How Long Does Underwriting Take?

When you apply for a mortgage, the lender compiles information about your finances, credit history, and the property to assess the risk of issuing a loan. This process is known as mortgage underwriting. During mortgage underwriting, a certified underwriter evaluates whether you meet the requirements for the loan product, assesses the risk you’ll default on your payments, and checks that the property is sufficient to secure the mortgage.

These verifications take time — typically 30 to 60 days. But in addition to the time spent reviewing your financial qualifications, the process also depends on the factors including the complexity of your application, the loan program, and the mortgage lender you choose.

What is mortgage underwriting?

Mortgage underwriting is the process of evaluating an applicant’s financial history and ability to repay a mortgage loan. It involves checking your financial information, such as income, assets, and credit history, to ensure it meets the qualification requirements of the lender and the loan program.

The assessment also determines whether the applicant can afford to pay housing expenses in addition to their existing debts and verifies that the property’s fair market value justifies the size of the mortgage loan. Mortgage underwriting ultimately results in an approval or denial of the loan application.

“When a loan is in the underwriting process, the lender is assessing and determining the loan risk,” says John Donikian, home financing loan officer and vice president of Michigan-based Best Interest Financial.

While the underwriting process itself doesn’t involve a calculation of the mortgage interest rate, the evaluation of your financial qualifications can affect your lender’s final rate offer. Based on this and the evaluation of the property, the lender could:

• Decrease the size of the loan
• Require additional insurance (if the property is located in a flood-prone area, for example)
• Recommend that the seller make repairs prior to closing

How long does mortgage underwriting take?

The timeline can vary significantly depending on factors including the mortgage lender and the complexity of your application. While some borrowers may breeze through underwriting in a few weeks, the process typically takes between 30 and 60 days from the initial application submission. 

“Generally, an underwriter can work quickly on a case that has a clean file and good credit and has stable and sufficient income and is documented,” says Donikian. But complicated cases may take longer. “For example, self-employment income is complex, as are numerous income sources, credit incidents, large or unexpected bank deposits, and employment gaps.”

However, keep a few things in mind:

• Underwriting takes place after the initial stages of the homebuying process, including application, receiving a Loan Estimate, and the home appraisal. The appraisal alone typically takes 7 to 10 days. 
• Some lenders advertise a fast closing process, but remember that the seller may not be able to move out as quickly as you need them to. You’ll need to communicate your timeline to all parties.

What happens during the mortgage underwriting process?

Underwriters evaluate the lender's risk in issuing a loan to the applicant based on factors known in the industry as “the three C's.”

• Capacity: The applicant’s ability to repay the loan given their income and resources
• Credit: The likelihood of responsible repayment based on the applicant’s debt payment history
• Collateral: The value of the property relative to the loan amount and the requirements of the loan

To make this assessment, the underwriting process typically involves several steps that include:

1. Verifying your financial information

The underwriter reviews documentation that you've provided to the lender, including your employment history, job status, income, assets, existing debts, and a copy of your credit report. 

“The best way to prepare is to get your documents together before you need them. Collect W-2s, pay stubs, two years of tax returns and all pages of bank statements,” says Ashley Harris, director of homebuyer education at Neighbors Bank of Columbia, Mo. “If you have large deposits in your account that look unusual, have a simple explanation ready to share with your loan team.”

Specific requirements may vary depending on your lender and the type of mortgage you’re applying for. For example, if you’re applying for a USDA loan, the underwriter requires  documentation that shows you meet household income guidelines. 

2. Determining if you meet the lender's requirements

The underwriter compares your financial information against the lender’s standards and the requirements for the loan program. 

“Most mortgage loans are initiated using automated systems due to speed and ability to help lenders determine if the file meets the minimum requirements,” says Donikian. 

For example, an underwriter at a commercial bank might review an applicant’s information with the help of Freddie Mac’s Loan Product Advisor to issue a decision on a conventional loan application. The system may also calculate your debt-to-income ratio based on your income and debts to determine your capacity for repayment. 

Sometimes, the automated underwriting system won’t reach a decision. “Manual underwriting is what happens when your situation doesn't fit neatly into the formula,” says Harris. If your application is referred for manual underwriting, “A real underwriter reviews your full picture and looks for compensating factors that strengthen your ability to repay. They are looking for things like consistent employment, solid savings, and good credit history,” Harris explains. 

Depending on the system, the underwriter may also need to perform some underwriting tasks manually, such as reviewing the appraisal.

3. Factoring in the appraisal

The appraisal report is used to evaluate whether the value of the property justifies the loan amount and falls within the loan-to-value requirements for the loan type. If you’re applying for certain government-backed loan programs, like an FHA loan or VA loan, the property will also need to meet certain minimum property standards to qualify. 

4. Confirming a 'clean' title

During underwriting, the lender typically works with a title company to ensure ownership can be transferred to you upon closing. A title search of the property looks for conditions that could complicate or even jeopardize the loan, such as liens, unpaid taxes, or pending litigation. 

5. Delivering a decision

You will receive one of the following decisions:

• Conditional approval
• Full approval
• Denial

If you receive conditional approval, you may need to provide additional details or documents before the loan can be fully approved.

If you’re denied, it might be due to one of these common reasons:

• Discrepancies or inaccuracies in your financial documents 
• Inability to verify financial information
• New debt or loss of job or income
• Home appraisal or inspection problems

What can delay mortgage underwriting?

Problems that can delay or derail the underwriting process include:

• Incomplete information or missing documents: If you forget to submit a required document like a bank statement or fill out a section of your mortgage application, the underwriter will need to spend more time gathering the necessary information to process your application. 
• Application errors: One wrong digit on an account number or phone number can also lead to processing delays — ensure you fill out the application accurately. 
• Delayed response times: The underwriter may contact you, your employer, or other relevant parties to ask for clarification. For example, they may want you to explain a large deposit or withdrawal. To avoid unnecessary delays, respond promptly and give all contacts listed on your application a heads up that you’re applying for a mortgage. 
• Credit freezes: A credit or security freeze helps prevent identity theft, but it can also delay underwriting by preventing access to your credit report. Make sure to lift any credit freezes with the appropriate credit bureaus before submitting your mortgage application. 
• Appraisal delays: Underwriting can’t be completed unless the underwriter reviews an appraisal of the property. Make sure you or your real estate agent are available to schedule the appraisal when the lender orders it. 
• Title issues: Liens, restrictive covenants, and other issues clouding the title to the property can delay underwriting.
• Complex applications: If your situation is unique, it may take longer for the underwriter to verify your information. For example, if you’re self-employed or have a past bankruptcy, you might need to provide additional documentation, or your application may require manual underwriting.
• Financial red flags: Be ready to explain any activity that might seem unusual to the underwriter. For example, Harris says, “Make sure your bank statements don't have unexplained large deposits. 
• Loan programs with stringent requirements: The more requirements and documentation the loan program requires, the longer underwriting can take. For example, an FHA 203(k) loan may take longer to underwrite because of cost estimates and bids for rehabilitation plans. 

How can you speed up the underwriting process?

• Get organized: Have your financial documents ready to go the day you apply. 
• Communicate: Respond to the underwriter’s questions and requests promptly. 
• Work with an experienced team: “An experienced loan officer is extremely important to speed up the underwriting process,” says Donikian. “An anticipatory loan officer will explain the importance of the initial submission to the borrower.”
• Choose the right loan type: “Conventional loans tend to move quickest when a borrower has strong credit and clean finances. Those nuances usually mean the file sails through automated underwriting without much back-and-forth,” says Harris. If you have a blemished credit report, consider a loan with less stringent requirements.