Paid at funding,
split three ways,
clawed back on payoff
Lending compensation looks simple from the outside. A loan funds, someone earns basis points. The complexity lives in when the money is earned, who else has a claim on it, and what happens if the borrower refinances in month four.
Lending is one of the few industries where the compensation rules are partly written by regulators instead of entirely by the company. That makes the plans less varied than in software sales and considerably more consequential to get wrong. This guide covers how originator pay is structured, where the money actually comes from, and the two events that cause most disputes.
Basis points, and what they are a percentage of
Originator compensation is quoted in basis points. One basis point is one hundredth of a percent, so 125 basis points on a $400,000 loan is $5,000. The number itself is rarely the argument. The argument is what it is a percentage of.
Most plans pay on the loan amount, which is clean. Some pay on a net figure after concessions, lender credits, or a portion of discount points. A plan that says 125 bps without saying 125 bps of what will produce two defensible numbers for the same loan, and the originator will always compute the larger one.
The other variable is the tier. Many lenders move originators up a basis point ladder as monthly funded volume rises, and whether that ladder is retroactive to the first loan of the month or applies only to loans above the threshold changes the payment materially.
- Loan amount
- The simplest and most common basis. Predictable for the originator and easy to audit, because the figure appears on the closing documents.
- Net of concessions
- Reduces the base by seller or lender credits. Defensible, and a frequent source of surprise if the originator was quoting the gross in their head all month.
- Retroactive tiers
- Hitting the volume threshold lifts the rate on every loan that month, including ones already funded. Generous, expensive, and the version originators assume unless told otherwise.
Who else has a claim on the file
Very few loans pay one person. A branch manager may take an override on everything their branch funds. A loan partner or processor may hold a fixed dollar amount per file. A referral source inside the business may hold a share of the originator's own basis points.
These claims stack in a specific order, and the order is worth writing down because it changes the totals. An override calculated on gross branch production costs the company more than the same percentage calculated on originator net. Both are common. Only one is usually documented.
Splits between two originators on a shared file are the other recurring case. A 60/40 split of 125 bps is straightforward. A 60/40 split where each originator sits on a different tier is not, and the plan needs to say whose tier governs.
The two events that cause disputes
The first is timing. A loan that locks in one month, funds in the next, and closes its trailing conditions in a third has three plausible pay dates. Paying at funding is the most common answer, and it is the one that matters most to originators, who would rather be paid promptly on a slightly smaller number.
The second is early payoff. If a borrower refinances or sells inside the lender's recapture window, commonly 90 to 180 days, the lender loses the premium it paid for that loan and typically reclaims the originator's compensation. This is where lending compensation gets genuinely difficult, because the money has usually been spent.
An early payoff clawback that arrives without warning, in a lump, against a month where the originator funded little, produces a negative paycheck and a resignation. The mechanics of how it is recovered matter as much as whether it is owed.
- Recapture windows vary
- Investor agreements set the window, so the same lender can face different windows on different products. A single company-wide clawback rule will be wrong on one of them.
- Recovery method is a policy choice
- Taking it all from the next payment is simplest and the most damaging. Spreading it across several pay periods, or holding a reserve at funding, both work better and both need tracking.
- State law constrains deductions
- Some jurisdictions limit what can be deducted from earned wages and require written authorisation. Worth confirming with counsel before a clawback policy is written, and certainly before it is applied.
Why lending outgrows the spreadsheet early
A twenty-originator shop funds perhaps 120 loans a month. That is 120 rows, which a spreadsheet handles comfortably. The problem is not the row count. It is that each row carries a tier that depends on the originator's month-to-date total, a split that depends on the file, an override that depends on the branch, and a clawback risk that stays open for six months after the row was written.
So the spreadsheet is never finished. A loan funded in March can change in September, and when it does, the March calculation has to be reopened and its consequences carried forward. Most teams handle this with an adjustments tab, which works until somebody needs to explain a specific figure to a specific originator eight months later.
One funded loan, paid out
A $420,000 loan at 125 basis points, shared 60/40 between two originators, with a branch override and a processor fee. The order of operations is what decides the final figures.
| Component | Calculation | Amount |
|---|---|---|
| Gross originator comp | $420,000 × 125 bps | $5,250.00 |
| Processor fee | Fixed per funded file | −$350.00 |
| Net available to split | $4,900.00 | |
| Lead originator | 60% of net | $2,940.00 |
| Second originator | 40% of net | $1,960.00 |
| Branch manager override | 15 bps on loan amount | $630.00 |
| Total company cost | Comp plus override | $5,880.00 |
Illustrative figures. Basis point levels, processor fees and override rates vary widely by lender, channel and state.
Questions people actually ask
- How is loan officer commission calculated?
- Multiply the loan amount by the originator's basis point rate. A $400,000 loan at 125 basis points produces $5,000. Deduct any per-file fees, apply any split with a second originator or loan partner, then add overrides owed to a branch manager. The result is what the originator earns on that file, usually paid in the payroll cycle following funding.
- What is a basis point in mortgage commission?
- One basis point is one hundredth of one percent, so 100 basis points equals 1%. Lending uses basis points instead of percentages because originator compensation typically falls between 75 and 150 basis points, and whole numbers are easier to compare than decimals.
- When do loan officers get paid?
- Most lenders pay at funding, in the payroll run following the month the loan funded. Some pay at closing and some hold until the loan is purchased by the investor. Paying at funding is the most common because it is the point where the lender's own revenue is certain.
- What is an early payoff clawback?
- If a borrower refinances or pays off the loan inside the lender's recapture window, commonly 90 to 180 days, the investor reclaims the premium it paid. Lenders generally pass that loss on by reclaiming the originator's compensation for that file. The window length comes from the investor agreement rather than from the lender, so it can differ by product.
- Does commission income count for a mortgage application?
- For a borrower, yes, though most lenders want a two-year history of commission earnings and will average it. That is a separate question from how a loan officer is paid, but the two get confused often enough that it is worth stating plainly.
The hard part is the six-month tail
Any tool can multiply a loan amount by a rate. The difficulty in lending is that a file stays open long after it is paid: tiers recalculate as the month fills in, splits get corrected, and an early payoff can reopen a settled month half a year later. Commish keeps every payment traceable to the rule and the loan that produced it, so reopening March in September is a query rather than an archaeology project. What it will not do is tell you whether your clawback policy is lawful in a given state. Ask a lawyer for that one.
Bring a funding report
and a comp plan
We will run your last month through Commish and show you every originator payment traced back to the loan and the rule behind it.