The Mortgage Underwriting Approval Process

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The mortgage underwriting approval process usually feels like an exceptionally long dentist trip on the fun scale. You have dutifully gathered the mountain of documentation required to obtain a mortgage. Or so you think.

Either you will hand them directly to your loan officer or you’ll give them to an assistant or processor. Regardless of the setup, this is the first time your docs are reviewed for thoroughness, completeness, and accuracy.

Nervous? Most of you will have messed something up, forgotten something, missed a signature or two. Your missing documents or signatures will be requested along with clarification on anything that is not imminently clear about your docs.

Getting Started

If you are putting less than 20% down you’ll probably get quizzed on any large deposits in your checking or saving accounts or how your 401k is vested. This is standard, so roll with it. Most importantly, though, hustle with your answers and additional documentation. It is absolutely needed for the next step; underwriting.

What happens next in the much-ballyhooed “underwriting process”? Well, that varies wildly depending on your loan officer and lender choice. In all seriousness, the mortgage lender and loan officer you choose, the type of loan you need and  your general level of detail gathering documents will in large part determine your personal level of “underwriting discomfort." Choose wisely.

If you went with a big bank your file will be passed on to a corporate mortgage processor in a centralized location (that is typically nowhere near you). These processors are typically overworked and underpaid. If you go with a big bank you can expect a more lengthy approval process. It is what they do.

They try to maximize a number of loan files that everyone has to process/underwrite. It is a quantity over quality approach and it will show throughout your mortgage approval process.

Smaller mortgage lenders and independent mortgage brokers typically take a different approach. They usually fully staff a cohesive in-house team. Along with having everyone under one roof, the team approach results in more efficient operations. 

Don’t get me wrong; there are many reasons to use a big bank as your lender. Some of them are valid. Often they can afford to take more chances than the little guy, and that is great for those in the approvability gray zone. They also typically offer a wider variety of niche mortgage products for things like renovation and construction financing.


All mortgage lenders have, at least internally, a “turn time." That is simply the time from submission to underwriter review and their decision. The turn time can be affected by a number of factors big and small. Internal policy on how many loans operations staff carries at once is the biggest factor, but things as simple as weather conditions - think Rochester, NY during a snowy winter - can throw off lender turn times quick.

You want to ask your loan officer what your turn time will be and consider that factor in your ultimate LO choice. One note, purchase turn times should always be less than that of a refinance. Home buyers have hard deadlines they need to meet, they get underwriting dibs.

Under normal circumstances, your purchase application should be underwritten within 72 hours of underwriting submission and within one week of you providing your FULLY COMPLETED documentation to your loan officer. So, your turn time window is nearly done and an underwriter has reviewed your file. What now?

The underwriter will typically issue one of three dispositions - approved, denied or suspended - to your application. If approved underwriting will typically assign a set of conditions you will need to clear to obtain full approval.

Clarification on a late payment, a large deposit, past life transgression or simply a missed signature here or there are normal requests.

If suspended, which is not completely unusual, underwriting is confused and needs clarification. Typically employment/income related, but occasionally an asset verification question can also lead to a suspension. In this case, you’ll get two sets of conditions; one to clear the suspense and the standard conditions needed for full approval.

Finally, if denied you will want to find out exactly why. Not all loans that start as denials end up that way. Many times a denial just requires you to rethink your loan product, down payment or clear up a mistake in the application or on your credit report.

Approved With Conditions

The status of the vast majority of loan applications after their initial submission will be approved with conditions (aka conditional approval). The underwriter wants clarification and additional docs mostly to protect themselves and their employer so that the closed loan is as sound and risk-free as possible. Quite frequently, the additional items needed are not to convince the underwriter, but to make sure the mortgage meets ALL the standards required by potential secondary investors who will buy the closed loan.  

Your primary job during the time your loan is in underwriting is to move quickly on document requests, questions and anything else needed. No matter how ridiculous you think the doc request may be, set that hoop aflame and jump yourself through it as quickly as possible. Do not take the inquisition personally, that is what underwriting does. Handle the last few items and submit them back to underwriting so that you can hear the three best words in real estate - clear to close!

You are DONE. Only a few routine hoops to jump through. Cutting your down payment check, signing on the dotted line and getting ready to move. Want to find out exactly what to expect at your closing? No problem, we got you and several tips on how to avoid a dreaded closing landmine that delays your purchase or worse.