A Complete Guide to the Mortgage Underwriting Process

February 2, 2021 | 5 min read | The mortgage process
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The underwriting process is a critical component of the mortgage financing journey. Reaching the underwriting phase means you are one step closer to your mortgage closing. Here is everything you need to know about the mortgage underwriting process and how to prepare! 

What is Mortgage Underwriting?

Mortgage underwriting is the process in which the underwriter does a deep-dive analysis of your credit history and financial background to determine if you are eligible for the loan program based on the lender’s guidelines.

When Does the Underwriting Process Occur?

Once you submit a complete loan application and provide all the necessary mortgage documentation, your loan will be submitted to underwriting. 

What Does a Mortgage Underwriter Do?

The mortgage underwriter is responsible for reviewing all your financial documents to ensure everything looks accurate and paints a clear picture of your financial profile. The underwriter will also assess the potential risk associated with your ability to repay the loan before issuing an approval.  The underwriter may review the following information to help draw a conclusion:

What Do Underwriters Look for When Reviewing that Information?

Your Credit Score and Credit History

Your credit report shows how you have handled debt in the past, such as credit card bills, student loans, or other mortgages. The underwriter will see if you have made those debt payments on time and how well you manage your credit allowance. 

Your Income and Employment History

Typically, the mortgage underwriter will look for about two years of steady income, especially if you are self-employed. They will review your pay stubs, employment verification letters, tax returns, and any other requested income or employment documents. Understanding how much money you earn each month helps a lender evaluate how much more monthly debt you may be able to handle. 

Income and employment verification is especially crucial in today’s environment. If you recently changed jobs, you may need to provide employment & income verification from your previous and current employer. The borrower should expect the underwriter to verify their employment multiple times throughout the mortgage process.

Your Assets

Assets refer to liquid cash in a checking or savings account. The underwriter needs to make sure you have enough liquid assets to cover the closing costs and your first mortgage payment. Additionally, reviewing your assets helps the underwriter understand how much money you may have to pay back the loan if you face unexpected hardship such as losing your job. 

Did you know – GuardHill offers asset-based mortgage programs that allow you to qualify for a loan based solely on your assets? 

Your Liabilities

Liabilities refer to debt or other financial responsibilities, such as alimony or child support. Understanding your current liabilities helps determine your debt-to-income ratio, which is an essential factor in deciding if you qualify for a specific loan program. 

The Appraisal

An appraisal is a professional assessment of a home’s value. The underwriter must review the appraisal report to ensure that the offered loan amount is still in line with the home’s actual value, which is referred to as your loan-to-value ratio.  The allowed loan-to-value ratio may vary depending on the program and lender guidelines. 

The Down Payment (For Purchases) 

After reviewing the appraisal, the underwriter will look at the down payment amount. Comparing the down payment to the home’s appraised value helps the lender evaluate the potential risk. Typically, a more significant down payment translates into less risk for the lender. 

Check out our blog on tips on how to save for a down payment

How Long Does the Underwriting Process Take and What are the Outcomes?

The underwriting process timeline may vary depending on the complexity of the loan and the underwriter’s decision. The process may range from a couple of days to a couple of weeks. After an initial review of your file, the mortgage underwriter will approve your loan, issue a conditional approval, or deny your loan.


If you receive approval from the underwriter, you are clear to close! Clear to close status means that you do not need to provide any other documentation or letters of explanation and schedule a closing date. 

Conditional Approval

If you receive conditional approval, this means that the underwriter needs to verify additional information. Some common conditions include:

  • Explaining a large deposit in your bank account.
  • Receiving another verification of employment.
  • Clarifying some items on the appraisal report.

You must clear all outstanding conditions before the underwriter can issue a final loan approval. Once the conditions are re-submitted for review, the underwriter will take another look at your loan and hopefully approve it. After that, you can schedule a closing date!


If your mortgage is denied, your loan originator will work with the underwriter to understand the denial reasoning. Some common reasons for a loan denial are the debt-to-income ratio is too high, or the credit score is too low for the desired loan terms.

Once you and your loan originator know the reasoning, you can work together to figure out the best next steps to get approved for a different loan program. 

Tips to Ensure a Smooth Mortgage Underwriting Process

Now that you understand the basics of the mortgage underwriting process, here are some helpful tips to follow to help you have a fast and easy mortgage approval process.

Respond Quickly 

If your loan originator or the mortgage underwriter asks you questions or requests clarification on something, it’s important to respond quickly.

Gather your Documentation

Gather all of your financial documents when filling out the loan application so you can submit everything at once. This will hopefully reduce the amount of back-and-forth between you and your loan originator. 

Do Not Make any Large Purchases or Apply for New Credit

The underwriter reviews your financial profile to look for consistency and stability. Thus, try to avoid making any large purchases or applying new credit lines during the mortgage process.

Why Choose GuardHill?

GuardHill has a team of in-house underwriters, which allows for a faster and more seamless underwriting process. Additionally, we work with numerous investors and lenders, which allows our teams to match your financial profile with a loan program that best suits you.