One of the most significant steps in the homebuying process is underwriting, which is when your lender verifies your creditworthiness as a borrower. The underwriting process can be intensive, as lenders must justify their decision to let you borrow money based on your ability to repay the loan. You can’t get a mortgage without going through underwriting.
But how long does underwriting take? It depends on what you mean by underwriting.
The entire loan approval process can take 30 days or longer. But underwriting is a step within the approval process that can take just a few days.
“The underwriting process from submission to approval does vary depending on current turn times and loan program,” says Dan Chapman, a mortgage advisor with Fairway Independent Mortgage Corporation (which owns Home.com).
Unless there is something very complex about your file, such as mile-thick tax returns or questionable income or assets, your file should emerge from underwriting in just a few days or less.
What's in this Article?
First, it’s important to lay out the whole mortgage approval process so you can see where underwriting falls.
The mortgage approval process
- Application: your loan officer receives your information. Time – less than 1 day
- Setup: Assuming you have a property, the lender’s office support orders a title report and opens escrow. Time – about a day
- Processing: The loan processor reviews the file for completeness and alerts the loan officer or applicant of missing items. Time – a few days, depending on completeness and applicant’s responsiveness
- Underwriting: Once the file is complete, the processor submits to underwriting. Time – a few days.
- Conditions: The underwriter will ask for any missing or clarifying items. The processor will communicate those to the applicant. Time – a few days
- Re-underwrite: The processor will submit all conditions back to the underwriter to receive a “clear to close,” meaning the file is ready for final loan signing. Time – a few days
- Signing/Closing: The applicant signs all paperwork. Time – a day
- Funding: The lender reviews final signed paperwork and the loan is complete. Time – a few days
How long does underwriting take?
Time for the whole process adds up, but the underwriting portion should take only a few days if the loan file is solid.
External factors can also delay things. For instance, if the appraisal takes 2 weeks, that prevents the “re-underwrite” process from happening. The underwriter won’t look at a file again unless all requested items are there.
That’s why closing times can sound a bit scary when you look at averages.
As of March 2021, the average time to close on a loan was 52 days, according to ICE Mortgage Technology. But timelines vary based on the type of loan you choose, and on your lender.
For instance, the average time to close with a conventional loan was 51 days. With an FHA loan, it was 55.
Some loans close much faster than that, in 30 days or even less. In fact, there are many cases where a member of the Home.com lender network closed a loan in days, not weeks. At most lenders, home purchases take priority over refinances, because that’s when the customer’s earnest money is on the line.
And not all loans can close fast.
“A lot depends on how clean your file is. If you have clear, straightforward documentation, including a steady job with W-2s for several years, have a good amount saved up in the bank, have favorable credit, and are purchasing a home with a clean title, I’ve seen lenders close in a matter of days,” says Evan Rosenblum, a Realtor with The Jason Mitchell Group in Los Angeles. “However, many lenders have lots of files they are working on at once, which is why it usually takes one to two weeks for the underwriting process to fully clear on the average file.”
Additionally, if your lender has staffing shortages or has a high volume of applications, that can slow down the closing time on their end.
But closing on time is critical, and working with a lender that has a reputation for fast, on-time closings can actually help you win out over other homebuyers if there are multiple offers on a property.
Your lender will be able to give you an estimate on how long underwriting will take on your loan, along with a firm closing date.
“Underwriting technically begins the moment you are actually under contract on a home and it does not actually cease until you are fully closed and handed the keys,” says Steve Laret, a real estate agent in West Chester, Pa. “In some cases, things can be discovered at a stage as late as the date of closing that will blow a deal up or at least cause it to go back into underwriting for further review.”
During underwriting, your mortgage lender will verify your income, debt, assets, property details, and more, based on the documentation you provide and other criteria. Your loan must pass the underwriting phase to ultimately be approved.
“This phase is usually reserved until after you’ve gone under contract and are in escrow,” Rosenblum says. “It is at that time that an underwriter – a person specially trained to review these files and who has a full understanding of the loan process and loan products – reviews your file closely and carefully to make sure you are actually qualified for this loan on that particular property.”
While this might sound a little scary – no one wants to worry about being denied once they’ve gone under contract, it’s not as daunting as you might think, especially if you’ve gotten preapproved.
A preapproval that’s already been underwritten, with the exception of property details, will verify that you are an eligible borrower and tell you how much a lender will let you borrow. That means fewer surprises once the full underwriting process begins.
In addition to verifying your finances, your lender’s underwriting team will review property details, including:
- Appraisal report
- Property title
- Homeowners insurance
- Adherence to loan program guidelines
Here’s why each of those matters.
Your lender will schedule an appraisal once you go under contract. The appraiser determines the fair market value of the property.
The home must be worth what you are paying for it. If not, you’ll have to make up the difference in cash, or have the seller come down in price.
The appraiser will also ensure that the home meets the property requirements for the type of loan you’re using.
If there are any red flags based on the government guidelines, they will need to be repaired before the loan can close.
Getting the appraisal report is one of the biggest factors in how long the underwriting process takes. The turnaround time can be up to three weeks, depending on your local market. If there is high housing demand, you may have a longer wait time than in a more moderate real estate market.
Your lender will also request a title search on the property to ensure that no one else has a claim on it and that you can take ownership of the property. This is important information for the lender to know, as they don’t want to give a home loan on a property with outstanding debts or complicated title claims. But it’s also important for you as the prospective homeowner, as you don’t want to be held responsible for unpaid property taxes or other debts that were accrued before you became the owner.
Your lender will require you to have a homeowners insurance policy to adequately rebuild your home in case of fire or other disaster. The underwriting team will also need to know your monthly premium, as that will affect your total monthly mortgage payment amount.
Your lender’s underwriting team needs to make sure that both borrower and property meet the loan program guidelines for whichever type of loan they’re using.
“It is the underwriter’s job to ensure that the lender is taking a good risk when it comes to lending the money for this loan,” Rosenblum explains.
Laret compares the underwriting phase to a kind of financial forensic examination.
“Receiving mortgage approval means that both the buyer and the deal have passed this forensic evaluation and the bank is now prepared to hand over the money they had previously agreed to when they granted preapproval,” says Laret.
How responsive you are can affect the underwriting timeline. If your lender requests updated bank statements or pay stubs, and you don’t submit those for several days, that will slow down the underwriting process.
Here are some tips for doing your part to keep the underwriting process on track:
- Don’t change jobs until after you close, if you can help it. A drop in income, significant change in how you’re paid (example: salary to commission), or a switch to an entirely new industry can cause your lender to deny your loan. If there’s no way to avoid a job change, tell your lender as soon as possible to see if they can still approve you
- Don’t take on new debts. “Resist purchasing a car. Avoid racking up credit card debt. And keep things status quo as much as possible, as any major changes could have a crucial impact on your loan approval status,” says Rosenblum.
- Be honest about your finances. Underwriters are thorough, and they will find any overdue payments, defaults, or unexplained large deposits. “Do not lie about your financial situation,” says Lyle Solomon, principal attorney for Oak View Law Group in Rocklin, Calif. “If you have missed a debt payment, be ready to explain why to the lender.” Missed payments or other past hiccups aren’t necessarily deal breakers. Your lender may simply ask for a letter of explanation as to why they happened and how you corrected the situation.
How long does underwriting take? FAQs
The underwriting process can take as little as a few days to as long as a few weeks. This timeline will depend on many factors, including the complexity of your financial status, the home you want to buy, appraiser availability, and other factors.
An underwriter typically takes approximately two weeks from conditional approval to final approval, according to attorney Lyle Solomon. You can close on your home once you receive final approval.
A loan submitted to underwriting means that your lender has reviewed the file and deemed it ready to be reviewed by the company’s underwriter, who is responsible to make a decision on the loan. The underwriter will assess your financial documents, property, and other elements of the file.
If, after submitting a loan application, your lender doesn’t contact you with additional requests for further documentation or other information, that’s a good sign. It likely means that you may be on a fast track to loan approval. But it’s still worth checking in with your lender every few days to make sure they have all the information needed from you and ensure you’re on track to close on time. It’s possible that your lender lost track of your file, in which case it’s not a very good lender.
While the underwriting process and how long it takes is largely out of your control, you can improve your chances of getting loan approval more quickly by responding rapidly to any lender inquiries, maintaining your current job status, and avoiding taking on any additional debt.
Ask your lender about any questions you have or things you don’t understand about underwriting. You’ll have better peace of mind being a more informed borrower.
*Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.