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What does an Underwriter do?

After your loan application has been checked over by your Loan Officer and Processor, it is ready to head over to the Underwriter for approval.

At this step, the Underwriter looks over all the documentation passed on to them to determine if the borrower is eligible to be granted the loan amount they applied for. They conduct a thorough credit analysis of the borrower’s finances, including employment records, income sources, and credit reports. In the end, they determine whether the financial ratios, like debt-to-income and loan-to-value, satisfy the requirements of the lender. If the Underwriter finds that the loan request should be altered for any reason, they work with the Loan Officer to find a new course of action.

There are four outcomes to the Underwriter’s decision on the approval of a loan:

  • Your application is approved, meaning your loan can move on to closing.

  • Your application might be deemed "approved with conditions," meaning your lender could require additional financial information, such as proof of insurance, marriage certificates, or tax forms.

  • Your application could be suspended, which might be the result of missing documents or the Underwriter’s inability to confirm your income or employment; you can reactivate your application by providing the missing details.

  • Your application could be denied because your finances did not meet the lending requirements, in which case you could reapply later once your finances have changed, or sometimes lowering the amount of the loan you applied for can help.

Underwriters have an in-depth understanding of the lending requirements along with federal rules and regulations and industry standards, so they know just what to do when it comes to any type of loan situation. An Underwriter is expected to pay close attention to detail, when it comes to analyzing loan applications and documents, to ensure everything has been evaluated correctly and the process can be as smooth as is hoped.

This important step in the mortgage process is there to help ensure that the mortgage loan you have applied to receive makes sense for you and your financial situation. It is both a protection for your mortgage lender and for you as a borrower.