry before getting my own license?
A: This varies from state to state from 0-5 years. Our typical answer is that you should be in the industry as a loan officer or other capacity for at least 1-2 years before you start to pursue licensing on your own.

Q: If I don't have any experience, where can I start?
A: While there are a few states that will permit you to get licensed without any experience, it would seem that a better route is to work for a mortgage broker shop as a loan officer in order to gain experience. Because it is a commission based job, most shops are pretty willing to bring on new loan officers. You may also look into training classes that are available either in a classroom setting or over the internet.

Q: Do I have to have an office in the state in order to be licensed?
A: Each state has its own requirements when it comes to whether or not you must open an office within its borders. When I started in licensing, there were maybe 5-7 states that had this requirement and the number has only gone up. Generally, if the state requires an office, then it will also require you to maintain an employee of your company who works in the office.

Q: Do I really have to have a license in each state where I do business or are their reciprocal licenses available from state to state?
A: As of today, the only states that do not require licensing for mortgage brokers are Alaska and Colorado (CO will begin licensing mortgage brokers on 1/1/07, so that exemption is basically gone), so yes, you must be licensed in each state. Also, the mortgage industry does not seem to have any reciprocal licensing from state to state.

Q: How much is getting licensed going to cost me?
A: Our ballpark estimate is that you should budget somewhere between $2200-$2500 per application where you plan to expand to. This number is just an average, as many states will exceed this and many states will be far less.

Q: How much time will it take:
A: Again, this varies state to state, but you should expect that it will take at least 60-90 days to get your license approval from the state agency.

Hope this is helpful and let me know if there are any general questions I didn't cover.
Eric