How Much Can We Afford to Borrow? Church Loan Experts Answer.

Church Loans

You've got vision. Now you need funding. The question is, how much can you afford to borrow? Two AGFinancial church loan experts, Bruce Gibbons and Randy Smith, share some insight into this important question.


When I talk with a pastor about a new project, I try to understand the vision before I offer much information in the way of counsel. The more I know about the vision, objectives, and resources, the more I am able to offer financial direction and recommendations. To provide the pastor with a number without having a complete understanding of these three—vision, objectives, and resources—is not providing a service to the pastor or the church. Here are a few of the questions I ask as we collaborate on a financing need:

  • How does the project play a part in the church's vision?
  • How much money do you reasonably need for your project?
  • How financially strong is the church?
  • What is the church’s annual gross and net income?
  • Is there any present debt?
  • How much cash on-hand will the church have to contribute for the project?
  • What is a reasonable timeline for the project (start to finish)?

Based on the discussion up to this point, I can give them an unofficial estimate of what they can reasonably afford, with the understanding that we need to go through a complete review of the church financials and project to provide a concrete number.

The very best advice I can give a pastor is to be willing to share the vision and need for funds and to work together with a loan consultant before making a decision to request funding from a lender.


I agree. It’s critical for a pastor to have a detailed conversation with a loan consultant to get a full picture of the church's needs and resources. We also want to assist the pastor and board in understanding how important it is to have a manageable mortgage. Debt can be an awesome tool for vision but also a millstone if improperly used. It's so important that a loan amount stays within the church's existing operating budget and cash flow.

Here is a checklist of key factors and ratios we look at to determine if the time is right for a church to borrow:

  • Three years of financial statements, including income/expense statements and balance sheets
  • An annual (balanced) budget
  • Positive trends in attendance and income over the past three years
  • Positive operating margins each year
  • Approximate cash reserves equal to at least one to three months of fixed operating expenses
  • Strong missions giving (at least 10% of total giving)
  • Personnel costs (salaries, housing allowances and benefits) less than 45% of total income, preferably at 33%
  • Annual debt service less than 33% of general (unrestricted and undesignated) income
  • Annual debt service plus personnel costs not more than 65% of general (unrestricted and undesignated) income
  • Loan to value ratio of not more than 75%
  • Excellent payment history on existing/previous loans
  • Lead pastor tenure of at least 12 months

A simple way to obtain a rough estimate of the amount your church can borrow is to multiply your annual undesignated income by three. In other words, a church with an annual undesignated income of $500,000 can generally borrow up to $1.5 million.

Keep in mind, this is just a guideline. A good loan consultant will consider all factors before making concrete recommendations.

To connect with the loan consultant dedicated to your region, simply fill out this brief loan inquiry.

If you’d like to get started evaluating your financial strength, click here for a simple church mortgage calculator.

If you have questions about ministry financing, we are happy to help. You can call 888.599.6015 or email

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