How Mortgage Underwriting Works
Complete guide to the underwriting process. Learn what underwriters verify, how long it takes, and what decisions you might receive.
6-Step Underwriting Process
Loan Processing Begins
Your loan officer submits complete application and all supporting documents to the underwriting department.
Document Review
- • Tax returns (2 years)
- • Recent pay stubs
- • Bank statements
- • Employment verification
- • Existing debt documentation
- • Closing disclosure
Property Appraisal
Independent appraiser evaluates property condition, comparable sales, and market value to ensure it supports the loan amount.
Title Search & Insurance
Title company searches property records to verify ownership and checks for liens, claims, or encumbrances.
Credit & Background Verification
- • Full credit report review
- • Fraud review
- • Bankruptcy/judgment checks
- • Legal background check
- • Employment history verification
Underwriting Decision
Underwriter issues one of three decisions: Approved, Conditional Approval, or Denied.
What Underwriters Verify
Income Verification
- • 2 years tax returns
- • Recent pay stubs
- • W2s
- • Bonus/commission docs
Asset Verification
- • Bank statements
- • Investment accounts
- • Retirement account statements
- • Down payment source
Employment Check
- • Current employment verification
- • 2-year employment history
- • Unemployment/gap explanation
- • Job change documentation
Credit Analysis
- • Credit score & report
- • Payment history
- • Outstanding debts
- • Credit utilization
Debt-to-Income Ratio
- • Monthly income calculation
- • All debt obligations
- • 28% housing ratio
- • 36% total debt ratio
Property Verification
- • Appraisal review
- • Title search
- • Homeowner insurance
- • Property condition
Underwriting Timeline
Loan enters underwriting queue
Document review & appraisal ordered
Appraisal complete & underwriting decision made
Clear to Close issued (if all conditions met)
Common Underwriting Issues & Solutions
Low Appraisal
Renegotiate purchase price, increase down payment, or challenge appraisal.
High Debt-to-Income
Pay down existing debt, increase down payment, or look at lower-priced properties.
Credit Issues
Explain late payments or delinquencies; recent good payment history helps.
Income Verification Problem
Provide additional documentation like business tax returns or employment letters.
Employment Gap
Provide written explanation and documentation of current stable employment.
Down Payment Source Issue
Document source of funds; may need explanation or bank statement of assets.
Frequently Asked Questions
How long does underwriting take?
Typically 5-7 business days. Complex cases may take 2-3 weeks.
What does conditional approval mean?
Approved pending receipt of additional documentation or verification.
Can my loan be denied during underwriting?
Yes, if major issues arise with employment, income, credit, or property value.
What if the appraisal comes in low?
You can renegotiate price, increase down payment, or walk away.
What is 'clear to close'?
All underwriting conditions satisfied and loan is ready for closing.
Can I make changes during underwriting?
Major changes require underwriter approval. Contact your loan officer immediately.
What to Expect as Buyer
- Respond quickly: When underwriter requests documents, provide them within 24-48 hours to avoid delays.
- Don't make changes: Avoid job changes, large purchases, or opening new credit during underwriting.
- Stay in communication: Your loan officer will update you on progress. Ask questions!
- Review your closing disclosure: You'll receive it 3 days before closing. Review carefully.
Have Questions About Underwriting?
Jimmy Joseph MBA can walk you through every step of the underwriting process.
Related Resources
Key Timelines
- Processing: 1-2 days
- Underwriting: 5-7 days
- Appraisal: 5-7 days
- Clear to Close: 10 days
Ready for Your Next Step?
Let's get your mortgage pre-approved and start the buying process.