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What Happens When a Mortgage Goes to Underwriting?

happy couple homeowners shaking hands with their underwriter after successfully completing the mortgage underwriting process

When a mortgage loan goes into underwriting, your credit and financial background are reviewed to determine whether your application can be approved. This can include an assessment of your credit history, credit score, income, debts, property, down payment amount, and any other factors that the lender believes can impact your ability to repay the loan

The mortgage underwriting process is often hidden in a shroud of secrecy. You’re not likely to ever speak with your mortgage underwriter, yet, they’ll be the person who determines whether or not you’ll be approved for the loan. 

Read on as we’ll demystify the mortgage underwriting process and shed some light on what happens during this process. 

What Is the Purpose of Mortgage Underwriting?

For lenders, mortgage underwriting is a critical step that measures the level of risk involved with issuing a home loan. Underwriting helps ensure your file meets the loan program guidelines and you can afford the mortgage payment. It’s designed to keep the likelihood of default at a minimum.

Contrary to what you may believe, lenders do want homeowners to be able to make payments in a timely manner rather than miss payments. Borrowers who miss enough payments would be subject to foreclosure, something that would be a lengthy and expensive process for everyone involved. 

With mortgage underwriting, various aspects of your file are reviewed to determine if it fits within the established guidelines for the loan program you’re applying for. The exact criteria can vary depending on the type of loan you’re applying for as well as the lender you choose. 

Continue reading as we’ll go through which aspects of your mortgage loan application are reviewed. 

What’s Reviewed in Underwriting?

When your loan application enters underwriting, a mortgage underwriter will review the information in your file. This involves validating the accuracy of your documents, ensuring there are no discrepancies that need to be addressed, and making sure your loan conforms to the guidelines for the program you have applied for. 

Credit history and Credit score

In evaluating your credit history, an underwriter will review your credit report and credit score. Your credit report will be reviewed to determine whether you’ve paid your bills in a timely manner, as well as how much debt you’re carrying. Credit scores will be reviewed to determine if you meet the minimum requirement for the type of loan you’re applying for. 


In addition to things like your credit score, a mortgage underwriter will be looking at your income to determine if it is stable and likely to continue. They’ll also be using it to calculate your debt-to-income (DTI) ratio. 

Your income is typically considered stable if you have a history of receiving it in the same line of work. Underwriters will review your pay stubs, your W-2s, and in some cases your federal tax returns as well. Non-salary income such as bonuses, commission, overtime, and tip income is considered less stable and often requires a two-year history of receipt to be considered likely to continue. 

If you are self-employed, you’ll need to provide any applicable business tax returns and other documents showing the financial history of your company. Self-employed borrowers can include gig workers, freelancers, anyone who has 25% or more ownership interest in a company, and any other individuals who receive a tax form 1099 or must file a business tax return. 


If your loan requires proof of sufficient cash reserves or funds to pay for closing costs, your lender will often require at least two months of bank statements. Bank statements will be reviewed to ensure that the funds are available, come from an acceptable source, and are not from a loan or other source of borrowed funds. 


In order to evaluate your property, lenders often require an appraisal to be completed. Appraisals can be a computerized estimate of the value of your home, or they can be a physical inspection performed by a certified appraiser. 

When the value of your home is determined, it will be used to determine your loan-to-value (LTV) ratio. This is an important figure as lenders typically only lend up to a certain percentage of the value of your home. The more equity you have, the lower your LTV, and the more likely you’ll be able to borrow a larger amount of funds. 

If your appraised value comes in low, you may need to either reduce your loan amount, or increase your down payment.


As part of the underwriting process, your lender will have a title company verify ownership of your home. This is done via a search of public records, and a title report is compiled for your lender to review. 

Title reports will show the current and past owners of a property, as well as any liens that other companies may hold against the property. 

Contracts and other legal documents

Contracts and any other legally binding documents that can impact your ability to repay the loan will need to be reviewed in the underwriting stage. This can vary depending on each borrower’s individual circumstances. Some examples can include the following:

  • Purchase contract for real estate
  • Divorce decree (to verify amounts for child support, alimony, or division of assets)
  • Internal Revenue Service (IRS) installment payment agreement for past-due taxes owed
  • Loan modification agreements

What Happens When the Underwriting Process Is Completed?

You’ll receive one of five possible outcomes when the underwriting process is completed. Your loan will either be approved, conditionally approved, counter-offered, suspended, or denied. Below are explanations of what each decision means for you:

  • Approved: This is the most ideal outcome and means that your loan has been approved at the terms you’ve requested and no additional documents are needed. 
  • Conditionally Approved: A conditional approval typically means that the lender just needs a few minor clarifying items before a full approval can be issued. These items generally are not expected to impact the outcome of your loan. 
  • Counter Offer: A counteroffer can be issued if the lender can approve your loan, but at terms that differ from what you initially requested. Some examples can include a change in the loan amount or a different interest rate. 
  • Suspended: If there are critical pieces of information missing from your file or large discrepancies, your file may be suspended pending additional clarification and documentation from you. Once you provide the lender with these items, it can then determine whether your file can be approved, conditionally approved, counteroffered, or denied. 
  • Denied: If a lender is unable to offer any type of financing to you, it will issue a formal loan denial. You’ll be given the reasons for the denial, and in some cases, you may also be given recommendations for what you can do to get approved. 

What Are Some Tips for a Smooth Underwriting Process?

As a borrower, getting through the mortgage underwriting process can be a stressful and frustrating experience, and it’s understandable why this might be. It’s the stage where borrowers are told whether they’ll get a loan on the terms they want. But not only that, it can be a challenging and even frustrating process if lenders need more documentation. 

Fortunately, there are things you can do as a borrower to have an easier, less stressful experience getting through underwriting.

  • Only provide what you’ve been asked for: When mortgage underwriters review your loan documents, more is not always better. For example, if you’ve been asked to provide two pay stubs, only provide two. Lenders must review anything you provide, and giving a lender additional items can slow down the process and increase the likelihood of additional questions or discrepancies needing to be addressed. 
  • Provide all pages of documents, even if blank: If you’re providing documents that indicate the total number of pages, you should provide all of them. A common example is pages from a bank statement. While banks might indicate that certain pages are intentionally left blank, your lender won’t know this if you omit these from your submission. Without these pages, your lender will not know if there is anything materially significant that has been left out. 
  • Do not alter or whiteout numbers on documents: Many mortgage underwriters will not accept documents that have been altered. If you have sensitive documents, ask your lender about its policies on data privacy. 
  • Provide the most recent copies of documents: To minimize the likelihood that a mortgage underwriter will have to request additional documents later in the loan process, you should provide the lender with the most recent copies available. This applies to documents such as pay stubs, bank statements, and loan statements. 
  • If asked for an explanation, only address what you’ve been asked about: If you’re asked for an explanation on something, keep your answer short, concise, and to the point. Providing unrelated information has been known to raise red flags and delay the process. 

What Happens During the Mortgage Underwriting Process

The mortgage underwriting process is arguably one of the most important steps involved in getting a loan. It describes the loan approval process where your loan application is reviewed, including your credit score, income, and debt-to-income ratio. It’s the stage where a mortgage lender will verify your information, and a decision is made on whether you can afford the mortgage payments and be approved for a loan.

Disclaimer: The above is provided for informational purposes only and should not be considered tax, savings, financial, or legal advice. All information shown here is for illustrative purpose only and the author is not making a recommendation of any particular product over another. All views and opinions expressed in this post belong to the author.

Andrew Wan

Written By Andrew Wan

With a decade of experience as a mortgage underwriter and a licensed California real estate broker since 2018, Andrew Wan use his expertise and experience to share insights on the housing industry. He covers a wide variety of topics, from buying a home to what the home loan process entails, and enjoy sharing tips to help better prepare you for how to make it all a seamless experience.
Jeff Levinsohn

Reviewed By Jeff Levinsohn

Jeff is the CEO of House Numbers and a home wealth management geek. He’s obsessed with tools and information that empower homeowners to save money, access their home equity, and build long-term wealth.