Mortgage underwriters are the fact-checkers of the home loan approval process, ensuring that the financial picture you portrayed in your application and the documentation you provided are accurate. The loan underwriting process not only assesses your creditworthiness and ability to repay a mortgage, but it also verifies that you and the property meet all requirements of the loan program.
Basically, underwriting is the final yes-or-no decision. Although mortgage underwriters don’t have a lot of wiggle room with approval criteria, the more information you can provide to show you’re creditworthy, the better.
“If you are looking to buy a house, you need to be forthcoming and candid about your financial picture because you are really building a story,” says Joe Thweatt, branch manager at Premier Mortgage Resources Home Loans.
Here’s more about what you can expect from the mortgage underwriting process.
[Read: Best Mortgage Lenders]
What Is Underwriting?
Underwriting is a mortgage lender’s process of evaluating the risk of borrower default. Underwriting begins after you submit your mortgage application.
An underwriter will then analyze your credit and financial information, as well as the value of the home you’re hoping to buy, to decide whether to approve your loan. This includes conducting a thorough analysis of all the information you and all other parties involved have provided to assess your creditworthiness and ensure everything is accurate. In other words, the underwriter effectively gets the final say in whether you qualify for a loan.
“Regardless of whether a loan is for $100,000 or $10 million, the question centers around the ability to repay it,” Thweatt says. “An underwriter verifies documentation like tax returns, pay stubs and W-2s. We have to answer the question, ‘How will the borrower repay that loan?'”
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What Is the Underwriting Process?
If you’re wondering what happens during the underwriting process, underwriters determine the risk of lending by looking at the three C’s: credit, capacity and collateral.
Credit
Your credit history is an important influence on a lender’s decision because it shows how you’ve handled credit in the past. In addition to your credit score, an underwriter will look at your credit report for any negative information, such as bankruptcy or foreclosure.
Underwriters don’t just take a quick overview of your credit; they look closely at your overall patterns of behavior to determine your creditworthiness, such as your payment history..
They will also look at the credit of any co-borrowers and even non-borrowing spouses under certain circumstances.
Capacity
Even if your credit is stellar, an underwriter wants to know about your ability to make your monthly payments. That depends on your income and debt.
“They’re looking at what (your) capacity is to service this additional debt,” Thweatt says.
The underwriter considers what happens after you close and have a mortgage payment to maintain. “We never want to put borrowers in a position in which they will not succeed,” he says.
Underwriters also consider factors such as how many people are on the loan, how much cash you’ll have in reserve after covering the down payment and closing costs, and whether you receive a salary or are self-employed.
Collateral
This refers to the home itself — the property that is acting as collateral in your mortgage loan. A lender wants to make sure the home you’re buying meets its standards. Some loan programs may require that the property satisfies certain safety conditions and that the loan amount doesn’t exceed program maximums.
Also, lenders require that you have an appraisal done on the home because they want to ensure that the appraised home value is enough to recoup their costs in case of default. A lender also considers the size of your down payment, the type of property and whether the mortgage is for a primary residence, a second house or an investment property.
Finally, lenders will request a title search on the property to determine who legally owns it and whether there are any other claims. If the seller doesn’t have the legal right to sell you the property, it may be a nonstarter for the lender.
How Long Does Mortgage Loan Underwriting Take?
The length of the mortgage underwriting process can vary based on the underwriter, application volume and complexity. You can expect it to last a few days, but it typically takes anywhere from 30 to 60 days.
For example, you can anticipate delays when the housing market is booming, such as when interest rates are low or during the spring and summer, when more people buy homes.
Sometimes, underwriters might request additional documents if they need more information to make a decision. That can prolong the process. Approval also takes longer for self-employed borrowers.
The process can also take longer if manual underwriting is required. In most cases, mortgage applications go through an automated underwriting process that analyzes your information and determines your loan eligibility. However, if the automated system raises a red flag, the process moves to manual, which involves higher scrutiny and can take significantly longer.
[Read: Best Mortgage Refinance Lenders.]
How Often Does an Underwriter Deny a Loan?
An underwriter can deny your loan if you don’t meet the eligibility requirements. According to data provided by lenders under the Home Mortgage Disclosure Act, 9.4% of home-purchase applications were denied in 2023. Here’s how the denial rates break down for each loan type:
— Conforming loans: 7.9%
— VA loans: 9.1%
— USDA loans: 13.7%
— Jumbo loans: 10.5%
— FHA loans: 13.6%
Mortgage underwriters can make one of four decisions about your loan application: conditionally approve, suspend, counteroffer or decline.
— Conditional approval. Conditional approval means you must meet certain conditions to ensure final approval. Typically this means not making any changes to your credit, capacity and collateral until you close on the home.
— Suspended. In this scenario, the underwriter doesn’t have enough information to approve your application. You can prevent a suspended application by presenting a full application and verifying with your loan officer that you have all the necessary documents for underwriting.
— Decline. This decision is straightforward: You don’t meet the lender’s criteria for a home loan, but you could still qualify for a different type of mortgage or with another lender.
You can go into underwriting ready for success by taking these steps:
— Complete every document. Resist the temptation to speed through the documentation; be methodical. A missing signature, figure or document could derail underwriting.
— Tell the truth. Avoid fudging the numbers on your application. Underwriting is fact-checking, so the truth will come out. Lying could result in an immediate denial or even legal trouble.
— Address potential concerns. Buying a home can be an emotional experience, and the excitement of having your own place can make the wait hard. But if you think that you might benefit from improving your credit score, paying off debt or saving for a bigger down payment, do it. You could qualify for a larger loan or better terms if you take some time to work on your financial position before you apply.
— Work with a pro. A mortgage banker or broker can help if you think you might have a tough time with approval.
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What to Expect During the Mortgage Underwriting Process originally appeared on usnews.com
Update 10/30/25: The story was previously published at an earlier date and has been updated with new information.
