Discover your borrowing power, even if you’re on a low income.
What is the minimum income required to get a personal loan?
There isn’t one set minimum to take out a loan. The requirements vary by lender and how much you need to borrow.
Even though many lenders have no minimum income requirement, they are still assessing other aspects of your financial situation to see if you’re capable of handling a loan. A big factor that comes into play here is your debt-to-income ratio.
Where do I find a lender’s minimum income requirements?
If there is a minimum income requirement for a specific provider, it’ll be listed on our review. Like in this example of CompareFirst loan connection service:
What income do I need to earn to be eligible?
Here are the income requirements for a selection of top online providers:
|Lender||Loans offered||Minimum income||Learn more|
|Even Financial||Personal loan||No minimum, credit requirements apply|
|Prosper||Unsecured personal loan||No minimum, must have proof of taxable income|
|SoFi||Personal loan||No minimum, must have steady employment and good to excellent credit|
|LendingPoint||Unsecured Personal Loan||$25,000 annually|
|LendingClub||Unsecured personal loan||No minimum, must have a low debt-to-income ratio to be considered|
|Laurel Road||Personal loan||Recommended annual income of $60,000+ and debt-to-income ratio under 40%|
|NetCredit||Unsecured personal loan||No minimum|
|Bank of America||Auto loans||No minimum, income is one of many factors for approval|
|BBVA Compass||Express personal Loan||No minimum, one of many factors that determines the approved loan amount (other factors include credit score and debt to income ratio)|
|Chase||Auto loan, mortgage loan||No minimum, must have debt-to-income ratio under 43%|
|Citibank||Personal Loan||$10,500 annually|
|TD Bank||Unsecured and secured personal loans||Income is a factor in the approved loan amount, must have a debt to income ratio of under 49%|
|US Bank||Personal loans, unsecured lines of credit||No minimum, one of several factors considered in approval of loan amount|
|Wells Fargo||Personal loan||No minimum|
How can I tell how much I can borrow?
The first step to determining your borrowing power is calculating whether or not you can actually afford it.Work out your repayments based on the interest rate, fees, loan amount and loan term of your chosen personal loan. After you’ve done this, determine whether you’ll be able to manage the repayments on your current budget.
What is a debt-to-income ratio?
Your debt-to-income ratio (DTI) is a simple measurement of your monthly debt compared to your gross monthly income. This lets lenders see how you’ve managed payments for what you’ve borrowed. Typically, borrowers that have a high debt-to-income ratio will likely have trouble making payments.
Borrowers with a debt-to-income ratio of over 43% are generally considered to be going through a financial hardship. A debt-to-income ratio of about 20% or lower is generally considered excellent.
Let’s say you have a total of $2,500 in bills each month and you make a salary of $9,000 a month – your debt-to-income ratio is about 28%. With a 28% debt-to-income ratio you would appear as a relatively responsible borrower.
How do lenders decide if I’m eligible?
When you submit an application for a loan, the lender will inquire about a number of details, they may include:
- Employment status
- Current debt
- Financial commitments
- Credit history
- Assets you can offer as security
What if I’m not qualified?
There are a few things you can do if you find out you don’t meet the minimum income requirements:
- Apply for a lower amount. If you can’t prove to the lender that you’ll be able to manage repayments for the requested loan amount, consider borrowing less. This will mean lower repayments for you and less of a risk for the lender.
- Choose a more affordable loan. The reason you might be ineligible could be that the loan has fees and interest that the lender thinks is too expensive for you. Other loans may have lower interest rates and fewer fees, and in turn will give you a better chance of managing the repayments.
- Try your current bank. If you have a good banking history, you probably have a better chance of being approved for a loan with your current bank. You may be able to find product detail on your bank’s website.
How much you need to earn to get a loan depends on how much you want to borrow. Generally, the higher your income, the more you’re able to borrow.
However, other factors like your credit score and DTI can play a crucial role in whether or not you’re approved — and how much you can borrow. You can find out more about how personal loans work by visiting our guide.