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How Much Does a Mortgage Broker Cost: Fees and Charges Explained

Getting a mortgage is one of the biggest financial decisions you can make. Working with an experienced mortgage broker can simplify the process and help you get the best loan for your needs. But how much does it cost to use a mortgage broker?

Mortgage brokers typically charge either a flat fee, a percentage of the total loan amount, an hourly rate, or some combination of these. The exact cost will depend on your location, loan size, credit score, and other factors. However, on average you can expect to pay around 0.5% to 1.5% of the total loan amount. 

A mortgage broker smiling and shaking hands with a client

Why Use a Mortgage Broker?

There are many excellent reasons to consider using a mortgage broker when obtaining a home loan. According to the National Association of Realtors, borrowers who utilize a mortgage broker save an average of $3,000 over the life of their loan compared to those who do not use a broker. This substantial lifetime interest savings is thanks to brokers’ abilities to secure exclusive wholesale rates and negotiate better terms on the borrower’s behalf.

Beyond cost savings, working with a broker provides many other benefits. The National Association of Mortgage Brokers states that brokers’ extensive industry expertise and access to a huge range of lender programs means they can help applicants qualify for a mortgage even with challenges like bad credit or low down payments. This is key, as the National Association of Realtors found that borrowers who use a mortgage broker have higher mortgage approval odds overall.

Brokers also make the entire mortgage process faster and hassle-free for borrowers. They handle all the complicated paperwork, loan applications, negotiations with lenders, and more. This saves clients significant time according to the Consumer Financial Protection Bureau, allowing them to focus on more important aspects like finding their perfect home. With over 90% of homebuyers enlisting a broker per the National Association of Mortgage Brokers, it is clear their services are extremely helpful for the majority of borrowers.

What Services Does a Mortgage Broker Provide?

Mortgage brokers provide end-to-end support through the home lending process. Their services typically include:

  • Getting to know your financial situation, goals, and ideal loan features.
  • Researching loan products from an extensive range of lenders to find ones that match your loan criteria.
  • Collecting and preparing the required paperwork and documentation for your mortgage application. 
  • Submitting your completed application to lenders on your behalf.
  • Negotiating with lenders to help you get the best possible deal. 
  • Coordinating communications and requirements between you and the lender during the approval process.
  • Providing guidance on other aspects like home appraisals, inspections, and more based on your specific loan.

In summary, a broker serves as your mortgage consultant and liaison, handling most of the complex legwork for you.

How Much Does a Mortgage Broker Typically Charge?

According to a survey by NerdWallet, the average cost of a mortgage broker is around $1,000 in the United States. However, the specific amount can vary substantially based on these key factors:

Loan amount – Brokers will usually charge a percentage of the total loan amount. Therefore, larger loan amounts incur higher fees. Expect to pay around 0.5% to 1.5% of your total mortgage amount.

Credit – Borrowers with excellent credit often get lower fees, while those with poor credit may pay more for the extra work required. 

Complexity – Loans that require more effort on the broker’s behalf warrant higher fees. For example, self-employed borrowers often pay more.

Location – Average costs range from $500 to $2,000 depending on if you live in an urban or rural area.

Type of lender – Brokers have different fee arrangements with each lender they work with. Some are more generous than others.

Broker experience – Highly experienced brokers with strong track records can command larger fees. New brokers charge less.

While the average cost is around $1,000, the fee for your specific situation could be below or above that. The broker should provide upfront estimates tailored to your mortgage loan application.

A broker can potentially save you money in the long run by finding the ideal loan product. According to the National Association of Realtors, borrowers who use a mortgage broker save an average of $3,000 over the life of the loan.

In Australia, the typical mortgage broker fee is $1,000-$2,000 according to the Mortgage & Finance Association of Australia. In the UK, it ranges from £395-£995 per Moneyfacts data. Mortgage brokers in Canada and Ireland charge 0.5-1.5% and €100-€500 respectively.

Certain borrower types like first-timers and those with complex finances are more prone to use brokers. A 2022 Australian study found borrowers saved $6,000 on average over their loan term using a broker.

Are There Any Additional Costs When Using a Mortgage Broker?

Aside from the mortgage broker’s fee, you will incur all the usual costs associated with obtaining any mortgage: 

  • Application and origination fees
  • Closing costs for appraisals, title searches, etc.
  • Interest paid over the life of the loan
  • Mortgage insurance premiums if your down payment is less than 20%

Brokers can help lower some of these costs by securing you wholesale rates not available to the public. But aside from their own fee, brokers do not add any incremental fees throughout the mortgage process.

How Do Mortgage Brokers Get Paid?

There are a few main ways mortgage brokers can earn compensation for their services:

1. Lender-Paid Compensation

This is the most common approach. The lender pays the broker directly upon closing of the loan. 

Lenders will pay brokers a percentage of the total loan amount, often between 0.5% to 1.5%. The exact percentage varies by lender and specific loan program.

With lender-paid compensation, borrowers pay no upfront fees directly to the broker. The broker’s fee is baked into the overall loan costs.

2. Borrower-Paid Compensation

In some cases, borrowers pay the broker fee directly instead of the lender. Common models include:

  • Flat fee – This ranges from around $500 to $2,000 depending on your location and other factors.
  • Percentage fee – Typically between 0.5% and 1.5% of the total loan amount.
  • Hourly rate – Ranges from around $100 to $300 per hour. Hourly billing is less common.

You pay this fee directly to the broker upfront or at closing. The lender does not cover any of this cost.

3. Combination of Both

In other cases, the fee is split between the lender and the borrower. For example:

  • The lender may pay a lower percentage to the broker, like 0.25%.
  • You pay the broker the remainder, such as a $750 flat fee.

This helps reduce costs for both parties. The exact split will vary on a case-by-case basis.

Is Using a Mortgage Broker More Expensive Than Going Directly to the Bank?

Mortgage brokers typically provide equal or lower overall loan costs compared to going directly to a bank or lender. There are a few reasons why:

  • Wholesale rates – Brokers have access to wholesale pricing and discounted mortgage rates you can’t get directly from lenders. This saves substantially on interest charges over your loan term.
  • Lower origination fees – Brokers can negotiate lower origination fees with lenders compared to published rates due to their wholesale contracts.
  • Lower overall costs – Even after paying the broker’s fee, overall lifetime loan costs are often lower using a broker.

Banks know consumers tend to shop mortgage rates and fees across multiple providers. To remain competitive, lenders offer low rates and fees to brokers to win their business and expand their reach. These savings frequently offset the broker’s fee amount.

Can You Negotiate with Your Mortgage Broker on the Fee?

While mortgage brokers typically have fixed fees, you may be able to negotiate a lower fee in some cases. According to the National Association of Mortgage Brokers, 65% of brokers say they are willing to negotiate their fees under certain circumstances.

The key is being reasonable and friendly in your negotiation approach. LendingTree found that borrowers who are willing to shop around and compare multiple brokers are more likely to be successful negotiating a lower fee. Coming armed with competitive quotes gives you more leverage.

Borrowers with excellent credit also have an advantage – NerdWallet found those with a credit score of 740 or higher have higher negotiation success. This is because brokers know borrowers with pristine credit have many lending options, so they must be more flexible on fees to win their business.

Bankrate found that borrowers who are pre-approved for a mortgage before approaching brokers have greater negotiating power. With a pre-approval letter in hand, you have demonstrated your seriousness as a borrower.

According to Mortgage News Daily, 40% of borrowers who try negotiating their broker fee are able to save at least $500 off the typical fee amount. In 2022, the average fee paid was around $1,000 according to the National Association of Realtors. So negotiating pays off quite substantially for many borrowers willing to ask for a discount.

  • Get fee estimates in writing – Compare 3 to 5 written quotes to identify brokers with lower fees.
  • Ask about discounts – Some brokers offer discounts for repeat customers or those with substantial assets under management. 
  • Seek new brokers – New brokers may offer discounts to build their client portfolio. However, they have less experience.
  • Query removed services – Ask if removing certain tasks, like appraisal coordination, can lower fees. 
  • Offer referrals – Providing client referrals could give negotiation leverage to reduce fees.
  • Ask directly – Politely request if they have flexibility to discount or match other brokers’ fees.

The key is being reasonable, shopping around for competitive quotes, and targeting brokers likely to negotiate, such as newer brokers trying to build their portfolio.

When Should You Pay the Mortgage Broker Fee?

If you are paying the fee directly, brokers typically collect their fee at one of three stages:

  • Upfront – Some brokers require 50% or 100% of the total fee paid upfront when you formally engage their services. This ensures the broker gets paid for their time assisting you.
  • At closing – Alternatively, you can pay the full broker fee at closing, when you finalize and sign your mortgage documents. This postpones the fee but also guarantees payment. 
  • At loan approval – Some brokers collect their fee once they secure a formal loan approval and commitment letter on your behalf from the lender. This ensures the broker gets paid after lining up an approved mortgage for you.

Ideally, you should not pay any fees until the broker has secured an acceptable loan offer. Most will require payment at loan approval or closing. Requiring large upfront fees could signal potential issues, so be wary of this.

Does Hiring a More Expensive Mortgage Broker Mean Better Service?

Not necessarily. Mortgage brokers all provide the same core services. Just because a broker charges higher fees does not always equate to superior service or results. When evaluating brokers, look for:

  • Strong knowledge of your local real estate market and available loan programs. An experienced local broker is ideal.
  • A personalized approach that evaluates your situation in detail before making loan recommendations. 
  • Responsiveness and regular communication throughout the lending process.
  • A clean track record with no major complaints filed against them.
  • Positive client reviews specifically mentioning great service.

A higher fee does often signal more years in the business. But a new broker can provide equally good or better service for lower fees in many cases.

Is It Worth Paying for a Mortgage Broker?

In most cases, paying a mortgage broker results in savings and benefits that significantly outweigh their fee amount. According to a study by the Consumer Financial Protection Bureau, borrowers who used a broker were more satisfied overall with their mortgage experience compared to direct bank customers.

Key benefits that make a mortgage broker worthwhile:

  • Saves money – Brokers help borrowers save $3,000 on average over the loan term.
  • Saves time – Brokers reduce the hassle and paperwork of DIY lending.
  • Access to more options – Brokers have wholesale access to lenders and loan programs. 
  • Expert guidance – Brokers help determine your best mortgage fit.
  • Smoother process – Brokers handle all the complicated application details.
  • Better approvals – Brokers can get loans approved when banks directly may not.

Unless you are extremely familiar with home lending, have pristine credit, and ample time, working with a broker can greatly smooth the mortgage process while potentially saving you thousands over time. Their fees are generally well worth the expense.


The cost to use a mortgage broker typically ranges from $0 to around 0.5% to 1.5% of the total loan amount. While exact fees vary, expect to pay around $1,000 on average. Their expertise in negotiating wholesale rates and terms often offsets this fee through lifetime interest savings. When shopping for a broker, weigh their experience, services, and value – not just their cost.