What Is Underwriting?
Underwriting: The lender's review of your credit, income, assets and the property to make the final loan decision.
Underwriting is the step where the lender decides whether to approve your loan. An underwriter reviews your file against the program's guidelines.
What underwriters check (the "three Cs")
- Credit: score, history and recent activity
- Capacity: income, employment and debt-to-income ratio
- Collateral: the appraisal, title and property eligibility
They also verify assets, the source of the down payment, insurance and the purchase contract.
Possible outcomes
- Conditional approval: approved once listed conditions are cleared
- Suspended: more information is needed before a decision
- Denied: the loan doesn't meet guidelines
How long it takes
Initial underwriting often takes a few days. Clearing conditions can take one to two weeks, depending on how quickly documents come in.