Dan Green
Dan Green

Dan Green

Homebuyer.com

Dan Green has helped millions of people achieve their American Dream of homeownership. Dan has developed dozens of tools, written thousands of mortgage articles, and recorded hundreds of educational videos. .

Dan Green

Dan Green

Homebuyer.com

Dan Green has helped millions of people achieve their American Dream of homeownership. Dan has developed dozens of tools, written thousands of mortgage articles, and recorded hundreds of educational videos. .

Jersey Shore Home - Underwriting

This website discusses mortgage programs and how to qualify. Your eligibility may vary based on lender guidelines and investor overlays. Check with your lender for specific details.

Trusted Content
Homebuyer Logo

Trusted Content

This article was checked for accuracy as of November 4, 2024. Learn more about our commitments to accuracy and your mortgage education in our editorial guidelines.

Homebuyer Logo

Trusted Content

This article was checked for accuracy as of November 4, 2024. Learn more about our commitments to accuracy and your mortgage education in our editorial guidelines.

Updated: November 4, 2024

What is Underwriting?

Underwriting is the process by which a mortgage lender evaluates a home buyer’s mortgage application and determines whether the mortgage should be approved.

A Longer Definition: Underwriting

Underwriting is a detailed evaluation of a borrower’s ability to repay a loan.

An underwriter performs the underwriting of a mortgage, which may include verifying a home buyer’s credit history, employment status, income, debts, and other characteristics of the transaction. This can include factors like the condition of the property and whether the transaction is an arms-length transaction.

Each mortgage type features different underwriting standards, known as mortgage guidelines.

An FHA mortgage is underwritten differently than a USDA loan and a VA loan. A HomeReady mortgage is underwritten differently than a Home Possible mortgage.

As part of the underwriting sequence, an underwriter may check credit reports for payment history and outstanding debts, verify employment through recent pay stubs or contact the employer directly, and confirm income by examining tax returns and bank statements.

Additionally, an underwriter may review a property’s value to ensure it aligns with the loan amount requested.

When underwriting is complete, the home buyer’s mortgage application is marked approved or denied.

We'll help you match a lender →

Underwriting: A Real World Example

First-Time Home Buyer Stories - Underwriting

Imagine a first-time home buyer applying for a low-downpayment mortgage to purchase a home.

The mortgage lender’s underwriting sequence will include a review of the buyer’s:

  1. Credit report, to ensure the buyer’s FICO score meets minimum standards
  2. Monthly income and debts, to ensure that the program’s debt-to-income maximums are not exceeded
  3. Employment history, to ensure that the buyer’s income is likely to continue

Underwriting may also require an appraisal of the subject property to ensure its value is commensurate with the purchase price, proof of a paid homeowners insurance policy for the upcoming 12 months, and a clean title report.

After every checkbox on the underwriting list is satisfied, the lender can issue a clear-to-close, indicating that the home buyer may schedule their closing.

Common Questions About Underwriting

What does an underwriter look for in a mortgage application?

An underwriter evaluates the home buyer’s credit history, income stability, debt ratios, and the property’s value, focusing on the buyer’s ability to fulfill loan obligations.

How does a home buyer’s credit score affect underwriting?

A home buyer’s credit score is crucial in underwriting, as it indicates past credit management and repayment behavior. Higher scores typically result in better loan terms and more borrowing options.

Can underwriting result in loan rejection?

Yes, underwriting can lead to loan rejection if the buyer fails to meet the lender’s criteria or if there are significant issues with the property’s value or condition.

How can applicants prepare for the underwriting process?

Applicants can prepare by ensuring their credit history is accurate, managing debts, and having all required documents organized and available.

Does the underwriting process differ for different types of mortgages?

Yes, the underwriting process can vary for different mortgage types, such as conventional, FHA, or VA loans. Each has its own requirements and guidelines.

Ready For Offers?

See which lenders are giving the best deals. Check out our listings now.

See Lenders
Homebuyer.com is not a lender or mortgage broker. We don't collect personal information or make credit decisions. We connect you with qualified lenders who may offer mortgage services.

Find lenders offering your perfect mortgage

We organize options. You choose who to work with.
Homebuyer.com is not a lender or mortgage broker. We don't provide quotes or credit decisions. We display links to lenders who may offer services.

Homebuyer.com is a mortgage information and comparison website. We are not a mortgage lender or broker and do not originate loans, collect personal information, or make credit decisions.

Homebuyer.com is operated by:
Growella Inc.
1311 Vine St, First Floor
Cincinnati, OH 45202
hello@homebuyer.com

Equal Housing Opportunity

Notices

Links

Mortgages

Tools

© 2021-2025 Homebuyer.com. Neither Homebuyer.com nor Growella Inc. is a mortgage lender or broker and neither originates loans nor makes credit decisions. The content on this site is intended for informational purposes only and should not be considered financial or legal advice. Nothing on this website constitutes a loan commitment or interest rate lock agreement. Homebuyer.com does not endorse or control the content, policies, or practices of participating lenders or their external websites. Always ask for a Loan Estimate when evaluating any mortgage loan proposal. This site is not affiliated with any government agency. This website and our services are not available in Connecticut, Illinois, Maryland, Minnesota, Nevada, North Carolina, North Dakota, Oregon, Vermont, or West Virginia. This website is not approved for use in the State of New York. Equal Housing Opportunity.