nav
Business Operations Business Models

How Does Rocket Mortgage Make Money (Business and Revenue Model)

The Rocket Mortgage business model

Rocket Mortgage logo
Here’s what you should know:
  • What is Rocket Mortgage, and how does Rocket Mortgage work?
  • How does Rocket Mortgage (Quicken Loans) make money?
  • Loan Origination Fees
  • Reselling Mortgage Loans
  • Mortgage Servicing Fees
  • Interest Income
  • Rocket Mortgage subsidiaries, acquisitions, and exits
  • Rocket Mortgage profit and revenue
  • What is the Rocket Mortgage business and revenue model?
  • Rocket Mortgage funding, net worth, and market cap

How does Rocket Mortgage (formerly Quicken Loans) make money? Well, here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Rocket Mortgage business and revenue model, how much money Rocket Mortgage makes per year, and how Rocket Mortgage works.

What is Rocket Mortgage, and how does Rocket Mortgage work?

Rocket Mortgage, formerly Quicken Loans, is a mortgage loan provider for buying a home or refinancing your mortgage.

Founded in 1985 by Dan Gilbert, Ron Berman, Lindsay Gross, and Gary Gilbert, Rocket Companies, the parent company of Rocket Mortgage, began trading on the New York Stock Exchange (NYSE) on August 6, 2020, under the ticker symbol “RKT.”

Since that time, Rocket Mortgage has helped more than 2.6 million families finance their homes totaling $1+ trillion of transactional volume since being founded back in 1985, making them the largest lender in the United States.

So, how does Rocket Mortgage work? To get a loan through Rocket Mortgage, simply head over to their website and choose whether you want to apply for a new home loan or refinance your current one.

From there, you can follow the steps to apply online, get approved, close your loan, and manage your mortgage all online.

Some of Rocket Mortgage’s competitors include Opendoor, Zillow, Better Mortgage, Knock, and other companies that originate and refinance mortgage loans.

Rocket Mortgage App in Apple App Store | Rocket Mortgage Business Model | How Does Rocket Mortgage Make Money? | How Does Rocket Mortgage Work?
Source: Apple App Store | Rocket Mortgage

How does Rocket Mortgage (Quicken Loans) make money?

According to Rocket Mortgage, Rocket Mortgage has helped more than 2.6 million families finance their homes totaling $1+ trillion of transactional volume since being founded back in 1985 – $351.2 billion of which came in 2021 alone.

So how does Rocket Mortgage make money off of these loans and loan origination volume?

Below is a breakdown of how much money Rocket Mortgage makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 4 ways how Rocket Mortgage makes money in 2022

Rocket Mortgage has a revenue model that makes money in four (4) ways; from loan origination fees they charge the borrower, reselling the loans for a fee on the secondary mortgage market, mortgage servicing fees, and interest income.

#1. Loan Origination Fees

Like all mortgage originators, one of the ways Rocket Mortgage (Quicken Loans) makes money is by charging borrowers loan origination fees on every loan they originate.

Loan origination fees are typically anywhere between 0.5% to 1% of the loan amount. So, for example, if a borrower is approved for a $500,000 mortgage. The origination fee would be anywhere from $2,500 to $5,000.

And as noted above, Rocket Mortgage had $351.2 billion of closed loan origination volume in 2021 alone. Meaning, that at a 0.5% to 1% loan origination fee, Rocket Mortgage made anywhere from $1.75 to $3.5 billion in loan origination fees in 2021.

How much are Rocket Mortgage loan origination fees?

  • between 0.5% to 1% of the loan amount

Note: Rocket Mortgage had $351.2 billion of closed loan origination volume in 2021 alone.

#2. Reselling Mortgage Loans

Rocket Mortgage also makes money by reselling the loans they originate after closing.

How does Rocket Mortgage make money from this? Once Rocket Mortgage originates and closes a borrower’s loan, Rocket Mortgage then turns around and makes more money by selling those loans on the secondary mortgage market to a lender for a fee for the loan’s rights. Though it’s unclear how much that fee is on average.

Note: Rocket Mortgage makes money on the front end with loan origination fees, and on the back end when they resell it to lenders for a fee.

#3. Mortgage Servicing Fees

Although Rocket Mortgage sells substantially all of their loans that they originate on the secondary market, they still service them. Which, in 2021, generated $1.3 billion from servicing fee income for Rocket.

What is mortgage servicing and how do they make money from doing this? A mortgage servicer, like Rocket Mortgage, handles all of the administrative tasks regarding a loan from the time a loan is closed until the loan is paid off. Some of these tasks can include things like collecting monthly mortgage payments, responding to borrowers’ questions, sending out mortgage statements, and more.

And for this administrative work, Rocket Mortgage charges either the borrowers’ lender or the borrower directly a monthly fee for managing their loan – which is usually about 0.25% to 0.50% of the mortgage balance.

So, if the mortgage balance is $500,000, and the servicing fee is 0.5%, Rocket Mortgage will take $208.33 from the mortgage payment each month. This is calculated by taking the mortgage balance and dividing it by the servicing fee, then dividing that number by 12. (for 12 months in a year.)

Note: Rocket Mortgage is both a mortgage originator and a servicer.

#4. Interest Income

Rocket Mortgage also makes money from the interest earned on originated loans.

While Rocket Mortgage does sell substantially all of its originated loans on the secondary market, Rocket Mortgage still collects interest on those loans while they are waiting to be sold.

And because they do not hold onto these loads for very long, the revenue generated from interest was $168.9 million, or just 1.3% of Rocket Mortgage’s total revenue.

Rocket Mortgage subsidiaries, acquisitions, and exits

To date, Rocket Mortgage (formerly Quicken Loans) has made a total of 4 acquisitions, 1 investment, and 1 successful exit.

Rocket Mortgage profit and revenue

In 2021, Rocket Mortgage reported $12.9 billion USD in revenue.

Note: Because Rocket Companies, Inc., the parent company of Rocket Mortgage, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Rocket Companies’ publicly released financial reports, including annual reports, through Rocket Companies’ investor section on their website.

What is the Rocket Mortgage business and revenue model?

Rocket Mortgage makes money through a few revenue models that they combine within their company, they are:

  • Fee for service (FFS) business model
  • Business to business (B2B) business model
  • B2B2C (partnerships) business model

Rocket Mortgage funding, net worth, and market cap

According to Rocket Mortgages’ Crunchbase profile, it’s unclear how much money Rocket Mortgage has raised but has a market cap of $16.33 billion USD as of June 2022.