Loan Officer

Ultimate Guide to Becoming a Loan Officer

Ready to start your journey?

What exactly is a loan officer? It is apparent that they deal with money and loans on some level, but do you know why they are important? Throughout this Ultimate Guide to Becoming a Loan Officer, you will explore what a loan officer is, how to prepare for and begin a career as a loan officer, what the job entails, and future trends of loan officers. We will briefly discuss the impact Covid-19 has had on loan officers’ business and what adjustments have been put in place.

Most things in life are not cheap, especially when we are talking about owning houses and cars, paying for a college education or a wedding, and even having a baby. But, when people want to accomplish these significant life events, sometimes they need financial assistance to make it possible. This is where the role of a loan officer comes into play. It is essential to note that loan officers can help make dreams come true for their clients, which is why they play a critical role in society and the economy as a whole. They are responsible for setting people at ease during life-changing and monumental moments. Why? Let’s take a look. 

What is a Loan Officer?

loan officer job

As we dissect the skills needed to be a loan officer, their duties throughout their job, and the history of lending, let’s first begin by defining a loan. There are different kinds of loans, but we are focusing on financial loans. A financial loan is an amount of money, usually a large amount, that you borrow from a financial institution and then pay back in smaller increments over time with added interest. Types of loans include personal, business, and mortgage loans. 

loan officer oversees and walks through the loan process with the borrower. They are responsible for advising those seeking a loan, evaluating the situation, and authorizing or recommending approval of the loan. They work with individuals or businesses, depending on the type of position and loan desired. 


agenda analysis business 990818

To be a successful loan officer, an individual must work well with numbers, details, and people. Skills in numbers include a full understanding of mathematics, algebra, and finance. There is a lot of paperwork and logistics to manage throughout the process. Hence, loan officers need to be detail-oriented, organized, decisive, disciplined, and able to analyze every loan application detail. Skills in decision making, logical reasoning, and risk management are essential. 

Strong skills in detail, analysis, and numbers go hand in hand with incredible interpersonal skills. Loan officers cannot complete their job if they do not work well with their clients. It is crucial for them to be caring, patient, personable, good listeners, professional, friendly, and desire to help others. It can be incredibly stressful for clients to apply for a loan, so loan officers need to ease their anxieties. These customer service skills, along with excellent communication, follow-up, tenacity, and initiative, round out an extraordinary loan officer. An ability to speak in multiple languages is also a good asset.        

Depending on the specific type of loans an officer deals with, they need to be skilled in commercial, consumer, or residential loans, loan underwriting, loan processing, or bill collections. Every type of loan officer should be able to conduct financial analysis, sales, customer service, customer relationship management, and use specialized software like Microsoft Office. 


Building strong relationships that lead to clients and referrals, creating marketing plans to promote their company’s products and services, and actively pursuing new business are just some of the loan officers’ responsibilities. They must be fully knowledgeable of what their company offers and what their client needs to decide which loan works best. All of their skills get put to work as they perform these types of duties:

  • MEET with clients to discuss their situation, why they need a loan, and their options.
  • EDUCATE clients about legal standards, fees, obstacles, and interest rates. 
  • LISTEN to the client’s concerns and offer financial solutions.
  • GUIDE customers through the loan application. 
  • FOLLOW-UP with the client and FILE paperwork.
  • COLLECT financial documentation and necessary personal information. 
  • EVALUATE and analyze financial history, circumstances, and information like credit history and scores, job status, income, marital status, and loan purpose. 
  • USE loan underwriting software and review its results.
  • REVIEW underwriting results and loan agreements to make sure they are compliant with state and federal regulations.  
  • IDENTIFY risks, loan options, and ways to reduce risk.
  • DETERMINE loan eligibility, accurate interest rates, and payment schedule.
  • APPROVE or DENY loans and sometimes consult with management.  
  • COMMUNICATE loan options, financial status, and payment plan.
  • EXPLAIN the available types of loans and NEGOTIATE their terms.  
  • FOLLOW-UP with clients


The verb form of loan is lending. Traces of lending can be found back to the beginning of recorded human civilization. There have been many steps along the way that have brought us to our current streamlined digital lending system. Historical loans can be found in the Bible, with the Romans and ancient Greeks, and even in Assyria and Babylonia. Let’s take a look at the evolution lending has experienced and how loans have kindled civilization’s commercial and industrial progression over the years.

2000 BC – 1754 BC 

  • Mesopotamian farmers borrowed grains, seeds, and livestock for repayment later, typically after harvest or calves’ birth. 
  • They also put in place the idea of “interest,” paying more than what you borrowed. 
  • The Code of Hammurabi provided regulation for how much silver costs and the interest amount charged on silver loans. Therefore, laying the foundation of the first system for interest rates. 

400 BC – 321 BC

  • Ancient Greece established the first “payday loans.” They started a system still used today, where pawnbrokers reduced the lender’s risk by collecting collateral from the borrower when they lent money. 
  • During India’s Mauryan Dynasty, the first “bill of exchange” and letters of credit came into existence. An adesha ordered bankers to pay a fixed sum of money to a third party.
  • India’s temples acted as “banks,” which could issue the adesha to the correct party.   
ancient currency

1400 AD – 1700 AD

  • Christianity and Islam placed restrictions on lending and banned lending with interest, but the Jews continued to offer it. This act led to the persecution of Jews.
  • The first merchant banks opened, creating the first underwriting process and offering the first insurance to farmers, which insured their crops against failure. 
  • These banks provide financial services, like loans, advising, and underwriting for businesses. 
  • In England, wealthy merchants paid goldsmiths to hold their gold. Repayment was guaranteed through a promissory note. Goldsmith’s traded their debt as value, becoming the first debt-based money. 
  • In 1690, due to the King’s overwhelming debt, England could not borrow the money needed to continue in the Nine Year War. Through William Paterson’s proposed plan, England quickly fundraised the necessary money, and the first central bank, the Bank of England, was established.  

1700 AD – 1900 AD

  • The religious restrictions on lending with interest slowly loosened as everyone became aware of the economic benefits it provided. 
  • Indentured loans were created. They involve the poor borrowing money from the rich and then paying them back by working off their debt, usually on the lender’s estate. 
  • Due to the boom of international trade, centralized banks grew across Europe, thanks to Mayer Amschel Rothschild, thus increasing the opportunity for international finance.  
  • Loans became more available to individuals, not just corporations. 
  • The first savings and loan bank opened in the United States, the Philadelphia Savings Fund Society.

1950 AD – 2000 AD

credit card
  • The credit card was born in 1950. 
  • Frank McNamara used a card to pay his bill at a restaurant pioneering what later became the Diner’s Club Card
  • The Bank of America launched the BankAmericard.
  • By 1959, lenders were using FICO scores in the mortgage loan process.
  • Online lending began in the 80s due to the evolution of computers and electronic data. Some of the application processes for Quicken Loans were offered online.  
  • Online banking was established in 1999. 

Every bit of lending history, the ups, and downs, has formed a strong foundation for today’s world of lending. As technology and lending activities continue to change, the economic benefits will secure a continued progression in this industry and the need for loan officers. 

How Do I Start a Career as a Loan Officer? 

Anytime your job deals with other people’s money, there is a high importance placed on your ability to do the job right. It would be best to have adequate education, preparation, and training to perform the job efficiently and effectively. Next up in this guide to becoming a loan officer, let’s look at what types of degrees, certificates, and professional development opportunities help prepare you for a loan officer career. 


accounting degree

The absolute minimum amount of education required for a loan officer is a high school diploma. Some associate’s degrees like an Associate’s in Economics can lay a solid foundation for an entry-level job at a financial institution, which can provide much-needed experience to become a loan officer. Also, an associate’s is a great stepping stone for entry into a bachelor’s degree program. 

A bachelor’s degree is preferred by most employers. To become a loan officer, an individual should pursue a bachelor’s in business, finance, economics, risk management, accounting, or financial management. Some career-specific courses should include financial accounting, the principles of economics, advanced mathematics, marketing, business law, economic and business statistics, global markets, and the global economy. Loan officers deal with customers all day long. They need to understand people, communicate with them properly, and navigate their emotional and environmental influences. Therefore, coursework in communication, humanities, psychology, and public speaking can be highly beneficial.   

Although not typically required for most loan officer positions, a master’s degree can only be beneficial for extending their knowledge and experience. A master’s degree in finance, economics, accounting, or business administration can properly equip a loan officer for management positions. 

Professional Development

Along with an excellent education, loan officers need years of experience and training. There is a chance for someone to become a loan officer without a bachelor’s degree if they have acquired several years of work-related experience in banking, sales, or customer service, especially within a financial institution. Once an individual is hired at a company, they will usually provide on-the-job training, including education in loan approval processes, legal requirements, job-specific software, customer service, and specialized training. Some employers will also pay for employees to take finance classes to stay up-to-date in the financial industry.  


Outside of the actual job, loan officers can develop professionally through participating in internships, financial banking associations, and obtaining certifications and licenses. Every bit of professional experience gained is an excellent addition to building a strong and impressive resume. 


During college and after, internships play a vital role in providing a hands-on, real-world professional experience. Those working at becoming a loan officer can pursue a wide variety of internship options throughout the nation. Let’s take a look at some current examples of available internships on

  • The Network Capital Funding Corporation is offering a Mortgage Internship in New York City. Interns will contact pre-qualified borrowers and enhance their professional interactions while preparing for and becoming a licensed Mortgage Loan Originator. 
  • Carolina Farm Credit is offering a Loan Officer Internship in North Carolina. Interns will enhance their finance, marketing, customer service, and sales skills with agricultural lenders. 
  • First Financial Bankshares in Texas has a summer internship for a Loan Review Analyst to assist in loan reviews for bank portfolios. 


Membership in professional associations can equip loan officers with more educational tools, knowledge of current trends and events, networking opportunities, conferences, professional development activities, certifications, and an incredible amount of useful resources. Loan officers should check out the National Association of Mortgage BrokersAmerican Bankers AssociationMortgage Bankers AssociationAssociation for Financial Professionals, Independent Community Bankers of America, and the Credit Union National Association


Some associations provide certifications that, although not a requirement, can help loan officers show their commitment and expertise in their field. One of the most prominent certifications for a loan officer is to become a Certified Lender Business Banker, which you can accomplish through the Bank Training Center. A private organization, the Bank Administration Institute, offers the Loan Review Certification. Loan officers that specialize in mortgage loans can pursue a Mortgage Professional Certification through the Mortgage Bankers Association. The Independent Community Bankers of America has the Community Bank Consumer Lender Certification and the Commercial Loan Officer Certification. Loan officers that work at a credit union can obtain the Credit Union Business Lending Professional Certification. There are also certificates, like the Certificate in Business and Commercial Lending and the Residential Mortgage Lender Certificate offered by the American Bankers Association


As far as licenses go, there is only one type of license required of certain loan officers. Those who work with mortgages, both for individuals and companies, need to acquire the Mortgage Loan Originator License. It involves an exam, multiple hours of coursework, annual renewal, background and credit checks, and continuing education. 

What Does a Career as a Loan Officer Look Like? 

Types of Loans

Online Associates Degree in Real Estate Studies

Loan officers mainly work with secured and unsecured loans. A secured loan is backed by a financial asset the borrower owns, such as a car, home, boat, stocks, bonds, or personal property. The collateral offered up to the lender secures the repayment of the loan. It typically provides lower rates, higher borrowing limits, and longer repayment terms. Secured loans are most commonly used for buying homes and cars.

An unsecured loan does not require any collateral and includes higher interest rates due to the higher risk the lender is taking offering this type of loan. Like a credit score, capital, income, current debt, and personal assets, many factors are considered for qualification. Examples of unsecured loans include credit cards, personal loans, bonds, and student loans.  

Types of Loan Officers

There are three types of loan officers: consumer, commercial, and mortgage. Consumer loan officers process personal loans for people that need to pay for a new car, home, college, or other types of individual needs. They have close interaction with the client to guide them through the process and either utilize automated software or handle the underwriting manually. Commercial loan officers deal with loans for businesses and corporations for things like supplies, development, and upgrading equipment and operations. The loan is typically very complex. If the loan needed is too large, officers will work with other banks to combine resources. Mortgage loan officers work with individuals and businesses who desire to purchase real estate. They seek out relationships to build their clientele. 

-> Check out this video on the role of a mortgage loan officer.

Amongst these three types of loan officers, some will choose to specialize in loan collection or loan underwriting. Loan collection officers track down borrowers behind on their payments, help create options to pay the loan, and sometimes sell the collateral to pay the loan. Loan underwriters focus on analyzing the client’s financial information to see what loan they qualify for if any.  

Work Environment

It is a full-time position with flexibility in schedule and can have long hours at times. Depending on where they work, loan officers typically have a small private office and work amongst a few to hundreds of fellow employees. Consumer loan officers stay at their office to meet with clients throughout the day at regular business hours. Commercial and mortgage loan officers do a lot of traveling to meet with their clients at businesses, homes, or public places like coffee houses and restaurants. These officers may work into the evenings or on weekends to cater to their client’s schedules.  


finance salary

The format in which loan officers are paid varies greatly. Some of them receive a salary, some are paid solely on commission, and others receive a base salary combined with the commission. Those who receive commission have possible opportunities to earn bonus commissions due to their performance. Entry-level loan officers can make an average of $65,000 in their first couple of years. In 2018 and 2019, the median salary for loan officers ranged from $63,040 to $76,270. In 2019, automobile dealers paid their loan officers an average wage of $82,380, and credit intermediation and related activities companies offered $62,210 on average. 

Cities that offer the highest salary for loan officers are New York, NY, Yuba City, CA, Bridgeport, CT, Stockton, CA, and Santa Barbara, CA, ranging from $106,360 to $127,700, respectively. Some of the top-paying nonmetropolitan areas include Eastern Oregon, Massachusetts, Hawaii/Kauai, West Central-Southwest New Hampshire, and Northwest Iowa. The states where loan officers can find the highest mean salary include New Hampshire, Connecticut, Massachusetts, Washington, D.C., and New York, ranging from $90,500 – $103,453, respectively. 

Types of Employers

Most loan officers work at financial institutions, such as banks, mortgage companies, credit unions, or similar. Automobile dealerships and credit card companies also employ loan officers. The top-paying industries include securities, contracts, commodities, other financial investments and related activities; automobile dealers; real estate; grantmaking and giving services, and other motor vehicle dealers. Big businesses that pay loan officers the best are Wells Fargo & Co., Agcountry Farm Credit Services, Farm Credit, and Bank of America. 

What are the Future Trends of Loan Officers? 


As we have discussed, lending does well when the economy is healthy. Even amidst a pandemic, our current and future predicted economy shows growth. The population continues to increase, and the need for loan officers rises alongside it.

The Bureau of Labor Statistics shows a projection of close to 8% growth for loan officers’ employment through 2028. These statistics reveal an increase of about 24,000 jobs. It is about the average projected growth rate for industries across America.

Some of the factors that may slow this growth rate are the increase in mobile banking, the decrease of bank branches, and the use of loan processing technology, including loan underwriting software. Still, people seem to want to meet in person when figuring out loan options. These applicants still need to be evaluated for creditworthiness and the likelihood of repayment, securing employment for loan officers.  

Loan Officers and COVID-19

The pandemic of 2020 has affected us all, in one way or the other. It has brought about hardships and unexpected challenges that most of us were not prepared to handle. Due to COVID-19, schools, restaurants, and stores have closed, we have all had to quarantine, and travel restrictions are in effect. 

Consumers, businesses, and financial institutions have all been impacted by COVID-19. People have lost jobs, seen a decrease in income, and companies have lost profits, and many have not survived. Loan officers have seen an enormous increase in mortgage refinance applications, late payments, and delinquent accounts for car loans, student loans, mortgage loans, and credit card payments. There have been inquiries for special programs and short-term loan options as people are desperate for money.  

online work

The way loan officers and their institutions adjust to the rapid changes and challenges occurring will determine their future relationships with clients and with their employees. They must figure out how loan officers can successfully work from home and give their clients virtual service options. Due to social distancing and the risk for appraisers to make house calls, loan officers must utilize Automated Valuation Models to estimate appraisals. And finally, policies need to be put in place to adjust to the unusual situations that may happen in the middle of the loan application process.     

Next Steps

We have discussed why a loan officer is a crucial communication agent between a creditor and a borrower, how to become one, what a career as a loan officer looks like, and what the position can expect in the near future. 

Does this interest you? If anything has sparked your interest throughout this guide to becoming a loan officer, check out this short quiz to see if a loan officer might be the right career path for you.

Related Resources:

Best Online Undergraduate Business Schools
Online Finance MBA Ranking
Online Master’s in Finance Management
Best Free Resources for Loan Officers
Best Online MBA Programs for Loan Officers
Best Degrees to Become a Loan Officer

Ready to start your journey?

Ready to start your journey?