What Is Underwriting?

Underwriting is the process where a lender’s underwriter analyzes your financial profile and the property details to determine whether your mortgage should be approved. The underwriter reviews your credit score, debt-to-income ratio, employment history, assets, and the home’s appraised value. This step is the most critical gate between application and closing.

For example, if you apply for a $325,000 mortgage with a 710 credit score, a 38% DTI ratio, and the home appraises at $340,000, the underwriter verifies these figures against the loan program’s guidelines. The process typically takes 1–3 weeks and may result in an approval, conditional approval (requiring additional documents), suspension, or denial. About 8% of mortgage applications are denied during underwriting.

Key Facts

• Timeline: Typically 1–3 weeks, though complex files may take longer
• Three Cs evaluated: Credit history, capacity (income/DTI), and collateral (property value)
• Conditional approval: Common outcome requiring additional documents like pay stubs or explanations
• Automated systems: Most lenders use Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Product Advisor
• Denial rate: Approximately 8%–10% of mortgage applications are denied at underwriting

Frequently Asked Questions

What can cause an underwriting denial?

Common reasons include a credit score below the program minimum, a DTI ratio above 43%–50%, insufficient assets for reserves, unverifiable income, or an appraisal that comes in below the purchase price. Your loan officer can help you understand which issues are fixable.

What is a conditional approval?

A conditional approval means the underwriter is likely to approve your loan but needs additional documentation first—such as an updated bank statement, a letter of explanation for a large deposit, or proof of insurance. Providing these items quickly keeps your closing on track.

Can I speed up the underwriting process?

Yes. Submit all requested documents promptly and completely. Avoid changing jobs, making large purchases, opening new credit accounts, or moving money between accounts during underwriting. Responding to conditions within 24 hours can shave days off the timeline.