How to Start a Mortgage Brokerage Business

Buying a home or owning a business is a dream many people have. But, getting a loan to buy that home, a piece of land, or an office building can be difficult. Lenders don't always want to talk to a small business owner or even a renter looking for a home. A mortgage brokerage business acts as a middleman between the borrower and the lender and can often negotiate deals with lenders that the borrower couldn't do on his or her own.

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Learn how to start your own Mortgage Brokerage Business and whether it is the right fit for you.


Start a mortgage brokerage business by following these 10 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your mortgage brokerage business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a mortgage brokerage business?

Costs involved in starting a mortgage brokerage business are small. Most brokerages can be started out of the home for little or no money aside from the licensure and basic legal requirements.

What are the ongoing expenses for a mortgage brokerage business?

Ongoing expenses for a small mortgage brokerage business are minimal. Usually, all you have to pay for is office space and labor expenses. Larger firms incur higher expenses due to higher labor, insurance, and office-related expenses.

Who is the target market?

Target market for this business includes businesses looking for commercial property, individuals and families looking for residential home(s), and investors looking for real estate or rental properties.

How does a mortgage brokerage business make money?

This business makes money by receiving a commission (a percentage of each loan) in return for bringing customers to the lender.

How much can you charge customers?

The fee is paid either by the borrower or the lender, and is usually between 1% and 2% of the total loan amount. Some brokerage firms also charge fees for applications or other ancillary services.

How much profit can a mortgage brokerage business make?

Mortgage brokerage firms can have a high profit margin. Smaller firms generally have a higher margin than larger ones, owing to the fact that smaller firms have lower overhead and ongoing expenses. Margins can range from 10% up to 50% or more, depending on the size of the operation.

How can you make your business more profitable?

Add ancillary services. Most borrowers need some type of help with their credit. If a borrower doesn't qualify for a loan, your firm could offer to help them improve their credit or partner with other firms that specialize in this area. You can also partner with insurance agents and real estate brokers or realtors to offer an "immersive" experience for your clients.

Check with your state. Some regulations prohibit mortgage brokers from engaging in sideline businesses.

As a mortgage brokerage company, you don't need to focus on the residential mortgage market, even thought this is a popular market. You can also fund real estate investments and provide capital to investors to increase profits for the firm.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Mortgage Brokerage Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

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STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your mortgage brokerage business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

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You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.
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Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Open net-30 accounts

When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.

Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

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Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act was passed in 2008, requiring all mortgage brokers to have met certain minimum standards for licensing. This includes 20 hours of a class from the National Mortgage Licensure System, as well as passing a national exam, the SAFE Mortgage Loan Originator Test.

State & Local Business Licensing Requirements

In addition to the federal standards each state has its own licensing requirements for mortgage brokers. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Certificate of Occupancy

A mortgage brokerage firm business is generally run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a mortgage brokerage business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your mortgage brokerage business will be in compliance and able to obtain a CO.

Services Contract

Mortgage brokerage businesses should require clients to sign a services agreement before starting a new project.  This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Recommended: Learn what business insurance for your Mortgage Brokerage Business will cost.

Business Insurance for
Mortgage Brokerage Business

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

How to promote & market a mortgage brokerage business

Start by networking locally. If you want to advertise, start small with business cards, flyers, and local ads in the newspaper and online (pay-per-click).

How to keep customers coming back

Most people don't make a major real estate purchase very often. So, if you want them to keep you in mind for future business, you need to stay in contact with them. After the loan closes, follow up with them to make sure everything worked out fine for them with the lender. If possible, get them on your email list and send regular updates about the local real estate market, insurance tips, money-saving tips, and ideas for living a better life.

Building a relationship with your clients will make you more than just a brokerage firm that got them a loan for their house that one time.

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Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.

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Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.

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Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.

Start A Mortgage Brokerage Business In Your State

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Is this Business Right For You?

Owning a mortgage brokerage business is not for everyone. You need to have a special affinity for numbers and finance. It also helps to have at least a basic understanding of the banking industry, and specifically the mortgage industry. You should be detail oriented and good with numbers. You also should have a passion for helping people. The mortgage business is highly commoditized. The most successful brokerages are those that build relationships with their clientele.

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Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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What happens during a typical day at a mortgage brokerage business?

Your day starts by collecting applications. The review process can take some time. Some borrowers don't have good credit and need help with their credit report and score. Others just need to find the best deal in the marketplace.

This is where you come in. Brokers who work for a mortgage brokerage business spend a significant amount of time emailing and calling lenders, using online quoting systems, and talking to their contacts in the industry about the best products available for their clients and customers.

They take applications, sort them, and talk to potential borrowers about what they qualify for. They also follow through on those applications with the lender to make sure all paperwork is in good order and that they are complying with all federal lending regulations.

What are some skills and experiences that will help you build a successful mortgage brokerage business?

You must be detail oriented, understand basic finance and financial calculations, and be licensed in your state to do business. In addition to the basic requirements, you also need to complete related coursework in finance and be able to review lending and financial documents and conduct research. Classes in computer use are not mandatory, but helpful.

You also need to attend pre-licensure education. The 2008 SAFE Act requires all mortgage brokers to be licensed. All licenses issued throughout the country are maintained by the National Mortgage Licensure System (NMLS). NMLS also provides brokers guidance on getting licensed in your state. Licensure involves 20 hours of pre-licensure programming and you must pass an exam to practice in your state.

What is the growth potential for a mortgage brokerage business?

The firm can be small or large. Typically, a small mortgage brokerage firm consists of a team of 1 to 5 people. If you own and operate the business, you can run the business out of your home. However, most brokerage firms operate out of an office, since most borrowers want to meet with a mortgage broker in a professional setting.

HomeSure Lending, Academy Mortgage Corporation, and Crestico are all examples of large mortgage brokerage businesses.

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Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a mortgage brokerage business?

Network. The mortgage industry is built on trust and referral business. While some larger institutions are able to use advertising to sell loans, many small mortgage brokerage businesses rely on a good reputation locally. Partner with successful local real estate agents and insurance agents. These professionals are frequently in contact with people who are or may be looking for a home.

How and when to build a team

If you're starting out at a one-person firm, then you don't need a team. However, a small mortgage brokerage business typically has a team of between 2 and 5 people. You may work as a loan officer or oversee other loan officers. You'll need an HR or account manager and a bookkeeper. You may also need someone to answer the phone, make appointments, and take messages.

Next Steps

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