The Mortgage Loan Process, Explained: Here’s How It Works

The mortgage loan process is a lengthy and essential part of the homebuying journey, and it’s important to be prepared for each step to avoid delays and headaches—or losing the home you want altogether. The entire process often takes around 30–45 days, with some more complicated cases spanning over 2 months.

We’ll look at the average mortgage loan process, from gathering your documents to what happens after you move in. While we give an estimated number of days for each step, many of these happen simultaneously—so the process may not be as long as it seems.

Preparing for the home loan application process

After you understand how much home you can afford, you can prepare to apply for a mortgage. You can—and usually should—complete this stage before finding a home you might want to make an offer on. 

Gather your documents (1–2 days)

You’ll need to hand over a ton of documents when you formally apply for the mortgage. It’s best to get started now, in case there are unforeseen delays in getting paperwork that will take more time to sort out.

Lenders will require documents to verify your identity, employment, credit history, debts, assets, and other relevant information. Here are some of the documents you may have to provide:

• Identity: Photo ID, past addresses, social security card
• Employment and income: W-2 statements, pay stubs, filed tax returns, employment verification letter
• Assets and debts: Bank statements, investment and retirement account statements
• Other items: Gift letter, official marriage or divorce documentation, proof of other real estate holdings (if applicable)

Depending on the lender or the mortgage program (e.g., FHA, USDA), you may need additional or alternative documents. Mortgage lenders will also review your credit history, so you’ll need to give them approval to run a credit check.

Get preapproved for a mortgage (1–2 days)

A preapproval letter is a document you can show to property sellers to prove you’re serious about purchasing. It shows that a bank has completed an initial assessment of your eligibility, so it’s best done at the very beginning of your homebuying journey.

Since it typically lasts 60–90 days, you may have to reapply, depending on how long your search takes. Also, the preapproval process could be delayed if you have a more complex income stream or discrepancies in your information.  

The mortgage application process

You’ve found your dream home, made an offer, and the seller has accepted. After you sign a purchase agreement, it’s now time to submit a formal mortgage application.

Submit your loan application (1–2 days)

You’ll submit the formal application at this point. Buyers will often choose to work with the lender who extended the preapproval offer, as it saves time. However, they may require updated documents from the preapproval process, along with additional details about the specific property and its selling price.

Don’t rush this part. Inaccuracies or missing information can cause significant delays or outright loan denial, so it’s best to double-check everything before submitting. Contact your loan officer or a mortgage consultant if you have any questions.

Get a mortgage loan estimate (1–3 days)

After submitting your mortgage application, you’ll receive a loan estimate (LE) and other disclosures. This 3-page document provides you with all the important terms, payments, and other details related to the specific loan you applied for. You’ll find information like:

• Your name, the property’s address, and the sale price
• Loan term, interest rate, and rate lock
• Estimated mortgage insurance, escrow, taxes, principal, and interest paid monthly
• Closing costs

Review everything carefully, as it becomes much more tedious to correct mistakes later in the process. A loan estimate doesn’t mean the lender has approved a mortgage for you; rather, it simply explains in plain language what you can expect from a financial perspective if and when they do. 

The loan processing, underwriting, and approval process

While you’re reviewing your loan estimate, lenders are hard at work going through your information to hopefully get you a mortgage approval.

Your documents get verified (1–2 weeks)

Verifying your information is the primary job of the loan processor, and it can take several weeks depending on the complexity and accuracy of the provided documents. For certain matters, such as employment, loan processors may require more information than you provide and request official proof directly from the source. The information they compile helps to streamline the work for the underwriter.

Loan processors carefully review statements to understand the nature of various debts and income sources. For line items that may require more information, processors may request an explanation—a common delay in this part of the process. Delays also tend to happen when they need to reach out to additional parties (e.g., your employer) and during long weekends and holiday periods.

Home appraisal and title search (1–3 weeks)

The loan processor will conduct a title search, which involves investigating public and official records to verify the current owner's right to sell the property to you. A title search will also uncover any liens, debts, or legal claims against the property, though the seller should have disclosed these to you already. 

Additionally, the lender will order a home appraisal to confirm the official value of the property. This appraisal may look at the property’s condition, any improvements or large repairs, and any significant defects or damage. Delays are more common when there’s a higher demand for home evaluators, such as in rural areas or densely populated cities. 

An underwriter assesses risks (5–21 days)

The underwriting process is probably the most critical stage of the entire mortgage loan process. The underwriter will make the final decision on whether to approve your mortgage.

An underwriter will take the work the loan processor began and go further. They analyze information from the provided documents to assess how risky it would be to lend to you and how confident they can be in your ability to repay the loan. 

For example, they’ll look at:

• The home appraisal to ensure it aligns with the sale price
• Your debt-to-income ratio
• Your credit history
• Your income and assets

An underwriter may also conduct additional checks to address any remaining concerns they may have regarding your documents or overall eligibility. 

Conditional vs. full approval (3–5 days)

After their investigation, an underwriter will provide an approval, denial, or “conditional approval.” A full approval means you’re cleared and can schedule your closing—congratulations! A denial will require you to review the reasons given and either wait or make changes (e.g., work down some credit card debt) before starting the process again.

A conditional approval, on the other hand, isn’t a full approval, but it usually leads to one. Basically, the underwriter is signaling that they would be happy to approve the loan as long as you satisfy one or two additional items. Most of the time, they may require an additional piece of information, such as another pay stub or an explanation for a particular debit or credit. 

Preparing for closing

Once you receive a full approval, you’re in the home stretch as far as your mortgage loan application process is concerned. 

Closing disclosure (3 days)

Along with the lender officially giving you the “cleared to close” green light, they’ll also send you a closing disclosure. A closing disclosure is similar to the loan estimate—it provides final mortgage terms, related costs, monthly payments, and other information. 

Compare the information on the closing disclosure with the previously reviewed loan estimate to ensure you’re aligned. Lenders are required to provide a closing disclosure at least 3 days before closing to give a borrower enough time to review it. 

Final documents are prepared (3 days)

While you’re reviewing the closing disclosure, the lender will be preparing the closing documents. They’ll also connect with your real estate agent or attorney, when applicable, to schedule the closing appointment.

The closing process

The closing process is the final stage of the journey before you get the keys to your new place and can officially call yourself a homeowner.

Mortgage documents are signed (1 day)

The closing appointment is often attended by many parties. A borrower may be joined by title company representatives, real estate attorneys, a loan officer or other lender agent, real estate agents representing both you and the seller, and the seller. 

Documents to sign on this day may include mortgage paperwork, ownership transfer material, and forms related to the property’s deed. Along with completing the signatures, you’ll need to provide funds for closing costs and the down payment. Once you pass this step, you should be handed the keys to your new place.

A few final things are still pending even after you receive the right to move in. For instance, the lender will still process the loan, transferring the money to the seller. But as the buyer, you won’t have to worry about this aspect. 

Lastly, check with the title company or your real estate agent to see if they’ve recorded the deed at the clerk’s office. If not, you may have to do it yourself to make your ownership truly official.