The digital mortgage software market hit $3.68 billion in 2025. By 2033, analysts project it will reach $12.75 billion. That growth is being driven almost entirely by cloud migration. Mortgage companies still running on-premises servers aren't just paying more for infrastructure. They're falling behind competitors who can deploy new integrations in days instead of months.
Cloud migration for mortgage companies isn't a technology project. It's an operational shift that touches every department from origination to servicing. This guide covers what that migration actually looks like, what it costs, where it breaks, and how to avoid the mistakes that stall most lender migrations halfway through.
The mortgage industry resisted cloud adoption longer than most financial services sectors. Compliance concerns, LOS vendor lock-in, and the "if it's not broken" mindset kept many lenders on aging on-premises infrastructure well past its useful life.
Three forces are breaking that resistance in 2025-2026:
ICE Mortgage Technology announced that all Encompass SDK integrations must transition to cloud-native APIs by December 31, 2026. The SDK retirement started October 31, 2025. Every custom integration built on the legacy SDK needs to be rebuilt on Encompass Developer Connect's API-first architecture.
For lenders with 10 or 20 SDK-based integrations, this isn't optional. It's a deadline with a hard stop. And API-based integrations work better in cloud environments where network latency to ICE's cloud is consistent and predictable.
The FFIEC's post-CAT guidance assumes cloud adoption. NIST CSF 2.0 and CIS Controls both include cloud-specific control categories. Examiners increasingly ask how institutions manage cloud security, not whether they use cloud services. If your entire environment is on-premises, you're still compliant. But your control framework looks outdated to modern examiners.
The 2020 experiment became the 2026 standard. Mortgage loan officers, processors, and closers work from home offices, branch offices, and client locations. On-premises infrastructure forces these workers through VPN tunnels that add latency, reduce reliability, and create security blind spots. Cloud-native infrastructure gives every user the same experience regardless of location.
Cloud migration isn't one project. It's a sequence of interconnected moves that typically spans 6 to 18 months depending on the lender's size and complexity.
Most lenders start here because it delivers immediate ROI with minimal risk. Moving from on-premises Exchange to Microsoft 365 eliminates server maintenance, provides automatic patching, and enables anywhere access.
The migration includes:
This phase alone typically reduces IT infrastructure costs by 30-40% while improving uptime from the 99.5% most on-premises environments achieve to Microsoft's 99.9% SLA.
Once identity lives in Entra ID, security controls follow. This phase layers on the compliance framework that examiners want to see:
This phase is where most self-managed migrations stall. The tools exist in Microsoft 365 Business Premium and E5 licenses. Configuring them correctly for a mortgage compliance environment requires financial services expertise that general IT staff often lack.
This is the harder lift. Line-of-business applications that run on local servers need to move to cloud infrastructure or be replaced with cloud-native alternatives.
Common application migrations for mortgage companies:
After the migration, the real value emerges. Cloud-native capabilities that weren't possible on-premises become available:
Vendors sell cloud migration as a cost-saving exercise. The truth is more nuanced. Total cost depends on where you are today and where you're going.
For a 200-person mortgage company, the typical break-even point arrives between months 12 and 18. After that, the ongoing savings compound annually.
These patterns repeat across lender migrations. Each one either stalls the project or creates problems that surface months after go-live.
Moving to the cloud without mapping your compliance requirements first means you'll spend months retrofitting controls after migration. Map NIST CSF 2.0 or CIS Controls to your cloud architecture before you move a single mailbox. Know which controls your cloud provider handles (shared responsibility model) and which remain yours.
If your LOS vendor is also migrating (like ICE's SDK-to-API transition), your cloud migration timeline needs to sync with theirs. Migrating your infrastructure to the cloud while your LOS integrations still depend on on-premises SDK calls creates a messy hybrid state.
Cloud migration affects loan officers, processors, closers, underwriters, and compliance staff. Every department needs communication, training, and a feedback loop. When IT migrates without operational input, users find workarounds that create security gaps.
Migrate a small department first. Test everything with real users doing real work for 2-4 weeks before rolling out company-wide. The pilot group catches issues that lab testing misses. Loan processing has edge cases no IT team anticipates.
AWS, Google Cloud, and Azure all offer cloud infrastructure. But mortgage companies running Microsoft 365 for email and productivity get dramatically better integration and compliance tooling on Azure. Splitting your environment across cloud providers adds complexity, cost, and security gaps that a single-stack approach avoids.
Track these metrics before, during, and after migration to prove the investment paid off:
Mortgage companies with strong internal IT teams can handle Phase 1 (email and productivity) independently. Phases 2 through 4 are where financial services expertise becomes critical.
An MSP focused on financial services brings:
The wrong MSP is one that treats your migration like every other small business migration. Mortgage companies have specific compliance, integration, and operational requirements that generic IT shops don't understand.
A typical mortgage company cloud migration takes 6 to 18 months across four phases: email and productivity migration in months one through three, security and compliance configuration in months three through six, application migration in months six through twelve, and optimization in months twelve through eighteen. Smaller lenders with fewer custom integrations can compress this timeline significantly.
Migration professional services typically cost between $15,000 and $75,000 depending on complexity. Ongoing Microsoft 365 licensing runs approximately $22 per user per month for Business Premium. Most 200-person mortgage companies reach break-even between months 12 and 18 as on-premises hardware, maintenance, and licensing costs disappear. Annual savings compound after the break-even point.
For mortgage companies already using Microsoft 365 for email and productivity, Azure provides the tightest integration with identity management, security tools, and compliance features. Running Entra ID, Defender, Intune, and Purview on Azure eliminates cross-platform complexity. Splitting infrastructure across AWS or Google Cloud adds integration overhead without clear benefit for Microsoft-centric environments.
ICE Mortgage Technology requires all Encompass SDK integrations to transition to cloud-native APIs by December 31, 2026. Mortgage companies planning cloud migration should coordinate their infrastructure migration with their Encompass API transition. Rebuilding SDK integrations as API calls works better in cloud environments where network connectivity to ICE's cloud is consistent and optimized.
After migrating to the cloud, mortgage companies should align with NIST Cybersecurity Framework 2.0, CIS Controls v8.1, or CISA Cybersecurity Performance Goals. The FFIEC retired its Cybersecurity Assessment Tool in August 2025 and now endorses these three frameworks. Each includes cloud-specific control categories that map directly to Microsoft 365 and Azure security features.
Encompass Developer Connect: ICE Mortgage Technology's API-first platform replacing the legacy Encompass SDK, providing RESTful APIs for loan data access, workflow automation, and third-party integrations with interactive documentation and testing environments.
Microsoft Entra ID: Microsoft's cloud-based identity and access management service (formerly Azure Active Directory) that provides single sign-on, multi-factor authentication, conditional access, and identity governance for cloud and on-premises applications.
Conditional Access: An Entra ID feature that evaluates sign-in requests against configurable policies (user identity, device health, location, risk level) and grants, blocks, or requires additional verification before allowing access to cloud resources.
Azure Site Recovery: Microsoft's disaster recovery service that replicates virtual machines and workloads to a secondary Azure region, enabling automated failover and failback with recovery time objectives measured in minutes rather than hours or days.
Microsoft Purview DLP: Data Loss Prevention policies that scan email, Teams messages, SharePoint files, and endpoint file transfers for sensitive information patterns (Social Security numbers, account numbers) and block or warn users before data leaves the organization.