Loan Officers

Loan officers work for banks, savings institutions, credit unions, and other financial institutions, officiating loans to individuals and businesses. Most loan officers specialize in commercial or business, consumer, or mortgage loans.

Loan officers provide a variety of services to potential borrowers, including identifying and recruiting borrowers, walking them through the application process, describing the features and restrictions of different types of loans, and explaining qualifications. For commercial or business borrowers, loans are typically for investing in equipment or operations. Individuals apply for home equity, automobile, and other types of personal loans, while mortgage loans are usually secured for refinancing or to buy real estate.

The loan application process has several phases. Once the application is complete, a loan officer verifies the information and checks the client’s credit and financial history, collateral, assets, and any other factors contributing to determine the applicant’s eligibility and eventually grants or denies the loan. In some cases, loan officers work with other banks and lending professionals to create package loans for large commercial clients.

Specialized types of loan officers, called loan underwriters or loan collection officers, focus on a particular aspect of the lending process. Loan underwriters typically use advanced computer software to perform risk analysis, which determines whether lending to a particular individual or business is a sound investment for the lender. Loan collection officers negotiate with borrowers who have failed to make payments on their accounts, designing repayment plans or arranging to seize assets to repay the loan if the borrower does not comply.
Personal loan officers tend to work a standard 40-hour week in an office setting. Commercial and mortgage loan officers may work extended or odd hours, as they are often required to travel to meet with clients at their homes or places of business, using mobile devices like smart phones and laptops to conduct their work. Since interest rate shifts can strongly affect the number of loan applications, workload may increase or decrease with these changes.

Education, Training, and Essential Skills

The minimum educational requirement for loan officers is a high school diploma. Commercial loan employers typically require officers to have a bachelor’s degree in business administration or finance or a similar degree. Most employers provide on-the-job training to for new hires or promote bank tellers and customer service representatives to these positions.

Licensing for mortgage loan officers is required by federal law, but there are currently no such requirements for other fields. Licensing requires passing an exam, a background check, a certain number of relevant coursework hours, and continuing education for periodic license renewals.

All loan officers require a set of skills to be successful, including familiarity with field-related software; computer fluency; research, analytical, and communication skills; confidence; sales ability; and strong self-motivation. A background check is often required, even for loan officers who do not require a license.

Advancement and Professional Development Opportunities

Loan officers can advance by taking positions with increased responsibility or in larger institutions and by taking managerial positions. Professional development, continuing education courses, and additional certifications also give loan officers a competitive edge for advancement.

Constant changes in banking laws and government financial regulations make continuing education essential for loan officers. Professional organizations, such as the Bank Administration Institute and The Mortgage Bankers Association, offer industry-recognized certificate programs and designations for loan officers.

Outlook and Income

Overall, the employment rate for loan officers is expected to increase by 10% over the next decade, driven by population and economic growth and fluctuations in interest rates. Demand will be highest for consumer and mortgage loan officers with sales, lending, or banking experience and college degrees. The availability of jobs is highly dependent on economic recovery and drops in interest rates, both of which spur the number of loan applications being filed.

Annual median salaries for loan officers are about $55,000, with the highest median above $106,000 and the lowest below $31,000. The highest median salaries for loan officers are associated with positions in the federal executive branch and management of companies and enterprises, with somewhat lower salaries in the fields of nondepository, depository, and other credit intermediation. In addition to regular salaries, many loan officers enjoy commissions or bonuses based on the number and performance of the loans they service.