How Much Salary Do I Need to Get a Loan?

by Van Thompson
Most lenders require proof of income from loan applicants.

Whether you're applying for a small, short-term loan or taking on the massive responsibility of a mortgage, lenders want to know that you have the ability to repay the loan. There's no single salary that will get you a loan. Instead, minimum income requirements vary depending upon the loan terms, the amount of the loan and your credit history.

Basic Salary Requirements

The salary you'll need to pay for your loan is determined by the lender's own policies. The lender will want to see that you have a steady, reliable source of income, so if you're self-employed or have recently been unemployed, you could struggle to get a loan. Even if you're approved for a loan, you'll need to consider whether you can afford it. For example, you might have low debt and a high salary, but if you're paying for your children's college or saving for a home, you might not be afford to meet your monthly obligations if you take on a loan.

Debt-to-Income Ratio

Most lenders look at how much debt you already have when determining whether to approve you for a loan. For example, Bankrate.com advises that your total debt should be no more than 36 percent of your income for a home loan. If you have low debt, you might still be able to get a loan with a relatively low salary, but people with large quantities of credit card debt can struggle to get loans no matter what their income is.

Secured vs. Unsecured

A secured loan is secured with something -- such as a car or home -- that the lender can repossess if you default. If you apply for an unsecured loan, you might have to have a higher salary because the lender can't repossess the property if you fail to repay the loan. Personal loans are an example of unsecured loans, and your lender may place a cap on how much you can borrow based upon your salary.

Other Loan Factors

No matter how high your salary is, you may struggle to get a loan with bad credit. Similarly, if you have excellent credit, some lenders will give you a larger loan than your salary might indicate. The individual lender's criteria can also play a role. For example, some payday lenders offer high-interest, short-term loans to people who can show they have some income, and therefore may not establish stringent income requirements.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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