Loan Officers

Summary

What Loan Officers Do About this section

Consumer loan officers specialize in loans to people, such as loans for buying cars or paying for college tuition.

Loan officers evaluate, authorize, or recommend approval of applications for personal and business loans.

Duties

Loan officers typically do the following:

• Contact businesses or people to ask if they need a loan
• Talk with loan applicants to gather information and answer questions
• Explain to applicants the different types of loans and the terms of each type
• Obtain, verify, and analyze applicants’ financial information, such as credit rating and income
• Review loan agreements to ensure that they comply with federal and state regulations
• Approve loan applications or refer them to management for a decision

Loan officers use a process called underwriting to assess whether applicants qualify for loans. After collecting and verifying all the required financial documents, loan officers evaluate the information to determine an applicant’s need for a loan and ability to repay it. Most firms use underwriting software, which produces a loan recommendation based on the applicant’s financial status. Loan officers review the software output together with the evaluation of an applicant’s financial information to make a final decision.

The work of loan officers has customer-service and sales components. For example, loan officers often answer questions and guide customers through the application process. In addition, many loan officers market the products and services of their lending institution and actively solicit new business.

The following are common types of loan officers:

Commercial loan officers specialize in loans to businesses, which often use the loans to buy supplies and to upgrade or expand operations. Commercial loans frequently are larger and more complicated than other types of loans. Some commercial loans are so large and complex that no single bank will provide the entire amount requested. In such cases, loan officers may have to work with multiple banks to put together a package of loans.

Consumer loan officers specialize in loans to people for a variety of uses, such as buying a car or paying college tuition. For simple consumer loans, the underwriting process may be fully automated. However, the loan officer still guides applicants through the process. Some institutions—usually small banks and credit unions—rely on loan officers to complete the underwriting process instead of using underwriting software.

Mortgage loan officers specialize in loans that are used to buy real estate (property and buildings). Mortgage loan officers work on loans for both business and residential purchases. Often, these officers seek out clients, which requires them to develop relationships with real estate companies and other sources that can refer prospective borrowers.

Within these three fields, some loan officers specialize in a particular part of the loan process:

Loan collection officers contact borrowers who fail to make payments. They work with borrowers to help them find a way to keep paying off the loan. If the borrower continues to miss payments on secured loans—those involving collateral, such as a home or a car, that the borrower uses to secure the loan—these officers start the process of taking away the asset and selling it to repay the loan.

Loan underwriters specialize in evaluating whether a client is creditworthy. Underwriters collect, verify, and evaluate the financial information that clients provide on their loan applications and then use loan underwriting software to produce recommendations.

Work Environment About this section

Most loan officers work full time.

Loan officers held about 354,600 jobs in 2021. The largest employers of loan officers were as follows:

The credit intermediation industry includes commercial banks, savings institutions, and mortgage companies.

Loan officers who specialize in consumer loans usually work in offices. Mortgage and commercial loan officers may work outside the office and meet with clients at their homes or businesses.

Work Schedules

Most loan officers work full time, and some work more than 40 hours per week.

How to Become a Loan Officer About this section

Loan officers must pay attention to detail, as each piece of information on an application can have a major effect on the profitability of a loan.

Loan officers typically need a bachelor’s degree and on-the-job training. Mortgage loan officers must be licensed.

Education

Loan officers typically need a bachelor’s degree, usually in a field such as business or finance. Because commercial loan officers analyze the finances of businesses applying for credit, they need to understand general business accounting, including how to read financial statements.

Some jobseekers may be able to enter the occupation without a bachelor’s degree if they have related work experience, such as in banking, customer service, or sales. Organizations that specialize in certain fields typically prefer to hire candidates who have some experience in those areas. For example, mortgage companies may prefer to hire candidates with residential mortgage or real estate experience.

Training

Once hired, loan officers typically receive some on-the-job training. This may be a combination of formal, company-sponsored training and informal training during the first few months on the job.

Licenses, Certifications, and Registrations

Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, they must complete prelicensing courses, pass a national exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements. Check your state licensing agency website for more information.

Several banking associations, including the American Bankers Association and the Mortgage Bankers Association, as well as a number of schools, offer courses, training programs, or certifications for loan officers. Although not required, certification shows dedication and expertise and thus may enhance a candidate’s employment opportunities.

Important Qualities

Decisionmaking skills. Loan officers must assess an applicant’s financial information and decide whether to approve the loan.

Detail oriented. Information on an application affects the potential profitability of a loan, so loan officers must pay attention to details.

Initiative. Loan officers may act as salespeople in promoting their lending institution, so they must contact people and businesses to determine their need for a loan.

Interpersonal skills. Loan officers must be able to guide customers through the application process and answer their questions.

Pay About this section

The median annual wage for loan officers was $63,380 in May 2021. The median wage is the wage at which half the workers in an occupation earned more than that amount and half earned less. The lowest 10 percent earned less than $32,520, and the highest 10 percent earned more than $138,310.

In May 2021, the median annual wages for loan officers in the top industries in which they worked were as follows:

Compensation varies widely by employer. Some loan officers are paid a flat salary; others are paid on commission. Those on commission usually are paid a base salary plus a commission for the loans they originate. Loan officers also may receive extra commission or bonuses based on the number of loans they originate or how well the loans perform.

Most loan officers work full time, and some work more than 40 hours per week.

Job Outlook About this section

Employment of loan officers is projected to grow 4 percent from 2021 to 2031, about as fast as the average for all occupations.

About 29,400 openings for loan officers are projected each year, on average, over the decade. Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.

Employment

Increased demand for loan officers is expected as both businesses and individuals seek credit to finance commercial investments and personal spending. Loan officers will be needed to evaluate the creditworthiness of applicants and determine the likelihood that loans will be paid back in full and on time.

However, the decline of bank branches and the increased use of productivity-enhancing technology in loan processing are expected to slow employment growth.  

State & Area Data About this section

Occupational Employment and Wage Statistics (OEWS)

The Occupational Employment and Wage Statistics (OEWS) program produces employment and wage estimates annually for over 800 occupations. These estimates are available for the nation as a whole, for individual states, and for metropolitan and nonmetropolitan areas. The link(s) below go to OEWS data maps for employment and wages by state and area.

• Loan officers

Projections Central

Occupational employment projections are developed for all states by Labor Market Information (LMI) or individual state Employment Projections offices. All state projections data are available at www.projectionscentral.org. Information on this site allows projected employment growth for an occupation to be compared among states or to be compared within one state. In addition, states may produce projections for areas; there are links to each state’s websites where these data may be retrieved.

CareerOneStop

CareerOneStop includes hundreds of occupational profiles with data available by state and metro area. There are links in the left-hand side menu to compare occupational employment by state and occupational wages by local area or metro area. There is also a salary info tool to search for wages by zip code.

Contacts for More Information About this section

For more information about certification and training for loan officers, visit

American Bankers Association (ABA)

For more information about a career as a mortgage loan officer, visit

Mortgage Bankers Association (MBA)

For more information about licensing for mortgage loan officers, visit

Nationwide Multistate Licensing System (NMLS)

State bankers associations have specific information about job opportunities in their state. Also, individual banks can supply information about job openings and the activities, responsibilities, and preferred qualifications of their loan officers.

CareerOneStop

For a career video on loan officers, visit

Loan officers

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Loan Officers