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What is the mortgage underwriting process?

Learn more about one of the last steps to buying a new home

Mortgage underwriting is a process your lender uses to determine whether or not you will be approved for a mortgage. Read on to learn about what’s involved in that process.

What does a mortgage underwriter do?

A mortgage loan underwriter reviews your mortgage application and decides whether you qualify for the mortgage based on your credit history, income, and overall financial situation. The mortgage underwriting process often considers the following factors.


Underwriters analyze what percentage of your monthly income you’ll be spending on housing expenses and other debts that may or may not appear on your credit report. They will use this information to calculate your mortgage debt-to-income ratio (DTI). If your debt-to-income ratio is too high, your loan may not be approved.

You can calculate your DTI by taking your total monthly debt payments and dividing them by your monthly income. A typical "good" debt-to-income ratio many lenders use is 36% or below. For example, if your income was $10,000 a month and your total monthly debt payments including your mortgage bill were $3,600, you would have a 36% DTI.

For salaried borrowers, your qualifying income is typically determined by your gross salary and a 2-year average of any bonus or commission income. For self-employed borrowers, your qualifying income is typically the average of the last 1-2 years of your net income as reported on your personal tax returns.

Employment history

Proving that you have stable employment can also be critical to getting your loan approved. For self-employed or freelance borrowers, you typically need to have a two-year history of self-employment in the same profession in order for your income to be considered.

If you're in a salaried position, you typically need 6 months to 1 year of employment at your current job before the income can be considered in qualifying your loan. You will still need to provide a 2-year history of employment. Your employment will typically be re-verified 24-48 hours prior to closing.

If you don't meet the employment history criteria above, a loan officer at Freedom Mortgage can discuss options with you. Notify your loan officer immediately if you anticipate a possible job change before or during the loan approval process.

Credit history

Your credit score and your credit history play a large part in the mortgage underwriting process. Underwriters will review your credit score and payment history to ensure you meet minimum credit requirements.

Significant changes to your credit score during the mortgage underwriting process can affect your loan approval. For example, making large purchases that increase your credit card balances or opening new credit accounts can affect your credit score. That’s why lenders often recommend you wait until after your mortgage closes to do things like buy furniture for your new home or open an account with a home improvement store.


Loan approval may also be dependent on your assets. Underwriters may review your bank statements to verify that you have sufficient funds for the down payment, closing costs and post-closing reserves. They also look for large deposits into your accounts so they can verify that the funds originated from an acceptable source.

Appraisal/property details

Since the lender is taking a risk when offering a loan, they want to ensure that the value of the property you’re trying to buy is also worth the risk. The underwriter uses a home appraisal from a licensed appraiser to determine the property's fair market value.

How long does mortgage underwriting take?

There is not a standard turnaround time for how long the mortgage underwriting process lasts. You can however help speed the process along by providing the answers to any requests for additional information as soon as possible. Learn more about what happens after your mortgage application.

Last reviewed and updated April 2023 by Freedom Mortgage Corporation.

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