1. What is Flat Commission?

Flat commission is a straightforward method of calculating mortgage broker compensation in California, where the commission is a fixed percentage of the total mortgage amount rather than a tiered or scaled commission structure.

2. How the Calculator Works

The calculator uses the flat commission formula:

Where:

• Mortgage Amount — Total loan amount in USD
• Flat Rate — Agreed commission percentage

Example: For a $500,000 mortgage with a 1.5% flat rate, commission = $500,000 × 0.015 = $7,500

3. California Mortgage Commission Rules

Details: California law requires clear disclosure of all mortgage broker compensation. Flat rate commissions must be agreed upon in writing before loan processing begins.

4. Using the Calculator

Tips: Enter the total mortgage amount in USD and the agreed flat rate percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical flat rate in California?
A: Rates typically range from 1% to 2% but can vary based on loan complexity and market conditions.

Q2: Is flat commission better than tiered commission?
A: It depends - flat commission is simpler but may not always align incentives as well as performance-based structures.

Q3: Are there caps on commission rates in California?
A: No legal caps, but rates must be reasonable and customary for the market.

Q4: Who pays the commission - borrower or lender?
A: Typically paid by the lender, but costs may be passed to borrower through higher rates/fees.

Q5: Are flat commissions tax deductible?
A: For lenders, yes as a business expense. For borrowers, possibly as loan origination costs.