The Role of A Mortgage Underwriter

Getting a mortgage for the first time is a truly unique experience where you’ll learn a lot. During that time, you’ll eventually get the word from your Loan Officer that your file has been submitted to underwriting. So, what does that really mean, what does an underwriter do, and what are they really looking for?

An easy way to think about what an underwriter pays attention to is to remember the three Cs: credit, collateral, and capacity. Credit as in, are you in a good position to receive a loan worth thousands of dollars; collateral, which lets the lender know that you have skin in the game; and capacity to identify the potential you have to repay the loan. Let’s look at this more in depth.

What Is Underwriting?

Before approving you for a loan, your lender will want to verify your income, assets, debt-to-income (DTI) ratio, and property details. This verification happens on a case-by-case basis and is the process known as underwriting.

You will notice that when you’re going through this process, your lender will probably ask for supporting documentation like bank deposits or proof of assets. This information is provided to the underwriter whose main objective is to ensure that you will be able to make loan payments. If they determine you can, you will most likely be approved for your mortgage loan.

What Does an Underwriter Do?

When a mortgage lender grants a loan, they are taking on risk, but they don’t want to do it just on faith and promises; they have a process for determining if that risk is acceptable. This is the job of an underwriter; they review all the provided financial documents and determine the likelihood that a borrower will be able to repay.

To assist in the determination of loan approval, the underwriter will help your lender make the best decision by looking at:

  • Your credit history.
    • Underwriters will look at the credit report pulled by your Loan Officer to see your overall credit score, note if you have any late payments, bankruptcies, or potential overuse of credit.
    • The credit score you need to be approved for a loan will depend on the loan type you’d like (like FHA vs. Conventional vs. USDA).
  • The appraised value of the home you’d like to purchase.
    • The lender wants to ensure that the home you’d like to purchase, and its price tag, are in line with the home’s actual value and meet the agency’s requirements.
  • Your current income and employment.
    • You will be asked to prove your income and employment situation by providing two years’ worth of W-2s, your two most recent bank statements, and your two most recent paystubs.
    • If you’re self-employed, you’ll instead want to provide profit and loss sheets, K-1s, balance sheets, and your personal and business tax returns.
  • Your debt-to-income ratio (DTI).
    • How much money do you spend vs. what you bring in? An underwriter ensures that you have the cash flow to cover monthly mortgage payments, taxes, and insurance.
    • DTI is calculated by taking the total amount of money you spend on bills and expenses each month and dividing that by your monthly pretax income.
    • Lenders often require a DTI ratio that’s at or below 50%.
  • What you’re bringing to the table for your down payment.
    • Do you have savings that can supplement your income, or can the underwriter verify the down payment you’d like to make on the purchase property?

How Long Does Underwriting Take?

The real answer is: it depends. At Homespire, once your loan is submitted to underwriting, it will be underwritten between 24 and 72 hours. Other lenders may take a few days to a few weeks to complete the process.

You’ll want to be timely with any documents that are requested by your lender because this will help keep the underwriting process on track. The sooner you can provide the needed docs to your underwriter, the sooner you will know what loan amount the lender will approve for you.

What You Need to Know

To make the underwriting process as smooth and streamlined as possible, there are a few things you must know.

  1. DO NOT apply for any new credit during the underwriting process.
    • This includes credit cards or other loans, as they can interrupt the entire process. Wait until AFTER you close to purchase that new car for your new driveway.
  2. Be timely in your responses to underwriting inquiries.
    • If more financial docs are requested, like bank statements, or other proof of income, it’s in your favor to respond to these as quickly as you can, because it’s most likely that your underwriter had to pause on processing your information until they have what’s been requested.
  3. Be honest about your finances.
    • If you know there are items that may stick out on your credit report, include a written explanation to the underwriter; they can be more lenient with you if they know the cause is for something like an auto repair or unexpected medical bill.

The Bottom Line

Underwriting looks at your three C’s: credit, collateral, and capacity, and it’s the process where the amount of risk is determined to be “safe” enough (or not) to lend you the money for your mortgage. You play a big part in how long this step in your loan process takes, and it’s in your best interest to be timely when you have an underwriter who’s asking for more documentation. Don’t worry, it doesn’t signify the process is going good or bad if they do; it just means they need a little more info.

If you’re ready to get started on the loan approval process and anxiously waiting to hear if you’ve been approved for a mortgage loan by an underwriter, Homespire can help.


This is not an offer for a loan or any type of extension. Eligibility for a loan or extension of credit from Homespire Mortgage Corporation is subject to completion of a loan application, credit, income, and employment qualification, and meeting established underwriting criteria. Rates are subject to change without notice based on market conditions. See Loan Consultant for information on program income limits, buyer contribution, area median income, debt requirements, and other application details.