Your income is an important factor in qualifying for a loan. Some lenders may have a minimum requirement you need to meet in order to apply, while others just ask that you provide proof you’re able to afford the loan. However, other aspects of your personal finances like your monthly bills and credit score can be just as important — if not more.
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’re 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 (DTI) ratio.
Where do I find a lender’s minimum income requirements?
If you’re comparing on your own, each provider’s website will list eligibility requirements. If income isn’t on that list, the provider may not have a set requirement. Feel free to call customer service to inquire further.
What income do I need to earn to be eligible?
Here are the income requirements for a selection of top online providers:
The first step to determining your borrowing power iscalculating 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.
Your DTI ratiois 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 DTI ratio over 43% are generally considered to be going through a financial hardship.A DTI ratio of 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 DTI ratio is about 28%, which would classify you as a relatively responsible borrower.
Here’s what 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 details on your bank’s website.
Bottom line
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 byreading our guide.
Frequently asked questions
It’s possible if you’re receiving benefits like Social Security or a pension. However, most lenders require you to have steady income to qualify for a loan. You can learn more about your options by checking outour guide to getting a loan when you don’t have a job.
You can, though it might be hard to qualify with some online lenders. Many use algorithm-based applications that sometimes don’t know how to recognize unorthodox proof of income. Readour article on self-employed loansto learn more about what you might be eligible for.
You can as long as you can afford your monthly repayments. For this reason, you might not be able to borrow large loan amounts. Personal loans typically start at $5,000, though some lenders offer financing as low as $1,000 or $2,000.
Kyle Morgan is SEO manager at Forbes Advisor and a former editor and content strategist at Finder. He has written for the USA Today network and Relix magazine, among other publications. He holds a BA in journalism and media from Rutgers University.
I have been turned down for a personal loan. My credit score is 703, I’ve had credit for over a year and they said my debt to income ratio is too high. I have no debt except for a $25 a month minimum payment, what can I do?
Most lenders typically say the ideal front-end ratio should be no more than 28%, and the back ratio, including all expenses, should be 36% or lower. However, depending on credit score, savings and down payment, lenders accept higher ratios. And this will vary per lender, so it’s best to inquire from a lender first before submitting an application for a loan.
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I have been turned down for a personal loan. My credit score is 703, I’ve had credit for over a year and they said my debt to income ratio is too high. I have no debt except for a $25 a month minimum payment, what can I do?
Hi,
Thank you for your comment.
Most lenders typically say the ideal front-end ratio should be no more than 28%, and the back ratio, including all expenses, should be 36% or lower. However, depending on credit score, savings and down payment, lenders accept higher ratios. And this will vary per lender, so it’s best to inquire from a lender first before submitting an application for a loan.
Regards,
Jhezelyn