Many people exploring a mortgage career ask a simple question:
How do 1099 mortgage loan officers get paid?
The short answer is: by commission, not salary.
But to truly understand how 1099 pay works, it helps to see real-world examples of how commissions are earned, paid, and sometimes adjusted.
This guide explains the full picture in plain terms.
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What Is a 1099 Mortgage Loan Officer?
A 1099 mortgage loan officer works as an independent contractor, not an employee.
That means:
- No hourly wage or fixed paycheck
- No taxes withheld by the company
- Income is reported on a 1099 tax form
- The loan officer manages their own taxes
However, being “independent” does not mean unregulated.
1099 loan officers are still supervised and must follow all federal and state mortgage laws.
→ Read more: Do 1099 loan officers make more than W2 loan officers?
How 1099 Mortgage Loan Officers Earn Money (Step by Step)
1099 vs W2 Mortgage Loan Officer1. Commission-Based Pay (With Example)
1099 loan officers earn income only when a loan closes and funds.
Example:
A borrower applies for a home loan with your help.
You guide them through the process, but the loan is denied or the borrower walks away.
Result: No loan closed → no commission earned
This is why mortgage origination is performance-based, not salaried.
2. What Happens When a Loan Closes?
When a loan does close and fund, the process typically looks like this:
- The loan funds successfully
- The wholesale lender pays the brokerage
- The brokerage calculates commission
- Approved fees are deducted
- The remaining commission is paid to the loan officer
Example:
You originate a loan that closes smoothly.
The lender pays the brokerage for that transaction.
Only after the brokerage receives payment and compliance checks are complete does commission become payable.
3. Fees and Deductions (Simple Example)
Most 1099 agreements include clearly defined fees.
Example (for illustration only):
- Loan closes successfully
- Brokerage receives compensation
- Administrative and processing fees apply
- Remaining amount is used to calculate your commission
These fees are disclosed upfront and outlined in the independent contractor agreement.
This is why experienced loan officers always review compensation terms carefully before joining a brokerage.
→ Read more: Top 5 Best Mortgage Companies for Loan Officers
Early Payoff (EPO): A Critical Example to Understand
Early Payoff (EPO) is one of the most misunderstood parts of mortgage compensation.
What is EPO?
If a borrower refinances, sells, or pays off the loan within a short period (often the first several months), the lender may charge the brokerage an EPO fee.
Example:
You close a refinance loan.
Three months later, the borrower refinances again elsewhere.
- The lender charges the brokerage an EPO fee
- The brokerage may offset or recover the previously paid commission
This is standard across the industry and not unique to any one company.
Self-Generated vs Company-Generated Business (With Examples)
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Self-Generated Loans
Example:
You build relationships with real estate agents, past clients, or referral partners.
They send you a borrower directly.
- These are self-generated loans
- Typically higher commission retention
- Still subject to compliance and advertising approval
→ Read more: Marketing Plan for Mortgage Loan Officers: Get More Borrower Leads
Company-Generated Leads
Example:
The brokerage offers you an online lead from a marketing campaign.
Before accepting the lead, you see the commission split disclosed.
- You choose whether to accept the lead
- Split applies if the loan closes
- Leads are not guaranteed and vary by availability
When Do 1099 Loan Officers Actually Get Paid?
Payment timing depends on:
- Loan closing and funding
- Lender payment to the brokerage
- Completion of compliance review
Example:
A loan closes on Friday. The lender pays the brokerage the following week. Compliance review is completed shortly after.
Commission is paid after all steps are complete, not instantly at closing.
Is Income Guaranteed for 1099 Loan Officers?
No.
Example scenarios that affect income:
- Borrower does not qualify
- Loan falls apart before closing
- Market slowdown reduces volume
- Early payoff triggers commission offset
Mortgage origination rewards consistency and skill—but it does not guarantee income.
Who Is the 1099 Model Best For?
The 1099 structure often fits loan officers who:
- Already generate their own business
- Understand income variability
- Are comfortable managing taxes
- Think long-term, not per-loan
Example:
Many loan officers start their careers under a W2 structure, then move to 1099 after building confidence and referral networks.
Why Choose Loan Factory as a 1099 Mortgage Loan Officer
Loan Factory offers a 1099 Independent Contractor model designed to be transparent, scalable, and compliant.
What Loan Officers May Access:
- 100% commission on eligible self-generated loans, minus a flat $595 fee per file
- No desk fees or junk fees
- Free MOSO platform (CRM, LOS, pricing, marketing, compliance tools)
- Access to 242+ wholesale lenders with side-by-side comparisons
- In-house underwriting support and $500 processing per file
- Optional company-generated lead programs (with disclosed splits)
- Mentorship from Thuan Nguyen (#1 Loan Officer in the U.S.)
- Weekly training and Loan Factory Academy
Compensation is paid only on closed and funded loans and may be subject to early payoff policies and compliance review.
Take the Next Step
Understanding how 1099 mortgage loan officers get paid means understanding the full lifecycle of a loan, not just the commission number.
If you want to learn how experienced loan officers structure commission-based income responsibly:
Join the Loan Factory webinar today: https://www.loanfactory.com/loan-officer
Call us at: 714-591-8143
Disclaimer
This article is for informational purposes only and does not constitute an offer of employment or a guarantee of compensation.
Mortgage loan officer income depends on individual performance, market conditions, compliance requirements, and applicable laws and investor guidelines.
FAQ: How Do 1099 Mortgage Loan Officers Get Paid?
