Mortgage underwriting is the formal review of your income, assets, credit, and property details to verify they meet the guidelines for your loan. 

Most loans go through two rounds of underwriting: 
Initial approval (“conditional approval”) — The underwriter issues approval with a checklist of items to satisfy before we can close.
Final approval (“clear to close”) — The underwriter signs off on all conditions, and your loan is officially ready for closing. 

We’ll usher your loan through both rounds of underwriting, keep you updated, and let you know when we need your help. Just follow our lead!  

Underwriting guidelines are the rules lenders use to determine if you qualify for a mortgage. They cover things like credit and credit scores, income and debt-to-income ratios, acceptable assets for your down payment, property standards, and documentation requirements. 

Every loan program has its own guidelines — some are hundreds of pages long. They’re a whole Thing. 

Probably! Most loan guidelines are published online and available to read – if you dare. 

Fair warning: they’re dense, packed with jargon — occasionally verging on gibberish. Oh, and they’re long. 

Despite over 100 years of combined lending experience, our team debates guideline interpretations with each other (and with underwriters) almost daily. For mortgage nerds like us, it’s practically a sport.

Still curious? Here are links to the guidelines for the majority of loan programs:
Fannie Mae
Freddie Mac
FHA
VA
USDA

If your loan falls outside of these programs, there’s a good chance the guidelines borrow heavily from Fannie Mae. 

Want help decoding something you see in the guidelines? Just ask — we love this stuff! 

Maybe! We use two paths for processing and underwriting loans:

Traditional path — You talk to the underwriter. Instead, your liaison to underwriting will be our processing team. Your Mortgage Consultant (MC) will work with you through initial underwriting approval. Your Loan Coordinator (LC) will take over from initial approval to final underwriting and closing. 

Same Day Mortgage — You’ll work directly with an Associate Underwriter to gather the necessary information and paperwork which the underwriter will also review to approve your loan.   

We’ll select the path that’s the best fit and most efficient for your loan type. 

Automated underwriting is a digital analysis of your mortgage application and the property you’re buying. Automated underwriting systems (AUS) are programmed to assess whether your loan meets basic parameters and assign a risk grade.

Lenders have been using AUS models since 1994, but they still don’t fully approve or deny loans on their own — they are a guide to the work done by human underwriters.

If the robot smiles and gives a favorable risk grade, you qualify with a higher debt-to-income ratio or less paperwork. 

But if the robot frowns and flags concerns, that doesn’t mean your loan is denied — it just means we’ll need to go through manual underwriting, which is more conservative and requires more documentation. 

The AUS models in heavy lending rotation are: 
Desktop Underwriter (DU) – Fannie Mae’s system (the OG of AUS)
Loan Product Advisor (LP or LPA) – Freddie Mac’s version
Technology Open to Approved Lenders (TOTAL) – The AUS developed by HUD for FHA loans.
Guaranteed Underwriting System (GUS) – USDA’s AUS (the toughest!)

VA loans and many jumbo programs allow lenders to run DU or LP to aid in underwriting.

Bonus perk: appraisal waivers!

DU and LP don’t just analyze your loan – they also evaluate the property. If Fannie and Freddie have enough data on file and see a low enough risk, LP or DU may grant an appraisal waiver. If you qualify, we don’t need an appraisal, which saves time and money and eliminates worries about a low appraised value. 

A mortgage underwriter reviews all the documents and information you’ve provided, cross-checks details, and makes sure everything meets the guidelines for the loan you’ve requested. 

They’re responsible for: 
• Calculating your qualifying income
• Calculating your debt-to-income ratio
• Assessing your ability to repay the loan
• Verifying your funds for closing
• Reviewing your credit
• Confirming the property is acceptable  
• Verifying all required documentation 

Most loans go through underwriting twice: 
1. Initial approval (“conditional approval”) — The underwriter issues approval with a checklist of items to satisfy before we can close.
2. Final approval (“clear to close”) — The underwriter signs off on all conditions, and your loan is officially ready for closing. 

We’ll guide you through each step, keep you posted on our progress, and let you know when we need your assistance. 

It depends on the loan type, market conditions, and the complexity of your file: 
• Typical underwriting turn times are 24 to 48 hours, much of which is spent in a queue waiting for our turn on the underwriter’s desk. 
• Busy market conditions or certain manually underwritten loans can extend the timeline to a week or more. 
• Active review time by the underwriter is usually one to three hours, but a complex file can take two or more days. 

We monitor turnaround times closely and will update you and your real estate agent on our progress toward closing. 

You can help us keep things on track by quickly reviewing and signing documents and providing information and paperwork as soon as possible. 

That’s the goal – and what happens most of the time. 

When we submit to underwriting, there are three possible outcomes: 

Approval (most common)
Typically, the underwriter issues a “conditional” approval. Your loan is approved subject to a list of to-dos we must complete before closing. 

Suspense
This usually means the underwriter needs additional information or documentation before issuing approval. But, sometimes, we may need to restructure your loan or switch loan programs.

Denial
Denial is rare — and rarely unexpected. Loan guidelines are detailed and clear about many things, but others are up to underwriter interpretation or require a subjective judgment call. 

A big part of our job is understanding the black, white, and grey areas of loan rules. If any part of your application falls into a grey area and we need an underwriter’s opinion, we’ll recommend submitting your loan for approval before you shop for a home. We want you to shop with confidence, not worries! 

Underwriting conditions fall into a few categories. 

Stuff that’s not yet available
When we first submit to underwriting, some things will still be in the works:
• Selling stocks or other assets for closing 
• Transferring a gift from family
• Completion of the appraisal or title report
• Clearing pre-employment contingencies for a new job 
• Selecting homeowners insurance

Stuff that needs to be updated
Months may have passed since your pre-approval, so some documents may need a refresh. We aim to update everything, but any loose ends will become conditions: 
• More recent pay stubs
• Current bank statements
• Updated credit report

Stuff that has changed
We strongly encourage you to keep everything in your financial life as stable as possible — status quo is your friend! But if something has changed, the underwriter will condition for supporting documentation for: 
• Changes to your income, job, or employer
• New debt or inquiries into your credit
• Funds transferred between accounts
• Large deposits
This feels like a good time to suggest you re-read “Help Us Help You” for tips on minimizing paperwork and hassles. 

Stuff we can’t do yet
Some things simply have to wait until we’re closer to closing: 
• Completion of any repairs
• Closing on the sale of your old home
• Receipt of funds from a 401(k) loan
• Final verification of employment (we do this within 10 days of closing)

Stuff that you can’t believe we actually need
Loan guidelines are full of quirky requirements. Please be patient if we ask for something that seems silly — I promise we’re not making this stuff up just to annoy you.  
• A letter explaining a gap between jobs
• An explanation for FMLA leave
• Proof you paid off a loan or credit card
• A letter explaining why you Venmo your roommate every month
• Evidence a property is owned free & clear
We’re here to answer questions and make clearing underwriting conditions as simple as possible. 

Absolutely! Most loan programs allow us to submit for a fully-underwritten pre-approval — we call ours PowerBid. 

Sending your loan to underwriting before you find a home takes a little extra effort and time up-front, but may: 
• Streamline the process once your offer is accepted 
• Make your offer more attractive to a seller

What is the #1 reason we recommend PowerBid approval? If any part of your application isn’t entirely black and white. 

Some loan guidelines require an underwriter’s interpretation. Submitting to underwriting clears the way to shop with confidence and solid pre-approval. 

It’s rare, but it can happen. 

The most common reasons for underwriting denial are: 
• Changes to employment or income — Getting laid off, switching from W-2 to freelance, or declining income.
• New debts — Opening a new loan or account that increases your debt-to-income ratio. 
• Student loans — A change to the minimum payment on your student loan. 
• Property issues — A low appraisal or required repairs the seller refuses to make.

These situations are rare, and we’re adept at finding solutions when they arise.

So don’t worry! Just follow these simple steps:
• Keep things as stable as possible — Make no big (or even medium-sized) financial moves before closing. 
• Read “Help Us Help You” — It’s full of tips to avoid surprises. 
• Keep us in the loop — Let’s talk first if anything about your job, income, or any other part of your world with dollar signs attached to it might change. 

We’ll work with you to keep things on track, come what may. 

After the first round of underwriting, we’ll be in touch and enlist your help clearing “conditions” as we prepare for the second round. 

If everything goes as planned after the second round of underwriting, we’ll have the final green light from underwriting—you’ll be clear to close.

At that point, we’ll get to work preparing for closing. You’ll be days away from getting the keys to your new home.