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Is It Possible to Get a Maternity Leave Loan?

Can I Use a Personal Loan as a Maternity Leave Loan?
Susan Guillory
Susan GuilloryUpdated March 12, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
You’re eagerly awaiting your bundle of joy…but at the same time, you’re starting to worry about money. Babies are expensive, and you might not have money coming in while you’re on maternity leave. What you may not realize is that there are loans available to help parents bridge the gap between rising expenses and reduced income during maternity leave. Sometimes referred to as “maternity leave loans” or “personal loans for maternity leave,” this type of financing can help parents bond with their newborn baby without the financial pressure of having to return to work too soon. Is a maternity loan right for you? The answer will depend on your credit (which will determine the cost of the loan), and whether or not you plan to return to work (which will enable you to pay back the loan). Here’s what you need to know about personal loans for maternity leave.

What Are Maternity Leave Loans? 

A maternity leave loan is essentially a personal loan that you can use to cover the expenses that rack up while you take maternity leave to be with your baby. You can use the funds to pay for unreimbursed labor and delivery expenses, pediatrician visits, diapers, formula, a car seat, a crib, and any other expenses involved in caring for your newborn. Personal loans for maternity leave are available through many banks, credit unions, and online lenders.Maternity leave loans are typically unsecured loans, which means you don’t have to put up any collateral, such as your home, to secure the loan. Loan amounts range from about $1,000 to $100,000 and are issued as a lump sum. In most cases, you’re required to pay back the loan over a fixed period of time at a fixed interest rate. The payback period can be as short as a year to as long as seven years, depending on the lender.Recommended: How To Financially Prepare for a Baby

Typical Costs of Maternity Leave

To determine whether you might need a maternity leave loan (and, if so, how much you would need), it can be a good idea to tally up the costs you may incur while you’re home with your new baby. This may include:

Income Loss 

While employers are legally required to let you take up to 12 weeks off under the Family Medical Leave Act, in most parts of the country, they are not required to pay you. Only a handful of states mandate employers to provide paid medical leave (California, Massachusetts, New Jersey, New York, Rhode Island, Washington, Oregon, Colorado, and Connecticut). According to the career resources site, the average adult loses $9,578 in wages after taking 12 weeks of maternity leave, typically 58% of their quarterly income.

Newborn Cost

In addition to regular expenses — mortgage, utilities, insurance, groceries, etc. — you’ll also have the added cost of a baby. This starts with actually having the baby. Even if you have insurance, out-of-pocket costs for labor and delivery can range from $8,361 to $19,771 (depending on where you live), according to research published by the Healthcare Cost Institute. Other one-time costs include baby gear, like a car set, stroller, crib, and changing table. Once the baby comes home, the regular expenses to care for your little one kick in, which will include clothing, diapers, formula, and medical care.Recommended: Tips for Building a Nursery on a Budget

Can I Get a Personal Loan While on Maternity Leave?

Whether or not you can get a maternity leave loan — and how much it will cost — will depend largely on your credit score. Your credit score is a number ranging from 300 to 850 that rates the likelihood of you paying back your debt based on your financial history. Lenders typically require a credit score of 660 for any type of personal loan; to qualify for the lowest rates, you may need a credit score of 800 and above. Your credit score also determines how much interest you’ll pay over the life of the loan.Recommended: How Much a Baby Costs the First Year

When Should You Consider Taking Out a Loan?

There are both benefits and disadvantages to taking out a personal loan. To help you decide whether getting a maternity leave loan makes sense for your family, here are some costs and considerations to keep in mind:

Medical Bills

Few parents have health insurance that pays 100% of their medical bills. If you are expected to pay a deductible or portion of medical costs for having the baby, you will need a plan to cover those expenses. A medical loan might be an option to consider.

Disability Due to Pregnancy

Not every pregnancy goes exactly according to plan. If there are any complications, such as needing to go on bed rest in your third trimester, you may end up being out of work for longer than the 12 weeks you’re allotted for maternity leave. Even If you have short-term disability insurance, it likely won’t cover all of your lost income. A personal loan could help fill in the gap.

You Have Good Credit

If you currently have good-to-excellent credit, you may be able to qualify for a maternity leave loan with a lower interest rate. This can make taking out a loan more cost effective than using a credit card to cover higher expenses and/or make up for lost income while you are on leave.

Other Expenses

If your mortgage/rent and other monthly financial obligations (like a car or student loan payment) currently use up a good chunk of your take-home pay, you may find yourself in a pinch when you’re on maternity leave. A personal loan could help tide you over until you’re back to earning a full income.

Single Income

If you don’t have a partner’s salary to rely on, taking time off with zero or a reduced income coming in can be a recipe for financial disaster. While taking out a maternity loan comes with costs, it could save you from falling behind on bills or running up high interest credit card debt.Recommended: Guide to Personal Loans for Single Mothers

Final Tips on Maternity Leave Loans

If you think getting a maternity leave loan might be a good move for your family, here are some tips to keep in mind:Plan ahead. The best time to apply for a maternity leave loan is while you’re still at work. This will give you the best chance of approval and ensure that the funds are in your bank account by the time you go on leave. Research your options. You may assume your only option is to apply for financing with the bank you already have a relationship with, but you might find a better offer from an online lender or one of the private lenders offering personal loans. To cast a wide net, you may want to use an online lending marketplace.Prequalify. Many lenders allow you to prequalify before submitting an application so you know what rate you can expect. Prequalifying involves a soft credit inquiry, so it won’t impact your scores.Keep an eye out for fees. When shopping for a loan, don’t just look at the rate you’ll be charged — also scan the fine print for fees. For example, many personal loans include an origination fee, which can range from 1% to 8% of the loan and gets deducted from your loan amount (which means the amount you receive may be less than what you expect).Gather the necessary documents. Before you begin the application process for a personal loan, it’s a good idea to collect all the information you will need to provide a lender. This may include:
  • Personal identification (such as a driver’s license, Social Security card, or passport)
  • Proof of income (such as W-2s, pay stubs, or tax returns)
  • Employer information
  • Proof of residence (such as a utility bill or a lease agreement)

The Takeaway

A maternity leave loan is a personal loan you can use to cover the expenses involved in having a new baby while you’re on leave from work. Having a maternity leave loan can help ease money worries during a truly special time in your life. However, you will have to pay the money back — plus interest. The rate you will pay will depend on your credit history.If you’re curious about what type of maternity loan you might qualify for, Lantern by SoFi can help. With one online application, you can access personal loan offers from multiple lenders. And, checking your rates won’t affect your credit score.*

Frequently Asked Questions

Can I get a loan while on maternity leave?
What is a maternity loan?
How do I apply for a personal loan while on maternity leave?
Photo credit: iStock/kupicoo

About the Author

Susan Guillory

Susan Guillory

Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
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