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How Long Does Underwriting Take, Really?

Almost everyone who applies for a mortgage asks: 

How long does underwriting take?

On average, it takes about 50-56 days to get a mortgage loan, depending on what type of loan you’re applying for, whether it’s a refinance or a purchase, and how hot the home buying market/mortgage rate is at the moment (in other words, how many applications your mortgage provider is currently processing.)

 

Here’s a chart showing the number of days from application to close for a variety of loans. 

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chart of underwriting turn times

Source Ellie Mae

These are nationwide averages. They can vary considerably based on how many applications your mortgage company is currently processing, your responsiveness in providing the data they ask for, the complexity of your financial situation, (for example, if you’ve got a low credit score or you’re self-employed, it’s probably going to take longer to approve your loan,) the policies of the lender, and the specific type of loan you’re applying for (FHA, VA, etc.)

What in the world takes so long? It’s called underwriting.

Underwriting is the process the mortgage lenders use to determine whether you are willing and able to repay your loan.

Basically, they’re looking at your income, savings and other assets, downpayment, debt, and credit history, to decide if you’ll be able to repay the loan. 

They’re also looking at information about the property you’re getting the mortgage for, to ensure that it’s worth the amount you’d be paying and that there won’t be any problems with that property in the future.

And throughout that process, they’re looking at whether that data would enable you to meet the qualifications for the specific type of home loan you’re trying to get, like an FHA, conventional, or VA loan (each of which has a different set of criteria you must meet to qualify for that loan.)

This analysis is called underwriting, and the person who performs it is called an underwriter.

The underwriting process involves a number of different steps, each of which has its own timeline, and some steps require a previous step before them to be completed before the next one can begin.

Here’s an example: let’s imagine that Matt and Tori are applying for a loan to buy their first home. They got busy, so it took them an extra 5 days before they were able to get copies of last year’s tax reports turned in to their lender. That delay will probably mean that it will take an extra week or so longer to get their mortgage approved.

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Hint: It’s always a good idea to respond as quickly as possible to all requests from your mortgage company – that’s a good way to keep the process on schedule. We know, it’s sometimes a pain to get everything pulled together, but you’re going to have to do it sometime, and any delay will likely result in a delay in getting your mortgage approved and getting moved into your new home!

Table of Contents

  • Loan Application and Pre-Approval
  • Collecting Documentation and Underwriting
  • Get an Appraisal
  • Perform a Title Search
  • Conditional Approval
  • Clear to Close

An Overview Of The Mortgage Underwriting Process – A Step-By-Step Timeline

Here’s an outline of each step an underwriter goes through in order to approve a typical mortgage loan (with timeline estimates included.)

Loan Application and Pre-Approval.

Typical time required: A few days to a week

The process typically starts with your filling out a mortgage application. That application asks you what seems like a ton of questions. Along with that you’ll be asked to provide documents that show your financial status (called documentation.) 

This initial documentation will probably focus on:

  • Your income
  • Your financial obligations (other loans, credit cards, etc.)
  • Your savings and investments
  • Your credit history (your lender will ask to be given access to your credit report)

Once your lender has that information, they will do an initial analysis of it to determine roughly how much mortgage you will probably be able to qualify for based on the information you’ve provided. At this point, you can ask them to provide you with a pre-approval letter, which will help you determine the price range you can afford as you look at homes.

Once you find a home you want to purchase, you’ll give the seller an offer, negotiate a price, and sign a purchase agreement, putting you under contract to buy that home.

Hint: it’s always a good idea to write a contingency clause in that purchase agreement, stating that the contract is based on your ability to secure a loan for that amount. That will give you the option to cancel the contract if you don’t get approved for the loan.

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Now that you’re under contract, the mortgage underwriting approval process will pick up steam.

Collecting Documentation and Underwriting

Typical time required: a few days to a few weeks depending on your situation and your responsiveness to requests

At this point, your underwriter is going to verify all your financial data to determine whether you are a good credit risk and a fit for the type of loan you are applying for. They will 

  • Relook at the documentation you have already provided
  • Request additional information to answer any questions they may still have and to get more details, like:
    • Bank statements
    • Retirement account statements
    • Copies of your prior tax forms
    • Pay stubs
    • Employment history
    • W-2’s
    • Explanations of negative items affecting your credit score
    • Other information is based on your sources of income. For example, if you have self-employed information, they may ask for complete tax forms for several years for you personally and your business, your type of business, your website address, key customers, etc. Basically, they’re looking for evidence that your income from that business is reliable to decide whether to include it in your income numbers.
    • Explanations of questions they may have, like where did this large deposit you got last month come from, cryptocurrency account holdings, etc.

What are they looking for in this process? Basically, they want to know:

  • If you have the ability to repay the loan based on your current income. As part of that, they’re looking at your debt practices, to make sure that you’ll have enough cash left over to pay them each month. A key element of this is called the debt-to-income ratio (DTI), which looks at what percentage of your income is required to repay all of your debt payments each month (including your mortgage.) If that ratio is too high, they’re likely to deny your loan.
    They’re also looking at your cash reserves, like savings, investments, etc. that could be used to make the mortgage payments if something happens.
  • Your credit history. They’re trying to determine how risky you are as a borrower. Do you pay your bills on time? What is your credit score? Have you defaulted on other loans in the past? In other words, they don’t just want to know whether you can pay your loan payments but whether you have a history of actually making them.
  • The riskiness of the property you are buying with the mortgage. They want to make sure the home is actually worth what you’re paying for it, because if you someday default (stop making payments) on that loan, they will have to take over the property and sell it, so they want to know whether they’ll be able to sell it for enough to make back what they loaned you.
    They’ll consider things like what percentage downpayment you are paying (higher is better) and how much equity you will have in the home. They may also ask for other information, like a termite inspection, whether the home is located in an area that may flood, etc. because they want to ensure that the home will retain its value.

This process of requesting, receiving, and analyzing the documentation/information is the cause of most delays in getting your mortgage approved. We recognize that these questions sometimes feel frustrating, but they’re a necessary part of the underwriting process. We recommend providing the additional information and answers they ask for as quickly as possible to prevent delays, ideally within 24 hours of the request.

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Automated Underwriting

Most underwriters use special software to gather and check whether the information you provide qualifies you for the loan. This is called automated underwriting. If yours is a simple, straightforward case, automated underwriting will probably be used to determine your loan eligibility. If it’s more complicated, the lender may deny your loan, others will turn to Manual Underwriting.

Hint: some of the biggest loan companies, the ones you see running commercials and online advertising or who contact you after you fill out a form online, will only use automated underwriting and will typically deny your loan if it is complicated enough that it can’t be processed through automated underwriting. If you have been denied by another mortgage company or your financial situation is more complicated than having a long-term stable job, with little debt, and making a significant downpayment, we recommend contacting us to talk directly with a mortgage agent who can help you deal with those challenges and increase the likelihood of getting your loan approved.

Manual Underwriting

Manual underwriting is used in special circumstances that don’t fit the requirements of automated underwriting, like self-employment, a limited or flawed credit history, frequent job changes, etc. Manual underwriting simply means that a person does each step of the underwriting process by hand, rather than keying numbers into a computer program and letting it do the work for them. It takes more time and is more labor-intensive, which is the reason that some companies will simply deny your application rather than go through the work to manually underwrite a loan. If that has happened to you, don’t give up.

Get An Appraisal

Typical time required: about a week, but this will happen concurrently with the process of collecting documentation and underwriting, so it usually doesn’t affect the overall timeline.

Your mortgage company wants to make sure that the home they are giving you the loan to purchase is worth what you’re paying. Thus, they will probably request an appraisal to be performed.

You do not  have to worry about this step because your lender will take care of requesting the appraisal from a licensed appraiser who has no connection with either you or the lender (a third-party appraiser.)

The appraiser will give their opinion of the fair market value of the home-based on:

  • An in-person evaluation of the exterior and interior of the house
  • A review of the recent sales prices of comparable homes (comps) in the neighborhood

This fair market value is a key factor in determining one of the key statistics the lender is evaluating, your loan to value ratio (with the value oftentimes different from the amount you actually will have to pay) to determine whether they will approve your loan. The costs of the appraisal will be included in your closing costs.

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Perform A Title Search

Typical time required: about a week, but this will happen concurrently with the process of collecting documentation and underwriting, so it usually doesn’t affect the overall timeline.

A title search is ordered by your mortgage underwriter to confirm that nobody has any outstanding claims against the property like unpaid debt, taxes or other judgments that would prevent you from taking full unfettered ownership of the property. The costs of the title search will be included in your closing costs.

Conditional Approval

Typical time required: about a week, though timing is dependent on your timeliness in providing the documentation they request.

Conditional approval is a statement from the lender that though your loan still hasn’t been formally approved, things are looking good for approval, unless surprises crop up in the additional documentation they have not yet received or reviewed.

Clear To Close

Typical time required: at least 3 days, though this time is conditioned on all other factors of your loan being delivered on time and meeting underwriting requirements.

Once your lender has given final approval to your loan, they will tell you that your loan is clear to close on your home and will give you a Closing Disclosure. This allows you to schedule a closing date to sign the documents and take possession of the property.

The Closing Disclosure gives you the specific details on your loan, including the final loan amount (don’t be surprised if this is slightly different than what you expected, as there are often factors like number of days until your first payment and escrow requirements that will affect the exact amount of your loan,) your monthly payment, interest rate, whether you’re required to pay for Private Mortgage Insurance (PMI), and the amount of money you’ll need to bring to the closing.

How To Get Your Loan Faster

You may have noticed that if you add up the days required for each step, the total is less than the average time reported at the beginning of this article.

That’s because many people make small mistakes that end up delaying the approval of their loan. Here are some of the most common mistakes (that we recommend you avoid! 🙂 

  • Not being responsive to requests for additional documentation.
    Every day you spend not providing the reports and information they requested will cost you in time to get your loan approved. We recommend placing a high priority on getting them any information they request ASAP, ideally within 24 hours of request.
  • Not giving your lender exactly what they requested.
    If they ask for your last two pay stubs, give them your last two pay stubs, not the two before that. The loan underwriting requirements oftentimes request very specific information, and if you give them something different, not only do they still need to get the exact information they requested, but they’ll think you’re trying to hide something, sometimes creating more requests and longer delays.
  • Giving them more than they ask for.
    You’re trying to be helpful, but that additional information causes confusion, and sometimes raises additional, time-consuming questions.
  • Not clearly explaining extenuating circumstances.
    If you’ve got a negative factor on your credit report, you’ll want to be clear, honest and precise in explaining that factor. This will help them understand what questions and additional documentation they will need to understand that derogatory report to properly judge your ability and willingness to repay their loan.
  • Applying for new credit during the underwriting period.
    Any change to your credit report creates questions and adds time. Buying a new washer on credit may not seem like a big deal to you, but it changes the numbers that make up the ratios your lender is using to calculate your loan, which could result in a delay and sometimes a denial of your loan.
  • Getting frustrated because they keep asking for more detail.
    It’s not unusual for an underwriter to find something in your data that needs more explanation and documentation, especially if you have an unusual situation, less than perfect credit or self-employment income. Don’t be surprised when this happens. Don’t argue with them, delay getting back to them or give them inadequate information. Just help them do their job, so you can get into your new home!

What Should You Do If Your Application Is Denied?

Not all loan applications are approved. Far too frequently, the problem isn’t you, it’s a mortgage company that is unwilling to take the additional effort to work with you if your situation doesn’t fit within their strict definition of “normal” and “easy.” This oftentimes happens when you’re working with one of the big lenders, the ones you see running ads and/or who contact you after you fill out a form on one of the sites listed at the top of the search engines.

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But all is not lost. Not all lenders are just trying to skim the quickest, easiest, most profitable loans. If you’ve been denied or just stopped hearing from another lender, it’s time to talk with us. We will put you together with a real human being, a lender who’s willing to spend the time and effort to figure out what it will take to get you the loan you’re looking for. 

While we can’t guarantee we’ll get your loan approved, what we can guarantee is that we’ll help you and answer your questions. 

That’s the way real, caring people act. Don’t you wish all mortgage companies would act that way?

In Conclusion: Work With Your Lender and (Usually) They’ll Work With You

You can help your lender approve your loan faster by providing all the information they ask you for as quickly, accurately, completely, and honestly as possible. They’re working hard to approve your loan, and your speed and willingness to give them the answers and information they request will help to speed up the process.

How Long Does Underwriting Take – Frequently Asked Questions

How long does underwriting take for a mortgage loan?

The time required for mortgage loan underwriting varies based on the type of loan being sought, how busy your mortgage company is at the moment, any unique situations in your financial life and the market, and how responsive you are in responding to requests for documentation (information) from your lender.

In 2021 all mortgage loan underwriting (including conventional, FHA and VA loans) took an average of 50 days: 51 days for a new home purchase and 49 days for a refinance. New purchases ranged from 48 to 57 days in 2021, with refinances ranging from 43 to 59 days.

How long does underwriting take for an FHA loan?

FHA loan underwriting took an average of 54 days: 54 days for a new home purchase and 55 days for a refinance in 2021. New purchases ranged from 50 to 61 days in 2021, with refinances ranging from 60 to 65 days.

How long does underwriting take for a conventional loan?

Conventional loan underwriting took an average of 49 days: 49 days for a new home purchase and 48 days for a refinance in 2021. New purchases ranged from 47 to 54 days in 2021, with refinances ranging from 43 to 58 days.

How long does underwriting take for a VA loan?

VA loan underwriting took an average of 55 days: 56 days for a new home purchase and 55 days for a refinance in 2021. New purchases ranged from 53 to 61 days in 2021, with refinances ranging from 47 to 76 days.

How long does underwriting take for refinancing?

Across all loan types (conventional, FHA, and VA loans), refinancing took an average of 49 days in 2021, with a high of 59 days and a low of 43 days.

How long does underwriting take for a new home purchase?

Across all loan types (conventional, FHA, and VA loans), approval for a new home purchase took an average of 51 days in 2021, with a high of 57 days and a low of 48 days

About the Author

Scott Schang

A 20+ year veteran of the Mortgage and Real Estate industry, I am passionate about educating and empowering consumers. I have been writing about consumer protection issues and making sense of complicated real estate and mortgage topics on this website since 2007

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