Mortgage underwriting is an evaluation of both the mortgage applicant’s eligibility and property requirements once all the mortgage documents have been submitted. When all of the information is gathered, the lender can determine whether the applicant is qualified to take on the mortgage they’re applying for.
Mortgage underwriting is a critical part of the homebuying process as it will determine whether you’ve provided sufficient proof that you’re eligible for the loan you applied for. Here’s what to expect when it comes to how long underwriting takes.
What is the underwriting process and how does it work?
Mortgage underwriting is an exercise in risk mitigation for the lender. The lender wants to ensure you’re not going to default on the loan they’re originating for you, so they take a close look at all of the evidence that supports the idea that you’re a solid borrower.
The underwriting process includes an evaluation of your financials, your credit history, your down payment, and the property you’re buying in making a final decision. It happens behind the scenes, but you’ll often get requests from the underwriter while they’re reviewing your application.
The underwriter will come back with one of three decisions regarding your application:
- Approved: Your mortgage is clear to close. You don’t need to provide any additional information.
- Denied: If you’re denied, you’ll typically receive a letter in the mail with the reason why. Understanding why can help you make adjustments to your finances to qualify in the future.
- Pending: Your application may need some additional documentation before a decision can be reached.
What documents do you need for underwriting?
When your lender sends your information to underwriting, it will make sure you have the following documents:
- Identification
- Last 30 days of pay stubs
- W-2s or I-9s for two years
- Other proof of income
- Federal tax returns
- Recent bank statements
- Proof of assets
- Details on long-term debts
- Real estate contracts and property information
It’s also common for the underwriter to ask for letters of explanation of scenarios unique to you. Examples include gift letters, previous bankruptcy or foreclosure documents, rent history, or a divorce decree.
How long does mortgage underwriting take?
Underwriting can take as little as a few days or as long as a few weeks. It takes place after you have an accepted contract on a home, but before closing.
The amount of time it takes can depend on a number of factors, including:
- Lender: Whether the underwriter is in-house or outsourced could affect how long underwriting takes. Sometimes, it’s the difference between a bank and a broker. The lender’s process for underwriting could affect how long it takes.
- Type of loan: Certain loan types, like USDA, FHA, or VA loans, could require more documentation than others.
- Application volume: If the mortgage lender is processing several applications at the same time, it could take significantly longer for your documentation to make it through underwriting.
- Your individual circumstances: If the underwriter needs to review your unique financial or credit situation, it can slow down the process. If you also do something to affect your credit history, such as take out a new car loan, underwriting can be delayed.
The biggest delays in underwriting occur from mistakes, missing paperwork, or any other issues that the lender finds in the process. It’s a normal part of the mortgage process, so if you get a request for more information, submit it as soon as possible.
Underwriting times for different loan types
In our research, we found that the time it takes for underwriting (also called turn time) is virtually the same for each loan type — except for one. A non-qualified mortgage takes two more days than conventional, FHA, USDA, or VA loans.
Note: There can be some variance for FHA and USDA loans, but on average, the times are the same.
A non-qualified mortgage is a mortgage that uses alternative methods to verify income. It’s for people with non-traditional income, such as self-employed individuals, contractors, artists, retirees, etc. Use our mortgage payment calculator to determine how much you can afford.
How long it takes to get a loan goes beyond underwriting. Many factors are outside your control, such as how long it takes to get an appraisal, but if you stick with it, you can complete the home loan process before you know it.
How long does underwriting take FAQ
What happens if you get denied after underwriting?
If your mortgage application is denied after underwriting, be sure to call the lender and check your credit. It’s possible the lender may need some clarification, or there may be mistakes on your credit report that you can fix. It’s also possible that you may need to wait a bit to apply for a mortgage. You may also be able to try another program that offers different mortgage types.
What might make an underwriter deny a loan?
Some common reasons an underwriter might deny a loan include: homebuyer doesn’t meet the requirements of the loan, new lines of credit, falsified or inaccurate information, the credit score is too low, job change, or an unexplained deposit to your bank account.
Can you reapply after being denied?
Yes, you can reapply after being denied. Depending on the reason for the denial, you may want to wait. If you can improve your credit, increase your income, lower your debt-to-income ratio, or save more money, you could put yourself in a better position for approval later.
What happens after underwriting?
After underwriting has cleared your loan to close, you’ll receive a closing disclosure from your lender. You’ll see exactly what your loan amount includes — the interest rate, payment, fees, and terms. Bring a photo ID and a cashier’s check for the funds you need to close the transaction (down payment, closing costs, etc).
Do they check your credit report during underwriting even if you’re pre-approved?
Lenders will check your credit multiple times throughout the lending process, including at the beginning and before closing. If a borrower takes out a new line of credit that shows up on the credit report, it’s possible that it can disqualify the borrower.
