Mortgage Bank Break-Even Analysis: $82K Monthly Net Revenue

Fixed costs $77.1K/mo Core monthly base

Contribution margin 12% After variable costs

Break-even revenue $642.7K/mo Monthly target

Break-even timing Month 14 Launch ramp point

Break-even calculator

Test how monthly revenue, direct costs, and fixed overhead move this mortgage bank across break-even.

Lean Base Full

Monthly revenue Revenue has to cover direct costs before fixed overhead is paid. $ Low month High month Variable expenses These rise with each loan and cut the cash left for overhead. $ Low direct High direct

Money available to cover fixed costs $34,867 $120,000 revenue - $85,133 variable expenses

Margin ratio

29%

Covers fixed costs

$42,250 short

Fixed monthly costs This is the monthly overhead break-even must absorb. $ Lean overhead Scaled overhead

Break-even chart Revenue Total costs

Which mortgage bank expenses are fixed, and which move with funded loan volume?

Cost classification

Classification matters because the first-year model carries about $57,917 of core payroll each month before any loan volume arrives. Variable items, like 1.3% loan origination commissions and 5.0% marketing, move with production and shape the Month 14 break-even target.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $8,000 per month from Month 1 through Month 60 before loan volume.	Scaling rent with funded loans instead of treating it as committed overhead.
Utilities & Maintenance	Fixed	Use the modeled $1,500 per month as a stable operating charge.	Turning a stable monthly line into a volume-based expense.
Software Licenses & IT Support	Fixed	Carry $3,000 per month in break-even overhead across the planning period.	Tying core systems spend to each closed loan.
Compliance & Legal Fees	Fixed	Include $2,500 per month because licensing, reviews, and legal support start before scale.	Leaving compliance out until loan volume is high.
Core Staff Payroll	Fixed	Model first-year committed wages at about $57,917 per month, calculated as $695,000 divided by 12.	Treating all mortgage production labor as variable when base staff is hired upfront.
Loan Origination Commissions	Variable	Apply the first-year 1.3% rate as production volume rises.	Counting commissions as fixed overhead and overstating early break-even burden.
Marketing & Customer Acquisition	Variable	Apply the first-year 5.0% rate to the model’s production-driven expense base.	Holding marketing flat even when funded volume scales.
Underwriter and Advisor Capacity	Semi-fixed	Add capacity in steps, such as loan advisors moving from 1.0 FTE in year one to 2.0 FTE in year two.	Smoothing step hires across every loan and hiding the real capacity cliff.

How does break-even shift from lean launch to base case to full-scale growth for a mortgage bank?

Scenario table

Lean still burns cash because fixed costs are about $77K a month and Year 1 EBITDA is -$507K. Base gets you to break-even, and growth turns that into a real cushion.

Planning assumptions only; actual results will move with loan mix, rates, funding costs, and approval timing.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case	$94K	$59K	$77K	37%	-$42K	Still below break-even; cash burn stays in place.
Base break-even case	$164K	$80K	$83K	51%	$0	This is the approval line; lower revenue restarts burn.
Full-scale growth case	$2.08M	$1.02M	$118K	51%	$941K	Clear cushion; hiring and expansion can follow volume.

What breaks this mortgage bank's break-even plan?

Stress test

The plan has no cushion at the current $823K monthly break-even. A 10% revenue miss, higher processing and compliance costs, or a 15% fixed-cost bump can push it into a gap fast, and the combined case is roughly $220K short.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$823K	$0 cushion	Break-even is met, but there is no buffer.
Revenue miss	Monthly funded revenue falls 10% to about $741K.	$823K	$77K gap	Lower funded volume quickly opens a monthly shortfall.
Fixed costs	Fixed overhead rises 15% to about $887K.	$947K	$124K gap	Added staff or rent pushes break-even up fast.
Margin pressure	Variable expense load rises from 63% to 100%.	$857K	$34K gap	Weaker gain-on-sale economics squeeze the spread.
Combined stress	Revenue falls 10%, overhead rises 15%, and variable load reaches 100%.	$961K	$220K gap	Three hits together create a material cash gap.

What should you verify before signing the lease and launch spend for a mortgage bank?

Founder checklist

Before you commit, test whether the first-year loan pipeline, funding line, and cost base can reach break-even by Month 14. The model turns EBITDA positive in Year 2, but Year 1 still posts a -$507K EBITDA loss and cash troughs at -$18.7M by Month 60.

1Funding line$30M vs $50M

Verify warehouse capacity and other funding sources can cover first-year loans, because Year 1 originations total $50M and the stated warehouse line is only $30M.

2Fixed burn$77.1K/mo

Check that monthly fixed costs stay near $77.1K before extra spend, since rent, tech, compliance, and payroll set the break-even floor.

3Direct margin6.3%

Confirm the loan spread, meaning interest earned minus funding cost, clears the 6.3% variable load from 1.3% origination commissions and 5.0% marketing.

4Launch capex$280K

Verify the $280K launch build is funded across leasehold improvements, IT, origination and servicing software, cybersecurity, furniture, backup power, and the marketing platform.

5Advisor ramp1→4 FTE

Add loan advisors only when funded volume supports the ramp from 1.0 FTE in Year 1 to 4.0 FTE by Year 4, or payroll will outrun production.

6Runway-$18.7M / 30 mo

Hold enough capital for the long ramp, because minimum cash falls to -$18.7M in Month 60 and payback takes 30 months, so thin reserves are not safe.