What Is Mortgage Underwriting?

Written by Elizabeth BoydSeptember 22nd, 20224 minute read

How mortgages get underwritten | What does an underwriter do? | Tips for underwriting | Summary | FAQs

Mortgage underwriting is analyzing the merits of a loan application to determine creditworthiness, capacity to repay the loan, and the value of the collateral. A mortgage underwriter’s role is to examine and evaluate all the pertinent information and then approve, deny, or suspend the applicant’s request for funds.

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What happens when a mortgage goes to underwriting?

Many borrowers start the loan process with preapproval, which tells you how much house you can afford. It’s typically somewhat quicker than the final loan approval procedure that your lender completes after you’ve made an offer on a home.

The lender needs personal identifying information and proof of income, employment, bank accounts, and other assets.

» LEARN: What you’ll need to apply for a mortgage

Once you’ve made a successful offer on the home you want, your underwriter orders:

  • An appraisal of the house to determine whether the value is in line with the purchase price
  • A title search to confirm a clear title is available for the property

Once the review is underway, the underwriter may discover they need more information or documentation, which causes underwriting delays. Your loan officer may contact you to address the discrepancies or missing documentation.

For example, your lender might ask for a letter of explanation if the underwriter runs into an issue and needs clarification. The process cannot move forward until you respond. If too much time passes, you can be denied or have your loan go to suspended status.

The approval may be absolute or conditional. On the other hand, when the loan is suspended, it usually means you haven’t provided all the necessary documentation.

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🗓 How long does underwriting take?

Borrowers with traditional employment, good credit, and no substantial risk factors may have a decision in a few days, pending the home appraisal. Underwriting more complicated applications can take several weeks.

🤔 Can a mortgage be denied during underwriting?

Yes, but that doesn't mean your home buying journey is over. Instead, ask your loan officer for the specific reasons for the denial and use that information to review alternative loan programs.

What does an underwriter do?

An underwriter assesses risk for a lender to determine whether the borrower can manage loan payments reliably. They perform that function by reviewing the following information about the applicant and the property:

Credit score and history
Underwriters pull a credit report with information from all three major credit bureaus to review payment history. The underwriter evaluates your score and history together to help assess how well you handle credit and debt.
Income history
Underwriters want to see stable, reliable income. Bank statements, income tax filings, and more provide insight into your income over the past two years.
Debt-to-income (DTI) ratio
Your DTI must be below a set maximum for your loan (typically 36–43%).

The underwriter calculates your DTI with the data from your income documentation, credit report, and any other debt disclosures.
Bank statements reveal whether you have enough money set aside to pay your closing costs and make a sufficient down payment.
Property profile
The home's appraised value needs to be high enough to cover the loan, the title search needs to come up with a clear title, and the property type must conform with the loan.
Risk factors
The underwriter must evaluate any risk factors that arise during the underwriting process. Examples may include erratic employment history, little to no credit history, high DTI, or a large bank deposit from an unknown source.

🔍 How do underwriters find judgments?

Underwriters may perform public records searches to uncover any suspected undisclosed debts. For example, the title search should reveal any liens against the home. In addition, third-party service providers can perform national searches that scan court records for judgment and lien filings.

🖊 Who is considered an underwriter?

Loan officers are your point of contact with the bank or mortgage lender. They help you choose the right loan program, gather information, and process your loan. Meanwhile, underwriters perform their borrower risk assessment functions for the lender internally.

You won’t interact with the underwriter. Instead, you’ll direct questions about your loan approval or denial to your loan officer, who operates as a go-between.

Automated underwriting is the go-to method for most lenders, with manual underwriting used sparingly and strategically.

Automated underwriting systems (AUS) are software programs that use artificial intelligence to analyze loan application data and assess credit risk. AUS can also identify applications that need more in-depth evaluations and refer them to manual underwriting for further review.

Automation is highly accurate, removes human bias, and completes the underwriting process faster than the manual alternative.

Manual underwriting means that a person or group evaluates your application. Most lenders today use manual underwriting only for complex loan applications or to supplement automated underwriting, For example:

  • Self-employed borrowers
  • New home buyers with little to no credit history
  • If the AUS initially denies your loan

Mortgage underwriter vs. loan underwriter

A mortgage is a type of loan, so a mortgage underwriter is merely a category under loan underwriters.

Tips for underwriting

While your application is being underwritten, there are a few things you should and shouldn't do to make sure there are no delays.

❌ DON'T...
File any new credit applications, or run up your credit cards.
Make large purchases. You should hold onto cash savings for your closing costs and down payment.
Change jobs. Establishing a stable employment history is a vital part of the underwriting assessment.
Hide information because you think it will affect your approval chances. Lying or avoiding the issue only delays the inevitable.

✅ DO...
Respond to lender requests quickly. Your underwriter may deny or suspend your application if you don’t submit the necessary documentation on time.
Tell the truth. Be honest if your lender asks for clarification about something on your application. But being truthful can give you a chance to address the issue.
Continue paying all your bills on time. Preparing for a move can be expensive, but you can’t risk making late payments and appearing financially irresponsible.
Contact your lender right away if anything changes with your job, finances, credit, or the house you’re purchasing. Getting ahead of a potential problem is much better than hoping it won’t come up. (It will.)


  • Mortgage underwriters assess loan application information and documentation to determine whether a borrower can repay the loan.
  • Many lenders use an automated underwriting system (AUS) to process straightforward loan applications.
  • To minimize the chances of delays or denial, do your homework BEFORE applying for a loan, and take the necessary steps to resolve any issues with your application.

FAQs about underwriting in real estate

Automated underwriters can quickly process and analyze data, sometimes within three days. Manual underwriters may take longer. Delays normally come from high demand or application mistakes.

A lender and an underwriter are NOT the same. The lender provides the funds you’re borrowing, while the underwriter assesses that financial risk by researching and evaluating the borrower’s application. The underwriter makes the final decision when approving or denying the loan.

There’s no reason to worry about underwriting if you’ve done your mortgage qualification research and followed the steps to best meet your specific loan criteria. Just be thorough, honest, and diligent when completing your application and submitting documents.