Do LOs make more $ from conventional loans than FHA?

[NewbieReed]

Idk how it all works. But do LOs make more $ on conventional loans? 

When we talked to LOs, it seemed like so many of them were trying to steer us away from FHAs and towards conventional loans. So i was wondering about their motivation.  Just looking for input.

Thanks everyone! 

[namvet]

Loan officers don't make more money just because the loan is conventional.  Loan officers that are on commission will get money from the orgination fee and/or yield spread preimum.   Jumbo loan will procuce more money for the loan officer due to a larger loan amount.  In some cases a conventional loan may be a better way to go.

[ShanetheMortgageMan]

Nope, per federal regulations loan officers have to make the same amount of money for every type of residential mortgage they do - it can be a flat amount (i.e. $2k per loan) or based on the loan amount (i.e. 1% of the loan amount, so on a $150k loan that would be $1.5k), however it cannot be based on the terms or conditions of the loan.

Could be a few reasons that conventional loans are being recommended ... FHA has higher mortgage insurance, FHA is a little more concerned with the property condition, and since the real estate market is heating up, sellers are usually choosing buyers who are using conventional financing rather than FHA/VA/USDA.

[DallasLoanGuy]

i make the same % of the loan amount regardless of the loan type.

there are some lenders who do not offer fha.... another motivation

could be that the LO is looking out for your best interest..... another motivation

[tooleman694]

Yeah conventional is almost always the best way to go if you can do it. Sounds like the LO is looking out for you.

[Anonymous]

Some LO's are actually on a W2 salary with a small commission ( more like a bonus ).

But as a broker I can say there are times when one loan has the opportunity to pay more then others. So while there are laws and regulations to help the consumer to understand the cost involved, you can thank the banks for excluding themselves from this disclosure.

Just to give an example....

Many have come back with the fees being charged on their GFE or HUD and under origination charge it says $0, or possibly $1K with a credit back to the client of 1k. So with that being said are the LO's or Brokers working for free?

I am sure they arent, but on paper it looks like they are.

There are different ways they produce income through a loan. Sometimes you get a great LO or Broker who does the right thing on every client and then you do have the greedy ones.

The bad have been fading out, but you do still have a few out there when it comes to money nothing else matters.

[NewbieReed]

Thanks everyone! i appreciate the input!