A loan officer helps people borrow money from a bank or credit union to buy houses, invest in their businesses, or achieve other goals. Learn about loan officer skills, salary, qualifications and what it takes to become one.
Loans can be pivotal for families wanting to buy their first homes, students trying to attend college, or small business owners hoping to expand their businesses. A loan officer acts as a mediator between those people and the financial institution that can provide them the means to achieve their goals.
A loan officer is a finance professional who helps individuals, small businesses, and companies borrow money to accomplish goals like buying a house or getting new equipment to grow a business. A loan officer can counsel potential borrowers through the loan process, educating a borrower on loans and their terms.
Loan officers can help individuals and companies borrow money by administering the following types of loans:
Small business loans
A loan officer’s general tasks and responsibilities include evaluating, authorizing, and recommending loan applications of potential borrowers. Loan officers can work in financial institutions such as banks, credit unions, or mortgage companies.
Specific tasks might include:
Receiving and assessing loan applications
Assessing borrowers’ creditworthiness by analyzing their financial history (a process called underwriting)
Consulting and educating borrowers on loan terms
Answering borrowers’ questions and providing customer service
The median annual salary for a loan officer is $63,380 in the US, according to the US Bureau of Labor Statistics (BLS) . Your salary could be higher or lower depending on your company and the geographical area you're working in.
The job outlook for loan officers is projected to grow 4 percent between 2020 and 2030, according to the BLS. The demand for loan officers increases when the economy grows and remains healthy.
Depending on the company’s salary structure, a loan officer may receive a commission or bonus on the loans they originate.
Though you'll likely learn many aspects of being a loan officer on the job, hiring managers may look for certain qualities in potential employees. Here are some common requirements.
Licensing: Licensing requirements to become a loan officer can vary from state to state. Loan officers who wish to work with mortgages however must meet federal guidelines. This will require loan officers to get Mortgage Loan Originator (MLO) licenses from their state, and register with the National Mortgage Licensing Service (NMLS). Obtaining a license might require coursework, passing an exam, and passing a background and credit check.
Education: Though there’s no strict educational requirement, many financial institutions will look for job candidates that have at least a bachelor’s degree. According to Zippia, 61 percent of loan officers hold a bachelor's degree, while 17 percent hold an associate degree . A college degree in finance, economics, or a field related to banking can give you the background knowledge desirable in a loan officer.
You’ll want to have the following skills to work as a loan officer:
Analytical skills will help a loan officer assess a potential borrower’s financial statements and creditworthiness. Being able to understand how financial markets work will also come in handy.
Interpersonal skills help a loan officer work with customers during the loan process. A loan officer should be able to communicate well with potential borrowers to determine their financial needs and answer questions that they might have.
Time management and organizational skills are important for loan officers because of the detailed paperwork necessary for each loan.
Computer skills are important as a loan officer often uses specialized banking and financial software applications to help service a loan. A loan officer might also need computer skills to adapt to new digital services and platforms.
Taking the first steps to become a loan officer can set you up for work in an important and rewarding career. See if a career in the financial industry could be a good fit with a course like Personal & Family Financial Planning from the University of Florida.
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This content has been made available for informational purposes only. Learners are advised to conduct additional research to ensure that courses and other credentials pursued meet their personal, professional, and financial goals.