The 10 Hardest States to Start a Mortgage Company (And How to Navigate Them)

Hi, I’m Megan Marsh—founder of Co/LAB and someone who’s spent the past decade helping mortgage professionals like you transition into ownership.

If you’ve been thinking about starting your own mortgage company, there’s one reality you need to be prepared for: not all states make it easy. Some are relatively straightforward, while others feel like they’re actively trying to keep new brokers out.

I’ve worked with hundreds of people across the country—loan officers, real estate professionals, processors—who are ready to break free and build something of their own. But again and again, the biggest hurdle they hit isn’t business planning or clients... it’s the licensing process.

So, let me walk you through the 10 hardest states to start a mortgage company, what makes them so tough, and what you can do if your state is on the list.

What Makes a State Hard to Get Licensed In?

When we evaluate which states are the most difficult for launching a brokerage, we look at four key areas:

1. Net Worth Requirements

Some states don’t ask for a cent in net worth. Others? They expect you to show up with $50,000 or more—sometimes liquid in a bank account.

2. Experience Requirements

Many states require that you (or someone on your team) have 2–3 years of recent experience in the mortgage world. No experience? No license.

3. Brick-and-Mortar Office Rules

A few states still want you to have a physical office within their borders. This means renting a space, maintaining it, and hiring someone to oversee it.

4. Approval Timelines & Ongoing Compliance

Some states move quickly. Others take 6 months… or even longer. And once you’re approved, some states have intense reporting and audit requirements.

The 10 Hardest States to Start a Mortgage Company

These are the states I’ve seen cause the most frustration for aspiring broker owners. Let’s break them down:

10. North Carolina

Net Worth: $25,000

Liquid Cash Required: $10,000

North Carolina’s ongoing compliance reporting is one of the biggest challenges here. Even experienced operators feel overwhelmed by how often and how detailed their reports must be.

9. Massachusetts

Net Worth: $25,000

Experience Required: 3 years

It’s not the money that makes Massachusetts hard—it’s the audits. Be ready for deep reviews, strict oversight, and a learning curve that catches many by surprise.

8. North Dakota

Net Worth: $25,000

Experience Required: 3 years

North Dakota doesn’t seem like it would be high on this list, but its rules are no joke. Fewer companies operate there, which means you’re under the microscope.

7. Indiana

Net Worth: $100,000

Liquid Requirement: $50,000

Indiana demands that half your net worth is liquid and ready to go. If you’re bootstrapping or self-funding, this is a huge barrier to entry.

6. Arizona

Unique Rule: Requires a physical office in the state

This is a dealbreaker for many. Arizona insists that you have a brick-and-mortar office within the state. That means rent, staff, and local oversight—even if you’re operating remotely elsewhere.

5. California

Two License Types: DRE (easier), DFPI (harder)

Net Worth Requirement (DFPI): $25K–$250K

Approval Time: 6–8 months

The DFPI license can feel like a full-time job. It’s slow, expensive, and comes with constant compliance expectations. Many brokers go with the DRE route, but it’s not an option for everyone.

4. Illinois

Net Worth: $50,000–$150,000

Out-of-State Rule: Requires audited financials

If you’re not based in Illinois, you’ll need to pay for an independent audit of your financials (and yes, that could cost you $10,000 or more) just to be eligible.

3. Wisconsin

Net Worth: $100,000

Requirement: Funds must be in your business bank account

This isn’t just “show us your assets.” Wisconsin wants all $100,000 in a business account—cash, not investments. That’s a huge ask, even for established professionals.

2. Connecticut

Net Worth: $50,000 in the bank

Experience Required: 3 years

Approval Timeline: Very long

Connecticut combines all the worst parts—long wait times, strict experience rules, and a major cash barrier. It’s manageable, but not without help.

1. New York

Experience Requirement: 2 years minimum

Approval Timeline: Up to 2 years

Ongoing Compliance: Very high

If you live in New York, you already know: it’s hands-down the most difficult state to get licensed in. Between the red tape, the timeline, and the constant scrutiny, it can feel impossible to break through.

So… What Do You Do If Your State Made the List?

Here’s what I always tell people: just because it’s hard doesn’t mean it’s impossible.

I’ve helped people get licensed in nearly every one of these states. And while yes, they take more work, the path becomes so much clearer when you have a strategy.

Here’s what you can do:

✅ Find someone who meets the experience requirement to serve as your qualifying individual.

✅ Work with licensing experts who understand how to navigate NMLS, submit the right documentation, and avoid unnecessary delays.

✅ Consider alternative states for your company’s main location if your home state is too restrictive.

✅ Look into temporary office solutions if brick-and-mortar is required.

Remember: you’re building a long-term asset—a business that can generate income, create freedom, and grow with you. A few extra hurdles are worth it when the reward is ownership.

Frequently Asked Questions

1. What’s the easiest state to get licensed as a mortgage broker?

In my experience, states like Florida, Texas, and Colorado tend to have more streamlined processes, lower net worth requirements, and faster approval times. That’s not to say they’re “easy,” but compared to the states on this list, they’re more accessible—especially for first-time broker owners.

2. I don’t meet the experience requirement—can I still start a mortgage company?

Yes! You just need to partner with or hire someone who does meet the experience requirement. Many of our clients bring on a qualifying individual (QI) while they gain the experience themselves. Over time, you can transition to being the QI of your own company.

3. What if I don’t have the liquid net worth a state requires?

This is a common hurdle—and there are options. You can bring on a business partner, take out a business loan, or build the necessary reserves before applying. We help people structure this in a way that’s both compliant and strategic.

4. Do I need to live in the state I want to get licensed in?

Not always. Many states allow out-of-state entities to get licensed. However, some—like Arizona or New York—may require an in-state office or qualifying individual. If you’re not sure about your state’s rules, let’s talk it through before you file anything.

5. How long does it really take to get licensed?

It varies by state. Some move fast and approve you in 30–60 days. Others can take 6 months or more—especially if documentation is missing or incorrect. That’s why having support (like our Broker Concierge team) can save you months of frustration.

6. What happens after I get licensed?

That’s when the real fun begins! You’ll need to set up your systems, start recruiting, onboard lenders, and prepare for audits. We help you build a full operational foundation so you’re not just licensed—you’re ready to launch and grow.

7. Is it worth starting a brokerage in a hard state?

If you’re committed to long-term ownership, yes. The reward is owning a business that builds wealth, flexibility, and impact. It might take more up front, but the freedom and income potential are well worth the effort.

You Don’t Have to Figure This Out Alone

If you’re feeling overwhelmed or unsure where to begin, I want you to know—you’re not alone. Every week, I talk to people who are in the same place you are right now:

• Stuck on the license application

• Unsure about net worth requirements

• Frustrated with approval timelines

• Wondering if it’s even worth it

At Co/LAB Broker Concierge, we help people through every single step—from choosing your company name to getting licensed, hiring your team, and opening your doors.

If your state made this list, don’t let it stop you. Let’s talk through your options and make a plan.

📞 Schedule a free discovery call with us—we’ll help you build your roadmap.

Final Thoughts: You Can Still Build the Business You’ve Been Dreaming Of

Yes, these states are tough. But I promise you this: you’re tougher.

If you’ve come this far, it means you’re serious about building a business that gives you more freedom, income, and purpose. And whether you’re in California, Connecticut, or New York, there’s a way forward.

So let’s find it together.

—

Megan Marsh
Founder, Co/LAB Broker Concierge

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Mortgage Broker Support

Need help starting your mortgage business? Our Mortgage Broker Concierge Team is here to assist you!

If you’re curious about how we can help you simplify your operations beyond what our videos offer and want to know how you can make launching or running your brokerage stress-free, the link below explains everything. No fluff, no “exclusive training” gimmicks—just a straightforward way to see how we work with brokers to take backend tasks off their plates. Check it out here: https://colablendingfranchise.com/book-a-discovery-call