When a seller accepts your offer on their home, you may start dreaming of barbecues on the back patio, cooking brunch on the weekends, or getting cozy for movie nights. However, there’s a big hurdle you must clear before you can close on your new home and get the keys: mortgage underwriting.

“Mortgage underwriting is the process where the lender reviews the loan and supporting documents and decides whether to approve the loan,” says Benjamin Schandelson, a mortgage loan originator at MJS Financial LLC, a small mortgage brokerage in Boca Raton, Florida.

Industry professionals say knowing how the process works may help cut back on costly mistakes and missing paperwork that could delay or stop your mortgage approval.

What Is Mortgage Underwriting?

Mortgage underwriting is part of the loan approval process and measures the lender’s risk in allowing you to borrow money. It involves assessing whether your finances and the home you’re buying meet the rules for the mortgage you want. There are several types of mortgages, each with different eligibility requirements.

“It is important for the homebuyer to work with the mortgage loan originator to determine which program works the best for them,” says Amber Smith, a mortgage loan originator at Freedmont Mortgage in Hunt Valley, Maryland.

The mortgage underwriting process happens after you’ve entered a purchase agreement with the seller and submitted a mortgage application. The lender sends your paperwork to the mortgage underwriter, and once everything is approved, you complete the homebuying process by closing on the house.

Getting final approval on your mortgage application is different from getting preapproved before you start shopping for homes. A mortgage preapproval letter shows sellers that you are more likely to get approved for a mortgage, but it doesn’t guarantee that you will qualify.

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What Does a Mortgage Underwriter Do?

The mortgage underwriter makes sure that you meet the eligibility requirements of your home loan and assesses your finances — focusing on your income, employment, assets, and credit — to determine whether you can afford the mortgage. In addition, the underwriter uses the appraisal to confirm that the home’s value matches the amount of money you’re borrowing. This process helps the lender evaluate your risk as a borrower.

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What Is the Mortgage Underwriting Process?

The underwriting process is where your mortgage application and finances are verified to determine whether you’ll be approved for your home loan. Here are the steps involved in the process.

1. The borrower compiles required documents

To help ensure that the process goes smoothly, you’ll want to gather all the documents needed for mortgage underwriting. The required paperwork can vary depending on your financial situation, the type of loan you’re applying for, and the lender. However, you should expect to provide supporting documentation for the following areas:

  • Employment status and job history.
  • Income sources.
  • Assets, such as checking and savings accounts, retirement savings, and investments.
  • Current debts, such as auto loans and student loans.
  • Other relevant areas, such as alimony and child support.

2. The lender orders a home appraisal

An appraisal is an evaluation of the home conducted by a licensed, third-party professional. It determines the property’s fair market value, and confirms whether the loan amount matches what the property is worth. The appraisal helps protect the borrower from overpaying for the home and the lender from loaning more money than necessary — meaning it benefits both parties.

While the lender is typically the one that orders the appraisal, the buyer pays for it as part of their closing costs.

3. The underwriter reviews the mortgage application

During the mortgage underwriting process, the underwriter reviews the following aspects of your financial situation.

Employment and income

The underwriter will seek to verify your employment situation, even if you’re self-employed, and look for a steady flow of income that demonstrates you can afford your monthly mortgage payment. Sources of income may include — but aren’t limited to — your salary, commissions, Social Security income, and more.


You can expect the underwriter to examine your assets, which refers to anything you own that has value. This includes your checking and savings accounts, stocks, and cars.

Generally, the more cash you have, the better — and the underwriter will make sure that the money is actually yours and not just a loan. The underwriter checks for enough funds to cover your down payment, closing costs, and emergencies, so the lender will know whether you can continue making mortgage payments in the event of any interruptions to your income.


The underwriter will review your credit report to check if you’ve been paying your bills on time, and determine how much of a risk you pose when it comes to repaying money. Some red flags in your profile may include no credit history or a record of late payments.

Generally, you need a credit score of at least 620 to be approved for a conventional loan, and a credit score of at least 500 to be approved for a loan backed by the Federal Housing Administration. Loans insured by Veterans Affairs and the U.S. Department of Agriculture don’t require a minimum credit score.

Debt-to-income ratio

To evaluate your ability to repay the loan, the underwriter will compare your monthly debt payments to your gross monthly income. The resulting calculation is known as your debt-to-income ratio. This figure is important because studies have shown that borrowers with a higher DTI are more likely to have difficulties making their monthly mortgage payments.

In general, the maximum DTI that borrowers may have to get approved for a conventional loan is 50%. If the loan is manually underwritten, the maximum DTI drops to 45% and comes with certain eligibility requirements.

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Manual Underwriting vs. Automated Underwriting

What is manual underwriting, and how does it compare to automated underwriting? Manual underwriting requires someone to review each page of your mortgage application by hand, whereas computer systems — like Desktop Underwriter for Fannie Mae mortgages — do the heavy lifting for automated underwriting.

The lender chooses automated underwriting or manual underwriting based on your circumstances. Smith says lenders may use automated mortgage underwriting to save time and process more applications at once. However, manual underwriting can be better for folks with unique situations — like having no credit history — since it may consider details beyond the scope of automated underwriting.

“There is room for gray whereas the automated underwriting system is black and white,” Smith says.

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How Long Does Underwriting Take?

The mortgage underwriting timeline can take up to 45 days from the purchase agreement to closing, Smith says. However, the exact amount of time may vary. According to September 2021 data from ICE Mortgage Technology, the average time to close on a loan was 47 days.

An important factor that affects this timeline is the type of underwriting. Smith says automated underwriting can take minutes, but manual underwriting requires more time. The process could also trigger some questions from the underwriter, adding further delays.

“It is very important that the homebuyer responds to these questions quickly so that they may finish underwriting the loan,” Smith says.

Ultimately, the mortgage underwriting process will result in an approval, a conditional approval, a denial, or a suspension, which is when the underwriter can’t complete their review of your application due to missing information.

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5 Tips for a Smooth Underwriting Experience

While there are plenty of things that could go wrong during the mortgage underwriting process, it’s better to focus on the things within your control. Following these five tips could help improve your chances of having a smooth underwriting experience.

1. Don’t be afraid to ask questions

It’s easy to get overwhelmed by the mortgage underwriting process, especially when you’re receiving so much new information at once.

“Often, people in the mortgage industry will throw around terms that borrowers do not fully understand,” Smith says.

She suggests asking questions to your real estate agent or lender if you’re feeling confused about homebuying jargon or any steps in the underwriting process.

2. Be open with your agent and lender

If you think there could be issues with your underwriting paperwork, both Smith and Schandelson recommend being upfront and honest with your real estate agent and lender.

“Discrepancies in the loan application can break the deal,” Smith says.

Your lender may know the best way to handle potential problems that could delay or put a stop to your mortgage approval. If you’re struggling to find your divorce paperwork, for example, Smith suggests telling your lender about the missing document as soon as possible. A divorce decree may include alimony or child support, and these details could impact your eligibility.

3. Provide up-to-date paperwork ASAP

The underwriting process may involve requests for additional paperwork, as you now know. Smith says that you should treat these requests with a sense of urgency. If you’re slow with the paperwork, you could encounter interest rate changes or closing delays.

“Be prompt with returning requested documents and signing disclosures,” Smith says.

It’s also important to make sure everything you submit is up to date.

“Many times, we have issues because the driver’s license is a month away from expiration or the pay stubs are from two months ago,” Schandelson says.

4. Don’t make big purchases at the last minute

To avoid slowing down your loan approval, Smith says you shouldn’t make large purchases of any type during the underwriting process. A hard credit inquiry or increased credit card balance may hurt your credit score, which could result in a higher mortgage rate and more-expensive monthly payments.

5. Be mindful of large cash deposits

Lenders will check your bank statements for any large deposits in the past two months. “Large” is defined as a single deposit of more than 50% of your qualifying monthly income for the mortgage, according to Fannie Mae.

Smith says large deposits must have documentation to prove that the money came from an acceptable source. For example, Freddie Mac guidelines state that funds from a family member must include a signed gift letter with the donor’s contact information and relationship to the borrower, the gifted amount, and a note confirming that the money doesn’t have to be repaid.

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The Bottom Line on Mortgage Underwriting

Mortgage underwriting is an important part of the homebuying process. You can help things run more smoothly by knowing what to expect and preparing for documentation requests. Keep in mind that your mortgage underwriting paperwork must be complete, up to date, and ready ASAP. If not, you could risk delaying your closing — or worse, getting your mortgage application denied.

Once the underwriter signs off, however, the lender will have the green light to offer you a home loan.

Rory Arnold contributed to the reporting of this article.