At a glance: Mortgage underwriting is a detailed process that usually takes a few days. In some cases, however, it can take as long as several weeks. Five to eight business days is a reasonable average. The timeline varies because every borrower is different.
We get a lot of questions from our readers regarding the mortgage underwriting process and how it works. Two of the most common questions are:
- How long does underwriting take?
- What happens during this process?
I’ve addressed both of these questions below, with an emphasis on the first one — how long it takes. Let’s start with a basic definition and move on from there.
What Is Mortgage Underwriting, Anyway?
From a borrower’s perspective, mortgage underwriting is one of the most important parts of the lending process. It has the power to make or break your loan. But what is it exactly?
Here’s a straightforward definition from elsewhere on our website:
Underwriting is a process during which mortgage lenders assess the eligibility of potential borrowers. In short, the lender wants to ensure that the borrower meets all of their guidelines in terms of income, debt, credit and collateral. The underwriter will also ensure that the borrower meets any secondary guidelines and requirements, such as FHA, VA, Freddie Mac, etc.
Mortgage underwriting takes place after you fill out a loan application and provide supporting documents. Typically, borrowers deal with a mortgage broker and/or loan officer first. After that initial step, the loan file will move into the underwriting stage.
What Does the Underwriter Do?
So what does the underwriter actually do during this process? He or she will review all paperwork associated with the loan, including any supporting documents you provided (W-2, tax returns, bank statements, etc.). He will review the borrower’s credit score, debt-to-income ratio, employment, income situation and more. He might request additional documents or letters of explanation from the borrower.
The goal of this process is to make sure that you (the borrower) meet all requirements set forth by the lender, the federal government, and the secondary mortgage market.
How long underwriting takes will partly depend on the type of home loan you choose. For instance:
Conventional: In addition to having their own internal guidelines, most mortgage lenders abide by third-party regulations or requirements set by Freddie Mac and Fannie Mae. They strive to create “conforming” loans that meet the guidelines of these two Government Sponsored Enterprises (GSEs), loans that can be sold into the secondary mortgage market.
FHA: If you’re planning to use an FHA-insured home loan when buying a house, the mortgage underwriter must also ensure that you meet all guidelines established by the Department of Housing and Urban Development (HUD), which oversees the FHA program.
So there’s one of the first variables that affect how long mortgage underwriting takes. Different loan programs have different standards, and this can make the process longer or shorter. My advice is to choose a program that works best for you in the long run, and not to worry too much about how long underwriting might take.
How Long Does It Take?
Another common question we receive is: How long does the mortgage underwriting process take, on average? It actually varies from one loan application to the next, because every borrower is different. Some people “sail through” the process with no issues,while other borrowers hit a lot of snags along the way.
In general: Mortgage underwriting can take anywhere from a few days to a few weeks. Five to eight business days is probably a good average (from the time the underwriter receives the file, up until a final determination is made).
In many cases, the underwriter will issue a conditional approval. This means he or she expects the loan to close, but needs to resolve one or more issues first. For example, the underwriter might need a letter of explanation (an “LOX” in industry jargon) about a recent bank deposit. Once this “condition” is cleared, the loan can move forward.
Some borrowers don’t get any conditions. In such cases, the mortgage underwriting process does not take as long. Other borrowers get one or more conditions they must resolve, before they are “clear to close.” Underwriting tends to take longer in these scenarios.
As you can see, there are many variables that affect both the length and difficulty of the mortgage underwriting process. How long it takes often comes down to two things: (1) the efficiency and workload of the underwriter, and (2) the number of issues or conditions that arise during the process.
As a borrower, the best thing you can do during this process is to stay in touch with your loan officer, and to resolve any conditions that arise as fast as possible. This will prevent or minimize delays.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author