BrokerVA
BrokerVA Team · September 14, 2026

Personnel & Sales Expense: Why Loan Officer Compensation Dominates Origination Cost

Personnel & Sales Expense: Why Loan Officer Compensation Dominates Origination Cost

Personnel is the largest piece of origination cost. Freddie Mac's 2024 Cost to Originate Study estimates it at about two-thirds (67%) of lenders' total production costs, and MBA's definition of production expenses starts with commissions and compensation. Here is what that includes, why it doesn't flex easily with volume, and where cost control has room to work.

What Counts as Personnel and Sales Expense?

MBA defines loan production expenses as commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations. Personnel sits at the front of that list, and it covers more than a loan officer's pay.

It typically includes commission and override structures, sales management compensation, and the staff who fulfill the file after origination: processors, underwriters, closers, and funders. On top of base pay and commission, a full cost includes benefits, payroll taxes, and retirement contributions, which is why a salary figure understates the real cost of a person. Freddie Mac's estimate doesn't split sales from fulfillment, so we can't say from that study how much of the two-thirds is each.

How Large Is It?

About two-thirds, according to Freddie Mac's study, which covered retail and consumer-direct lenders. It's the biggest single driver the study identifies, ahead of technology, vendor fees, and occupancy. For the full picture, see Freddie Mac's Cost to Originate Study, Explained.

Why Doesn't Personnel Cost Shrink When Volume Slows?

In our view, for a few consistent reasons. This is our reading of how lenders behave, not a measured finding.

  • Compensation structures vary. Many plans include base pay or draws that continue in a slow month, even though commission scales with production.
  • Lenders are reluctant to cut producers. Rebuilding a producing loan officer's pipeline and referral network after a departure can take far longer than the slow period that prompted the cut.
  • Replacing people costs money. Recruiting, training, and ramp-up often exceed the short-term savings from a layoff. See What Does a $70,000 Employee Actually Cost?.

There is evidence that lenders do cut when pressure builds. HousingWire reported that the average number of production staff per company fell from 555 in the second quarter of 2022 to 337 in the first quarter of 2026. Per-loan cost nonetheless remained well above its long-run average, which suggests headcount alone isn't the whole story.

What Moves Cost per Loan Besides Headcount?

Volume and matching capacity to it. In Q2 2025, MBA's Marina Walsh attributed a drop of more than $1,600 per loan to a seasonal pickup in purchase volume and a decline in average production employees, as reported by Scotsman Guide. It's one quarter, but it shows how much per-loan cost moves with volume and staffing together.

Freddie Mac also found a wide spread between lenders, with the top quarter at about $6,900 per loan and the bottom at about $16,500 in 2023, and listed matching resources to loans among the habits of the leaders. See The Performance Gap.

What Varies Between Lenders?

A few factors explain why personnel cost differs from one lender to another:

  • Commission and tier structures
  • Productivity, or volume produced per originator and per fulfillment person
  • Staffing model, such as generalists versus role-specific specialists, and fixed versus flexible capacity
  • How marketing and lead-generation spend is allocated

A lender with highly productive staff and capacity that matches volume will generally see a more efficient ratio than one carrying more people than the volume supports.

Can Personnel Cost Be Reduced Without Cutting Compensation?

Not easily on the sales side, and that distinction matters. Compensation tied to revenue-generating people is a harder lever to pull without risking production itself. The more realistic opportunity usually sits on the fulfillment side, where staffing structure and process design can change without touching the pay that drives origination volume. See Back-Office & Processing Costs.

Why Does This Matter for In-House vs. Outsourced Staffing?

The same dynamics that make compensation sticky also apply to fulfillment staff. A salary figure understates the real cost of an in-house hire once benefits, turnover risk, and ramp-up time are included. BrokerVA's goal is to lower your cost to originate, and our stage-based roles, Setup, Disclosure, Closing, Funding, and Post-Closing, are one way to add capacity without adding fixed payroll. Pricing is customized to your volume and the roles you need, and we can't promise a specific saving. See BrokerVA vs. In-House Staffing: A Full Cost Comparison.

Frequently Asked Questions

What percentage of mortgage origination cost is personnel? Freddie Mac's 2024 study estimates about two-thirds (67%) of lenders' total production costs. Its estimate doesn't separate sales from fulfillment staff.

What does MBA include in production expenses? Commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations.

Why does personnel cost stay high when volume drops? In our view, because base pay and draws often continue, lenders are reluctant to cut producing staff, and replacing people is costly. HousingWire's reporting shows lenders have cut production headcount, yet per-loan cost remains elevated.

Should lenders cut sales expense to lower overall cost? Generally not as a first move. It is tied to revenue generation, and the fulfillment side usually offers more room to restructure without affecting origination volume.

Sources

See where your own cost structure has room to improve. Book a call with BrokerVA and we'll walk through your numbers and show you our cost calculator.

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