Mortgage Underwriting Process: How to Get Cleared to Close

Mortgage underwriting is the process lenders use to review your application to decide whether to approve your loan or not. During underwriting, a mortgage underwriter verifies the information in your application, including your income, debt, cash reserves, and investments. With the right lender and a great local real estate agent guiding you, the mortgage underwriting process becomes much smoother and far less stressful.

What is mortgage underwriting?

Mortgage underwriting is the lender’s in-depth review of your application to confirm two things: 

• You can comfortably repay the loan
• The home you're buying is worth as much as or more than the loan amount

Lenders need to verify this before they can approve the mortgage. This step happens after you submit your mortgage application, not at the prequalification or preapproval stage.

Every lender must follow a version of the underwriting process for mortgage loans, whether they use automated underwriting systems (AUS) or manual review. The goal is the same: ensure the loan meets guidelines and poses an acceptable level of risk.

Once the underwriting process is complete, the lender will either approve, approve with conditions, suspend, or deny your application.

What does a mortgage underwriter do?

A mortgage underwriter is the person or team that verifies your documents, checks your loan against specific guidelines, identifies missing information, and recommends approval, denial, or additional conditions.

Most lenders use an automated underwriting system like Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor to run an initial risk assessment. But they also conduct manual review, especially for borrowers with complex finances.

The underwriter’s main role is to protect both the lender (from loaning to borrowers who can’t afford to repay) and the borrower (from borrowing more than they can afford).

The 4 Cs of the mortgage underwriting process

Underwriters rely on four key factors, called the 4 Cs, to evaluate borrowers’ risk.

Credit

Your credit history gives lenders a clear picture of how you’ve handled debt in the past. They’ll check your credit score and any instances of late payments, collections, bankruptcies, or foreclosures.

A good credit profile will not only improve your approval odds but also help you secure better rates and terms.

Capacity

This is your ability to repay the loan. Lenders examine your income, employment stability, and debt-to-income (DTI) ratio.

Underwriters want to see steady income and proof that your monthly debts, including the new mortgage, won't exceed around 43% of your gross income, depending on the loan type.

Collateral

Lenders will also review the appraisal to confirm the home's value, condition, and location. They also check how you'll use the home — primary residence, second home, or investment property — because that affects approval.

Capital

Your down payment, cash reserves, and other assets will also help lenders evaluate your risk. Putting more money down and having large cash reserves and assets signals stability.

Step-by-step: The mortgage underwriting process

Wondering what happens during underwriting? Here are the steps in the mortgage underwriting process:

1. Apply for a mortgage and submit documents

You’ll complete your mortgage application and authorize a credit pull. Your lender will require several documents from you, including recent pay stubs, bank statements, W-2s or tax returns, and employment verification. Once you submit everything, your file goes to processing.

2. File goes to processing

A loan processor organizes your documents and prepares the file for the underwriter. They will order the home appraisal and title report, identify missing or unclear information, and ensure all required documents are there.

3. Initial underwriting review

During this stage, the underwriter reviews your 4 Cs and the property. They’ll then issue a conditional approval (you're likely approved, but they need a few more items) or request additional information if something is unclear or missing.

4. Conditions and documentation

The underwriter may request you to provide additional documentation. The faster you respond, the sooner you’ll get an approval decision.

5. Final underwriting review

Once you've satisfied all conditions, the underwriter conducts a final review to confirm everything still meets their requirements.

6. Clear to close

A clear to close means underwriting is complete. The lender will then prepare closing documents and schedule your closing date with the title company or attorney.

How long does the mortgage underwriting process take?

The initial underwriting review takes a few days to a week in a normal market. But the full mortgage underwriting timeline from the application to clear to close often takes two to four weeks.

Factors that speed things up include:

• A clean file with complete documents
• Fast responses to underwriter requests
• Working with a local lender who has in-house underwriting
• Simple income (W-2 employee with steady job)

Factors that slow things down:

• Busy housing markets with high loan volume
• Appraisal delays or property condition issues
• Complex income (self-employed, multiple jobs, commission, rental income)
• Large unexplained deposits in bank accounts
• Missing documents or incomplete responses

The underwriting process for FHA loans can take slightly longer than conventional loans because FHA appraisals include additional safety and habitability inspections, and some lenders have overlays that require extra documentation.

Common mortgage underwriting conditions (and what they mean)

A condition is anything the underwriter needs before giving final approval. Common underwriting conditions include:

• Updated pay stubs or bank statements
• Letter of explanation for a credit inquiry or large deposit
• Verification of employment
• Proof of homeowners insurance
• Proof of paid-off debt, divorce decree, or child support order

Conditional approval means you’ll likely get a mortgage loan approval after you provide the needed documents. Suspension, on the other hand, means the underwriter cannot proceed until you provide the required information.

Why mortgages get denied during underwriting

Even if you get preapproved for a mortgage, you can still get a denial during underwriting. Here are the most common reasons:

• DTI too high or income not stable enough
• Credit score too low or recent negative events
• Insufficient assets for down payment or closing costs
• Property issues like appraisal too low, condition doesn’t meet guidelines
• Major changes mid-process, like changing jobs, taking on new debt, or missing a payment

A preapproval is not a guarantee. The underwriter has the final say. They’ll re-check your credit and employment right before closing.

FHA mortgage underwriting process: How it’s different

The FHA mortgage underwriting process follows FHA guidelines plus any lender overlays. FHA loans have minimum credit score and DTI requirements that differ from conventional loans, and underwriting may involve a few extra steps.

Here are the key differences:

• FHA allows credit scores as low as 580 (or even 500 with 10% down), but many lenders add overlays requiring 620 or higher.
• FHA appraisals include safety, habitability, and condition checks, which can take longer.
• FHA requires an FHA case number, which ties your loan to the property and adds a layer of tracking.
• Gift funds for the down payment must be thoroughly documented, with a gift letter and proof the donor has the funds.

The FHA underwriting process timeline is similar to conventional loans, but appraisal or extra documentation can add time.

How to improve your chances of mortgage underwriting approval

Getting a mortgage denial can be frustrating, but you can boost your approval chances by:

• Checking and cleaning up your credit before you apply: Pull your credit report from the three bureaus (Experian, Equifax, and TransUnion), dispute any errors, and pay off debt to lower your utilization ratio.
• Lower your debt-to-income ratio: Pay down credit card balances and avoid new debt or financing during the mortgage process.
• Save more for your down payment and reserves: The more money you put down and the larger your cash reserves, the less risky you appear in the eyes of lenders.
• Keep your job and income steady: Avoid switching jobs, moving from salary to commission, or taking unpaid leave right before or during underwriting. Underwriters want to see income stability.
• Stay responsive and organized: Before applying, gather all your documents, including tax returns, W-2s, pay stubs, and bank statements. Also, respond quickly to lender requests.

What happens after underwriting?

Once the underwriter completes reviewing your mortgage application, you’ll get one of the following outcomes:

• Approved or clear to close: You’ve met all the requirements and can now schedule closing.
• Approved with conditions: You're approved, but the underwriter needs a few final items. Submit the documents as soon as you can.
• Suspended: The underwriter needs more information to decide. Provide what they’re asking for quickly.
• Denied: Your application doesn’t meet guidelines. You’ll get a notice explaining why.

If you're approved or conditionally approved, your lender and title company will coordinate the final steps.

How a great agent and lender team can make underwriting smoother

The mortgage underwriting process becomes easier when you have a strong agent-lender team.

A great buyer’s agent will:

• Help you time your offer and contingencies based on realistic mortgage underwriting process timeline
• Connect you with reliable local lenders who have strong underwriting teams
• Help you respond quickly when the underwriter requests something

If you want a smooth underwriting process, Clever will match you with a top local partner agent. You may even qualify for cash back after closing.

Bottom line: What to expect from the mortgage underwriting process

The mortgage underwriting process is a detailed review of your finances, credit, and the property you're buying. Most delays and denials come from issues you can anticipate and fix ahead of time.

With the right preparation and support team, you can move from application to clear to close with fewer surprises and less stress.

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