Loan officers evaluate, authorize, or recommend approval of loan applications for people and businesses.
Loan officers typically do the following:
- Contact companies or people to ask if they need a loan
- Meet with loan applicants to gather personal information and answer questions
- Explain different types of loans and the terms of each one to applicants
- Obtain and verify financial information, such as the applicant’s credit rating and income level
- Analyze and evaluate the applicant’s finances to decide if the applicant should get the loan
- 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, the loan officer evaluates this information to determine the applicant’s loan needs and ability to pay back the loan. Some firms underwrite loans manually, calculating the applicant’s financial status by following a certain formula or set of guidelines. Other firms use underwriting software, which analyzes applications almost instantly. More often, firms use underwriting software to produce a recommendation, while relying on loan officers to consider any additional information to make a final decision.
The work of loan officers has sizeable customer-service and sales components. Loan officers often answer questions and guide customers through the application process. In addition, many loan officers must 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. Businesses often use loans to buy supplies and upgrade or expand operations. Commercial loans are often larger and more complicated than other types of loans. Because companies have such complex financial situations and statements, commercial loans usually require human judgment in addition to the analysis by underwriting software. Furthermore, some commercial loans are so large that a single bank will not 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. Consumers take out loans for many reasons, such as buying a car or paying for college tuition. For some simple consumer loans, the underwriting process is fully automated. However, the loan officer is still needed to guide applicants through the process and to handle cases with unusual circumstances. Some institutions—usually small banks and credit unions—do not use underwriting software and instead rely on loan officers to complete the underwriting process manually.
Mortgage loan officers specialize in loans used to buy real estate (property and buildings), which are called mortgage loans. Mortgage loan officers work on loans for both residential and commercial properties. Often, mortgage loan officers must seek out clients, which requires developing relationships with real estate companies and other sources that can refer prospective applicants.
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 their loan payments on time. They work with borrowers to help them find a way to keep paying off the loan. If the borrower continues to miss payments, loan officers start the process of taking away what the borrower used to secure the loan (called “collateral”)—often a home or car—and selling it to repay the loan.
Loan underwriters specialize in evaluating whether a client is credit worthy. They do this by collecting, verifying, and evaluating the client’s financial information provided on their loan applications. They may use loan underwriting software, or they may perform the process manually.
Loan officers held about 296,900 jobs in 2012, of which 84 percent were in the credit intermediation and related activities industry. This includes commercial banks, credit unions, mortgage companies, and other financial institutions.
Loan officers who specialize in consumer loans usually work in offices. Mortgage and commercial loan officers often work outside the office and meet with clients at their homes or businesses.
Most loan officers work full time.
Most loan officers need a bachelor’s degree and receive on-the-job training. Mortgage loan officers must be licensed.
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 loan officers may be able to enter the occupation without a bachelor’s degree if they have related work experience, such as in sales, customer service, or banking.
Once hired, loan officers usually 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. Those who use underwriting software often take classes to learn the company’s software programs.
Licenses, Certifications, and Registrations
Mortgage loan officers must have a Mortgage Loan Originator (MLO) license. To become licensed, mortgage loan officers must complete at least 20 hours of coursework, pass an exam, and submit to background and credit checks. Licenses must be renewed annually, and individual states may have additional requirements.
Several banking associations and schools offer courses or certifications for loan officers. The American Bankers Association and the Mortgage Bankers Association both offer certification and training programs for loan officers. Although not required, certification shows dedication and expertise and thus may enhance a candidate’s employment opportunities.
Employers may prefer candidates who have work experience in lending, banking, sales, or customer service. For those without a bachelor’s degree, work experience in a related field can be particularly useful.
Decision-making skills. Decision-making skills are important for loan officers, who must assess an applicant’s financial information and decide whether to award a loan.
Initiative. Loan officers need to have initiative when seeking out clients. They often act as salespeople, promoting their lending institution and contacting firms to determine their loan needs.
Interpersonal skills. Because loan officers work with people, they must be able to guide customers through the application process and answer their questions.
The median annual wage for loan officers was $59,820 in May 2012. 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 $32,600, and the top 10 percent earned more than $119,710.
The form of 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 do.
Most loan officers work full time.
Employment of loan officers is projected to grow 8 percent from 2012 to 2022, about as fast as the average for all occupations. The need for loan officers fluctuates with the economy, generally increasing in times of economic growth, low interest rates, and population growth—all of which create demand for loans.
After a period of decreased lending resulting from the recent recession, banks and other lending institutions are granting an increasing number of loans to people and businesses. Because lending activity is sensitive to fluctuations in the economy, consumer and mortgage loans are expected to increase as the economy recovers. Similarly, many businesses postponed borrowing funds for maintenance, improvement, and expansion during the recession, so commercial loans should increase as businesses are more willing to borrow and banks are more willing to lend.
However, growth in the number of jobs is expected to be tempered by the expanded use of loan underwriting software, which has made the loan application process much faster than in the past. Some loan applications can be completed online and underwritten automatically, allowing loan officers to process more applications in a much shorter period of time. This factor may limit the number of new loan officers needed in the future, despite an increasing number of loan applications.
Prospects for loan officers should improve over the coming decade as lending activity rebounds from the recent recession. Job opportunities should be good for those with lending, banking, or sales experience. In addition, some firms require loan officers to find their own clients, so candidates with established contacts and a referral network should have the best job opportunities.
For more information about certification and training for loan officers, visit
For more information about a career as a mortgage loan officer, visit
For more information about licensing for mortgage loan officers, visit
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.