If you want to scale your real estate or lending business, you need to understand exactly how the money flows in a transaction. One of the most common questions new investors and agents ask is: How do mortgage brokers earn their commission? There are two primary ways Mortgage Brokers get paid on a deal: Lender Paid or Borrower Paid. Let’s pull back the curtain and break down the difference. 🏦 1. Lender Paid Compensation (LPC) With Lender Paid compensation, the broker’s fee is covered directly by the lender. This is typically baked into the interest rate (often called "yield spread premium"). Because the lender is cutting the check to the broker behind the scenes, this fee does not show up as a direct charge to the borrower on the closing statement. 📝 2. Borrower Paid Compensation (BPC) With Borrower Paid compensation, the borrower pays the broker's fee directly. Real estate investors and buyers often choose this route to secure a lower interest rate, or it is used heavily on specialized non-QM loans, hard money loans, and commercial real estate deals. Because the borrower is paying it out of pocket (or out of the loan proceeds), the broker’s fee gets reflected directly onto the closing statement. 🔍 Real-World Breakdown: Borrower Paid in Action Take a look at the attached image. This is a final Closing Statement that perfectly illustrates Borrower Paid compensation in action: - The Deal: A $2,500,000.00 loan amount. - The Payout: If you look under the "ADDITIONAL DISBURSEMENTS" section, you will see a specific line item for "Broker Fee 0.5% of loan amount: Loan Factory," which equates to a transparent $12,500.00 fee paid at the close of escrow. This fee is fully disclosed upfront, cleanly documented, and paid out directly when the deal funds. 🚀 Ready to Master the Business? Want to learn exactly how to structure high-level deals, master loan underwriting, and scale your pipeline? 👉 Smash the LIKE button, drop a comment below with your biggest takeaway, and JOIN The Real Estate Lender Academy today to unlock our full curriculum, templates, and resource vaults!