BPS mortgage commission is Loan Officer compensation expressed in basis points and calculated against an eligible mortgage loan amount.
One basis point equals 0.01%. Therefore:
50 BPS equals 0.50% 75 BPS equals 0.75% 100 BPS equals 1.00% 150 BPS equals 1.50% 250 BPS equals 2.50% For example, 100 BPS applied to an eligible $400,000 mortgage equals $4,000 in gross commission. Confirm whether the quoted BPS represents compensation paid to the mortgage company or commission allocated to the individual Loan Officer. These amounts are not necessarily the same.
That $4,000 is not necessarily the Loan Officer’s final payment. Company splits, administrative fees, processing charges, team allocations, payroll withholding, taxes, early payoff provisions, and other agreement terms can reduce the amount received.
Key Takeaways BPS definition: Basis points are financial units where 1 BPS equals 0.01% and 100 BPS equals 1.00%. Gross formula: Gross commission equals the eligible loan amount multiplied by BPS and divided by 10,000. Gross vs. Net: BPS indicates the starting gross calculation, not final take-home pay. Regulation Z compliance: Compensation cannot vary based on interest rates, APR, loan terms, or prohibited transaction terms. Earned vs. Paid: Commission earning depends on lawful closing and funding, while payment follows the designated payroll schedule. Total value matter: A higher BPS plan with high operating fees may yield lower net pay than a lower BPS plan with low fees and strong support. Important Note: Loan Officer compensation depends on the employer, written compensation plan, employment or contractor agreement, licensing, worker classification, transaction eligibility, closing, funding, company fees, state law, and federal Loan Originator compensation requirements. All examples below are educational calculations, not compensation offers or income projections.
What Does BPS Mean in Mortgage Commission? BPS means basis points, a financial unit used to express small percentages precisely.
BPS-to-Percentage Conversion Basis points
Percentage
Decimal
1 BPS 0.01% 0.0001 10 BPS 0.10% 0.0010 25 BPS 0.25% 0.0025 50 BPS 0.50% 0.0050 75 BPS 0.75% 0.0075 100 BPS 1.00% 0.0100 125 BPS 1.25% 0.0125 150 BPS 1.50% 0.0150 200 BPS 2.00% 0.0200 250 BPS 2.50% 0.0250
In a Loan Officer compensation plan, the stated BPS is generally applied to the amount of credit extended or another clearly defined eligible loan amount.
For example:
50 BPS on $300,000 equals $1,500. 75 BPS on $400,000 equals $3,000. 100 BPS on $500,000 equals $5,000. 125 BPS on $600,000 equals $7,500. These are gross mathematical calculations before fees, splits, taxes, withholding, offsets, or other compensation-plan conditions.
The standard calculation is:
Gross commission = Eligible loan amount × BPS ÷ 10,000
You can also calculate it in three steps:
Convert the BPS into a percentage. Convert the percentage into a decimal. Multiply that decimal by the eligible loan amount. Example: 75 BPS on a $400,000 Loan Convert 75 BPS:
75 BPS = 0.75% = 0.0075
Calculate the commission:
$400,000 × 0.0075 = $3,000
The illustrative gross commission is $3,000.
Example: 100 BPS on a $500,000 Loan Convert 100 BPS:
100 BPS = 1.00% = 0.01
Calculate:
$500,000 × 0.01 = $5,000
The illustrative gross commission is $5,000.
allocations, or adjustments.
Illustrative Example Disclosure : These calculations are mathematical examples only. They do not represent a Loan Factory compensation quote, expected income, or guaranteed payment.
BPS Mortgage Commission Calculator Table The following table shows illustrative gross commission at several loan amounts and BPS rates.
Eligible loan amount
50 BPS
75 BPS
100 BPS
125 BPS
$200,000 $1,000 $1,500 $2,000 $2,500 $300,000 $1,500 $2,250 $3,000 $3,750 $400,000 $2,000 $3,000 $4,000 $5,000 $500,000 $2,500 $3,750 $5,000 $6,250 $600,000 $3,000 $4,500 $6,000 $7,500 $750,000 $3,750 $5,625 $7,500 $9,375
The table shows gross commission before:
Company splits Administrative fees Processing Branch allocations Team compensation Payroll withholding Taxes Early payoff adjustments Other agreement terms Is BPS Mortgage Commission the Same as Mortgage Rate BPS? The unit is the same, but the application is different.
In every context:
1 BPS = 0.01 percentage points
The BPS may describe a rate movement, pricing adjustment, company margin, or compensation amount.
BPS in Mortgage Rates Suppose a mortgage rate changes from 6.50% to 6.75%.
The difference is:
6.75% − 6.50% = 0.25% = 25 BPS
The 25 BPS describes the change between two interest rates.
It does not represent the Loan Officer’s commission.
BPS in Loan Officer Compensation Suppose a Loan Officer earns 75 BPS on an eligible $400,000 transaction.
The commission calculation is:
$400,000 × 0.75% = $3,000
The 75 BPS represents a compensation percentage applied to the eligible loan amount.
BPS in Mortgage Pricing Rate sheets may also show BPS representing:
Pricing adjustments Lender credits Discount costs Company margin Compensation settings Those figures do not automatically represent the individual Loan Officer’s pay.
Quick Comparison BPS context
What the number represents
Mortgage-rate BPS Difference or movement between interest rates Pricing BPS Adjustment, credit, cost, or pricing amount Commission BPS Compensation applied to eligible loan volume Company-margin BPS Revenue or margin retained under a company structure
Always confirm which BPS number the compensation agreement uses.
Gross Commission vs. Net Loan Officer Compensation The BPS formula calculates gross commission under the stated compensation method.
It does not automatically calculate:
Net compensation Take-home pay Taxable income Final payroll amount Profit from operating the Loan Officer’s business Net compensation can be affected by:
Company commission split Flat administrative fee Processing charge Branch allocation Team split Assistant Loan Officer allocation Payroll taxes Income-tax withholding Independent-contractor tax obligations Advance recovery Early payoff adjustment Marketing expenses Technology expenses Licensing expenses Other permitted charges Illustrative Net Commission Example Assume:
Eligible loan amount: $400,000 Compensation rate: 100 BPS Gross commission: $4,000 Administrative fee: $595 Processing fee: $500 Calculation:
$4,000 − $595 − $500 = $2,905
The illustrative amount remaining before taxes and other applicable adjustments is $2,905.
The actual compensation agreement determines whether these fees apply, when they are collected, and whether other allocations or deductions are required.
What Is a Mortgage Commission Split? A commission split divides eligible gross compensation between the Loan Officer and the mortgage company.
Illustrative structures can include:
50/50 60/40 70/30 80/20 90/10 These examples are not industry standards.
For a broader explanation of how BPS, company splits, flat fees, and payment conditions work together, review our guide to Mortgage Loan Officer commission structure .
Illustrative 70/30 Split Assume a $400,000 eligible loan produces $4,000 in gross commission at 100 BPS.
Under a 70/30 split:
Loan Officer share: $2,800 Company share: $1,200 Additional processing, branch, team, payroll, tax, or administrative charges may still apply.
Split Before Fees vs. Split After Fees The order of the calculation can materially change the result.
Example A: Split Before a $500 Processing Fee Gross commission: $4,000 Loan Officer share at 70%: $2,800 Processing fee: $500 Illustrative remaining amount: $2,300 Example B: Fee Deducted Before the Split Gross commission: $4,000 Processing fee: $500 Remaining compensation pool: $3,500 Loan Officer share at 70%: $2,450 The difference is $150.
Your compensation agreement should explain:
Which amount is divided Whether fees are removed first Whether team allocations occur before or after the split Which party pays processing How payroll deductions are handled What Does 100% Commission Mean? A 100% commission plan generally means the Loan Officer retains eligible commission rather than sharing it with the company through a percentage split.
It does not mean:
The Loan Officer receives 100% of the mortgage amount. No company fees apply. Processing is free. Every application earns commission. Payment occurs before closing or funding. Taxes do not apply. Income is guaranteed. A 100% commission structure can still include:
Flat company fees Processing Team allocations Payroll withholding Early payoff adjustments Closed-and-funded requirements Compliance conditions Business expenses The correct comparison is:
Eligible gross commission − applicable costs and adjustments
Do not evaluate a compensation plan solely by the “100%” headline.
What Does “Up to 250 BPS” Mean? “Up to 250 BPS” means that 250 BPS, or 2.50%, is the maximum rate described under certain eligible circumstances.
It does not mean every Loan Officer receives 250 BPS on every transaction.
The actual BPS can depend on:
Approved compensation plan Worker classification Business source Role on the transaction Team allocation Company policies Eligibility Applicable law Written agreement Ask the company to identify:
The exact BPS that applies to your role Which transactions are eligible Whether the rate differs by business source Which fees and allocations apply When the commission becomes payable A maximum advertised rate should not replace a written compensation plan.
How Do Mortgage Loan Officers Get Paid? Mortgage Loan Officers can be paid through several permitted methods.
The CFPB explains that compensation can include salary, a fixed dollar amount per loan, a fixed percentage of the loan amount, or a combination. Consistent minimum or maximum per-transaction payment amounts may also be permitted.
Common structures include:
Salary Hourly wages Salary plus commission Fixed BPS Fixed amount per eligible loan Commission split Flat-fee model Team-based compensation Recoverable or nonrecoverable draw Permitted production incentives The written plan should state:
How compensation is calculated Which transactions qualify When commission is earned When payment is processed Which fees apply Whether early payoff adjustments can apply How team transactions are allocated What happens after termination When Is BPS Commission Earned? The payment event depends on the written compensation plan and agreement.
Many transaction-based plans require the loan to:
Close Fund Satisfy file-completion requirements Pass applicable compliance review Reach the scheduled payroll cycle Some agreements also require the mortgage company to receive its applicable compensation before the individual Loan Officer is paid.
Do not assume commission is earned when:
A lead is received An application is submitted A preapproval is issued Automated underwriting returns favorable findings The file receives conditional approval Closing documents are prepared A Loan Officer can perform substantial work on a transaction that never becomes eligible for commission.
Common reasons include:
Borrower withdrawal Loan denial Purchase-contract cancellation Property or appraisal issue Incomplete documents Unresolved underwriting conditions Borrower choosing another lender Failure to close Failure to fund Compliance issue Ineligibility under the compensation plan Commission-based income therefore depends more heavily on eligible funded production than on application volume alone.
Can BPS Change Based on the Mortgage Interest Rate? Generally, no.
Regulation Z prohibits Loan Originator compensation that is based directly or indirectly on a term of the mortgage transaction or a proxy for a transaction term.
Restricted factors can include:
Interest rate APR Loan term Discount points Origination points or fees Prepayment penalties Other consumer rights or obligations A factor functioning as a proxy for a transaction term The amount of credit extended is treated differently. Compensation can be based on a fixed percentage of that amount, provided the percentage remains fixed and does not vary according to the individual loan size. A consistent minimum or maximum dollar amount may also be used.
For more details on prohibited transaction-based incentives, permitted compensation methods, and written agreements, read our guide to Mortgage Loan Officer compensation rules .
Permitted Fixed-BPS Example A company pays a Loan Officer 75 BPS on every eligible mortgage, regardless of:
Interest rate APR Discount points Lender credit Product profitability Other transaction terms Prohibited Rate-Based Example A company pays:
75 BPS when the borrower selects one interest rate 100 BPS when the borrower accepts a higher interest rate That arrangement directly connects compensation to a transaction term and would conflict with Regulation Z’s general restriction.
Can the BPS Percentage Change With the Loan Amount? A compensation plan can apply a fixed percentage to the amount of credit extended.
However, the percentage generally cannot change from one loan-size tier to another.
For example, the official interpretation says a plan may pay 1% of the amount of credit extended, subject to a consistent minimum or maximum dollar payment.
A plan should not pay:
3% on smaller loans 2% on medium loans 1% on larger loans when the percentage changes according to the amount of credit extended.
This distinction matters:
A fixed percentage with a consistent minimum or maximum may be permitted. A percentage that changes by loan-size tier generally is not permitted under this rule. To remain compliant, lenders may set a fixed minimum or maximum dollar cap per loan, but cannot vary the BPS rate tier by loan volume.
Can a Loan Officer Lower Commission to Save a Deal? Generally, a Loan Officer cannot selectively change personal compensation on an individual transaction because the borrower negotiated new terms or received a competing offer.
The official Regulation Z interpretation explains that once compensation is established for the transaction, it cannot ordinarily be increased or decreased because the interest rate, points, or other credit terms change.
A company can change its pricing to compete, but the individual Loan Originator’s compensation generally cannot be adjusted for that reason.
Narrow Exception for Certain Unforeseen Settlement Costs Regulation Z provides a limited exception allowing compensation to be reduced to cover certain unforeseen increases in actual settlement costs, such as an unexpected rate-lock extension or tolerance cure, when the applicable requirements are met.
This exception should not be treated as general permission to negotiate Loan Officer compensation loan by loan.
Does Higher BPS Always Mean Better Compensation? No.
A higher BPS can still produce lower net compensation when the structure includes:
A larger company split Higher processing expenses Monthly desk fees Technology charges Marketing costs Team allocations Branch expenses Fewer company-provided resources Greater administrative responsibility Example: Comparing Two Plans Assume both structures apply to a $400,000 eligible loan.
Plan A Compensation rate: 100 BPS Gross commission: $4,000 Company split: 30% Loan Officer share before additional expenses: $2,800 Plan B Compensation rate: 85 BPS Gross commission: $3,400 Flat company fee: $595 Loan Officer amount before additional expenses: $2,805 Plan B produces $5 more in this simplified comparison despite advertising a lower BPS rate.
The real comparison should also include:
Processing Technology Marketing Benefits Tax treatment Support Payment timing Business-development responsibilities 1099 vs. W-2 BPS Mortgage Commission A 1099 independent contractor and a W-2 employee can both receive compensation expressed in BPS.
The classifications affect payroll, taxes, benefits, expenses, and the legal working relationship.
Compensation consideration
1099 structure
W-2 structure
General status Independent contractor Employee Tax withholding Generally handled by the contractor Generally processed through payroll Commission plan Governed by contractor agreement Governed by employment compensation plan Employee benefits Generally unavailable as employee benefits May be available under company policy Business expenses Can involve greater personal responsibility Depends on employer policy Mortgage supervision Still required Required Guaranteed funded volume No No
Worker status cannot be determined solely by issuing Form 1099 or Form W-2.
The IRS explains that the complete relationship must be considered, including behavioral control, financial control, and the type of relationship between the company and worker.
Neither classification automatically provides:
A higher BPS rate More take-home pay Greater job security Guaranteed benefits Guaranteed production Compare:
Gross compensation Company fees Tax obligations Benefits Business expenses Technology Processing Marketing Schedule and control Support Payment timing Obtain qualified legal or tax advice regarding your specific worker-classification and tax situation.
How BPS Commission Affects Annual Gross Income Annual gross commission depends on eligible funded volume and the contractual BPS.
The basic formula is:
Annual gross commission = Eligible annual funded volume × BPS ÷ 10,000
Illustrative Annual Commission Table Eligible annual funded volume
50 BPS
75 BPS
100 BPS
$3,000,000 $15,000 $22,500 $30,000 $6,000,000 $30,000 $45,000 $60,000 $9,000,000 $45,000 $67,500 $90,000 $12,000,000 $60,000 $90,000 $120,000 $18,000,000 $90,000 $135,000 $180,000
These figures are gross calculations before:
Company fees Splits Processing Payroll withholding Taxes Team allocations Business expenses Early payoff adjustments Other plan requirements A high BPS rate without consistent eligible funded volume does not create predictable income.
Similarly, high funded volume does not reveal net income until operating costs and compensation-plan conditions are reviewed.
For a broader view of how commissions, salary, funded volume, and business expenses affect earnings, explore our guide to Mortgage Loan Officer salary .
What Should a BPS Compensation Agreement Include? A clear agreement should answer each of the following questions.
Compensation Formula Confirm:
What BPS applies? Is the BPS fixed? Which loan amount is used? Is there a minimum payment? Is there a maximum payment? Does a company split also apply? Are team or branch allocations deducted? Eligible Transactions Confirm whether the formula applies to:
Self-generated loans Company-sourced opportunities Purchase transactions Refinances Brokered loans Correspondent loans Team transactions Assistant Loan Officer files Loans in specific states Specific products or channels Applicable Fees Review:
Administrative fee Processing fee Technology fee Desk fee Payroll charge Branch allocation Team allocation Marketing cost Licensing expense Advance recovery Payment Conditions Determine:
Must the loan close? Must it fund? Must the company receive compensation first? Is compliance review required? When does payroll process? Which file-completion standards apply? Can an early payoff adjustment apply? Termination and Pipeline Treatment Confirm what happens to:
Applications in progress Loans in processing Loans in underwriting Closed but unpaid transactions Pending bonuses Future payroll payments Early payoff obligations CRM and client records Team allocations Recruiting conversations and marketing claims should match the written agreement.
What Is an Early Payoff Adjustment? A lender or investor can sometimes recover compensation from a mortgage company when a loan pays off or refinances within a contractually defined period.
A Loan Officer agreement may include an early payoff, or EPO, provision explaining how that company-level recovery affects individual compensation.
Review:
Which transactions are covered The applicable time period The amount subject to recovery Whether future commissions can be offset Whether repayment is capped What happens after the relationship ends Whether state wage laws affect recovery Do not assume that a Loan Officer automatically owes money whenever a borrower pays off early.
The written compensation plan and applicable agreement control the individual obligation.
How Technology and Support Affect Net BPS Value Commission is only one part of a Loan Officer’s operating model.
A Loan Officer may otherwise need to pay separately for:
CRM Loan Origination System Point-of-sale system Pricing engine Marketing platform Website Compliance review Processing Training Income-analysis tools Borrower communication systems Included technology and support can increase the practical value of a lower BPS or flat-fee structure by reducing separate expenses and manual work.
Technology does not guarantee production.
It can help Loan Officers:
Organize prospects and borrowers Assign follow-up Compare mortgage scenarios Track active files Manage past-client relationships Reduce duplicate entry Coordinate approved team members How Loan Factory Structures Current Loan Officer Compensation Loan Factory’s current public recruiting information describes compensation structures that include:
A flat $595 company fee $500 in-house processing A 1099 structure in which eligible Loan Officers retain commission after the applicable flat fees A W-2 structure paying 90% of eligible commission after the listed administrative and processing fees Access to the TERA mortgage platform *Note: Fee structures and compensation plans may vary by state guidelines and individual employment contracts.*
These terms remain subject to role, licensing, state availability, eligibility, compensation plan, signed agreement, closed-transaction requirements, payroll treatment, and current company policies.
Loan Factory also currently describes TERA as a company-provided platform supporting its Loan Officer operations.
TERA Can Include CRM Point of sale Loan Origination System Pricing Marketing Support Mortgage marketplace resources Including these tools can affect the full compensation comparison because a Loan Officer may otherwise purchase similar services separately.
Technology access does not guarantee:
Leads Applications Approval Closing Commission Income Why Choose Loan Factory? Loan Factory may be worth evaluating when you want to compare compensation together with:
TERA mortgage technology Flat per-transaction company costs In-house processing Training resources Marketing support Underwriting resources Live Loan Officer support Eligible W-2 and 1099 structures The relevant question is not only:
What is the advertised BPS?
It is:
After company fees, processing, taxes, operating expenses, and support, what does the complete structure provide?
Explore the current Loan Factory Loan Officer compensation and technology platform to review available compensation structures, fees, technology, training, and support.
You can also call 714-591-8143 to discuss the applicable role, current fees, licensing, technology, and onboarding requirements.
Questions to Ask Loan Factory or Any Mortgage Company Before joining, ask:
Which compensation plan applies to me? Is the role W-2 or 1099? What is the exact BPS or commission percentage? What amount is the BPS applied to? Does the percentage remain fixed? Which transactions are eligible? Which company fee applies? Is processing required or optional? When is the processing fee charged? Are monthly technology fees required? How are team transactions allocated? How are company-sourced opportunities paid? When is commission earned? When is commission paid? Can EPO offsets apply? What happens to pipeline loans after termination? Which CRM records belong to the company? Can the plan change prospectively? Which written document controls? Request the applicable compensation plan and agreement before relying on recruiting claims.
Conclusion: Evaluate the Full Value Behind the BPS BPS mortgage commission expresses Loan Officer compensation as a percentage of eligible loan volume.
The essential conversions are:
1 BPS = 0.01% 50 BPS = 0.50% 100 BPS = 1.00% 250 BPS = 2.50% The basic calculation is:
Eligible loan amount × BPS ÷ 10,000
However, the BPS rate is only the starting point.
Before comparing compensation structures, evaluate:
Gross commission Company split Flat fees Processing Team allocations Payroll treatment Taxes Business expenses Technology Training Support Payment timing Early payoff provisions Pipeline treatment A lower advertised BPS can produce greater net value when fees and operating costs are lower. A higher BPS can still be valuable when the company provides meaningful salary, benefits, business resources, or support.
The correct comparison depends on your actual role, funded volume, costs, and written agreement.
Qualified candidates can register as a Loan Officer to begin Loan Factory’s review and onboarding process.
Registration begins the review process and does not guarantee licensing, sponsorship, acceptance, employment, contractor engagement, compensation, production, or system access.
Sources About the Author Loan Factory Loan Officer Education and Recruiting Team
We create practical resources to help aspiring, newly licensed, and experienced Loan Officers understand mortgage compensation, basis points, commission agreements, licensing, technology, compliance, training, and business operations.
Our goal is to provide clear information you can use to compare compensation structures, understand the costs behind an advertised BPS rate, and evaluate the complete operating model offered by a mortgage company.
Disclaimer This content is for educational purposes only and is not legal, tax, employment, licensing, compensation, accounting, financial, or career advice.
Mortgage Loan Officer compensation varies by company, role, worker classification, business source, state, agreement, transaction, and applicable law. Consult qualified legal, tax, payroll, or financial professionals regarding your circumstances.
Loan Factory compensation, processing, technology, training, support, sponsorship, and onboarding remain subject to licensing, eligibility, state availability, management approval, current terms, applicable agreements, and compliance requirements.
Nothing in this article guarantees licensing, sponsorship, employment, contractor engagement, funded loans, commission, production, income, or career results.
Loan Factory, Inc. NMLS #320841. Equal Housing Lender.
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