What Is an Automated Underwriting System (AUS)?

Written by Chloe GoodshoreOctober 17th, 20223 minute read

How AUS works | Automated vs. manual underwriting | FAQs

An automated underwriting system (AUS) is a computer program that analyzes your loan application — rather than a human reviewer — and decides within minutes whether or not you should get approved for a mortgage. Thanks to their efficiency, completely and partially automated underwriting systems are becoming more and more common.

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How does an automated underwriting system work?

When you apply for a basic mortgage, lenders will often use an AUS to analyze your application. Some lenders use automated underwriting systems to guide their human underwriters, while others leave things completely up to the algorithm. Most conventional mortgage lenders use Fannie Mae algorithms.

The AUS will review the information you provided (name, current address, income, Social Security number, etc.) and probably pull additional details, such as your credit report. Based on its calculations, it takes the AUS only a minute or two to make a decision about your application.

» LEARN: What happens when a mortgage goes to underwriting?

Depending on your lender, one of a few things can happen after an AUS review:

  • A manual (human) underwriter will review your application, using the AUS analysis to guide their decision-making.
  • A manual underwriter will check your loan application for accuracy before rubber stamping the AUS’s decision.
  • The automated system's decision is final, no human will look at your application, and you’ll get a near-instant answer.

☝️ Don’t count on an instant decision

While an automated underwriting system does speed things up compared with manual underwriting, and AUS can still flag applications for human review — for instance, if it can’t find your credit report.

Is automated underwriting better than manual?

An AUS offers speed, less bias, and high accuracy. Manual underwriting, on the other hand, recognizes nuance and can spot instances of human error. No human or system is perfect, though, so always double-check your application for accuracy, and take the time to check your credit score and report.

⏲ Automated underwriting can offer almost-instant decisions on loans, whereas manual underwriting can take days, weeks, or even months. So if you’re in a hurry to get a loan, applying with a lender that uses an AUS can speed things up for both of you.

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⚖️ Some people argue that automation takes bias out of the underwriting process — but since algorithms are manually designed, they may have built-in biases.

In addition, manual underwriting can see, for instance, that you have a good reason for the gap in your employment history (especially if you include a letter of explanation). An AUS, though, will judge your application without considering extenuating circumstances.

🎯 Automated underwriting is over 95% accurate, whereas manual underwriting tends to be up 90% accurate.[1] However, computers won’t notice lots of errors and typos that a human underwriter might ― like a missing zero in your income or a fraudulent entry on your credit report.

☝️ You can request manual underwriting from your lender if your financial profile is on the more complex side — for example, if you're:

FAQs about automated underwriting

The actual automated underwriting process takes just a couple minutes. But if your lender reviews underwriting decisions personally, you may still have to wait hours or days to get a decision.

The main difference between manual and automated underwriting is that an AUS analyzes applications faster. A human manually analyzes and approves or denies your loan application. With automated underwriting, your application approval is based on an algorithm. While automated underwriting is faster, manual underwriting considers extenuating circumstances.

Mortgage lenders are more likely to use automated underwriting alongside human underwriters. As the AUS technology gets more advanced, you can expect more automation in the loan underwriting process — but you still request a manual review.

Automated underwriting is over 95% accurate. Even so, many mortgage lenders will still manually review the AUS analysis to guide a decision.

Fannie Mae developed an AUS called Desktop Underwriter (DU), which is now standard for mortgage underwriting. Freddie Mac has its own system, called Loan Product Advisor, which many lenders use alongside DU.

The Federal Housing Administration (FHA) uses an underwriting system developed by HUD, called Technology Open To Approved Lenders, or TOTAL Mortgage Scorecard. It even gives borrowers feedback on their loan applications.