How Long Does Underwriting Take?

Whether you’re purchasing a new home with a mortgage or you’re refinancing, your loan will go through a procedure called “underwriting.”

Underwriting is the process where a mortgage lender evaluates a borrower’s income, credit history and the value of a property to determine whether to approve a mortgage loan and under what terms. Underwriting can take a few days to a few weeks before you’ll be cleared to close.

Understanding how underwriting works and the average timeline of the process can help you feel more prepared to handle any issues that may arise while your loan is being underwritten.

So, how long does underwriting take when you’re getting a home loan? Here’s what you’ll need to know.

How Long Does Underwriting Take, On Average?

Underwriting typically takes 30 – 45 days, but every home buyer’s situation is different. In some cases, the process may only take a few days.

The bulk of the closing process is made up of the various steps your lender will take to ensure that you’re creditworthy and that they aren’t taking on an unreasonable amount of risk with your loan. Much of this work happens during underwriting. If the underwriter encounters issues, this can delay your closing.

What Determines How Long Mortgage Underwriting Takes?

How long it will take for you depends on a lot of different factors, including the number of applications your lender is currently processing, the lender’s policies and procedures for underwriting, the type of loan you’re applying for and the complexity of your own financial situation. For those with more complicated financial histories, such as self-employed borrowers, the process may take a little more time than someone with a relatively clear-cut application.

Underwriting can be a quicker process for certain loan types. For example, Streamline refinances and loans with automated underwriting systems can be processed more quickly than others.

What Is Underwriting?

Underwriting is the part of the mortgage process when your lender verifies your financial information to confirm that you qualify for a loan. The person who completes this process is called an underwriter. Your underwriter will carefully comb through your financial information and the value of the property you’re purchasing to ensure they’re not taking on too much risk by approving your mortgage loan.

Automated Vs. Manual Underwriting

Most mortgage lenders use software that runs all of your information and determines whether you qualify for a loan. This is called automated underwriting. Automated underwriting helps streamline and standardize the underwriting and approval processes.

If you have unique circumstances, such as a limited credit history, the lender may need to manually underwrite your loan, which just means that a person completes the entire process of underwriting, rather than inputting information into a computer program.

The Underwriting Process: A Timeline Breakdown

Here’s what the overall mortgage process looks like, from application to closing, how long each step typically takes and how underwriting fits into that process.

1. Loan Application And Preapproval: A Few Days

When you first apply for a mortgage, you’ll typically provide information about your current financial situation. You may be asked to provide documentation showing your income, savings, debts and any other information that may pertain to your finances. You’ll also give the lender permission to look at your credit history and score.

The lender will look at all this information and determine whether you meet their qualifications for getting a loan. This will typically take less than a week to complete.

Get Your Mortgage Preapproval Letter

At this point, you may get a preapproval letter from the lender stating how much they’re willing to lend you based on your financial profile. This will help you understand your price range when you’re shopping for a home.

Going through the preapproval process before you begin your search can help you make offers with confidence and work out any kinks in your application before you go through underwriting. This can also help you save time once you’ve found your future home. The Rocket Mortgage® Verified Approval program provides even more assurance, as these approvals all entail a manual review by an underwriter.¹

Find A Home And Make An Offer

Once you’ve found the home you want, you’ll make an offer and negotiate it with the seller. If it all works out, you’ll both sign the purchase agreement and you’ll be under contract to buy that home.

Next, you’ll work with your lender to get full approval and be cleared for closing.

2. Appraisal And Valuation: A Week Or Less

Whether you’re purchasing or refinancing, you’ll most likely need to get a home appraisal.

Your lender will order the appraisal. A licensed, third-party appraiser will create an appraisal report based on a physical examination of the interior and exterior of the property. They’ll also review the sales prices of recently sold properties that are similar to the property they’re appraising.

The appraisal report will include the appraiser’s opinion of the home’s fair market value. This whole process generally takes a week or less.

The appraisal is vital to the underwriting process. Knowing the home’s actual value, compared to the sale price, helps the underwriter calculate the loan-to-value ratio (LTV) and ensure that the borrower has enough money in their savings to cover a sufficient down payment.

3. Collecting Documentation And Underwriting: A Few Days To A Few Weeks

Once the details of your loan and application have been prepared, an underwriter will look over every aspect of your file and verify that you qualify for the loan and that the lender isn’t taking on too much risk by lending to you. They’ll review documents like your tax returns, W-2s, bank statements, retirement savings, pay stubs, investment account statements and any other relevant documents.

Underwriters will perform the following tasks when going over your application.

• Evaluate your risk as a borrower: The underwriter will check if you’ve defaulted on mortgage loans in the past. They’ll also look to see whether you have a strong history of making on-time debt payments and what your credit score is.
• Assess your ability to repay the loan: Underwriters want to know that your debt-to-income ratio (DTI) isn’t too high to afford your monthly payments and that you have some extra money available (known as reserves) to cover your mortgage payments if you suddenly lose your income.
• Determine if the home’s value covers the loan amount: Lenders don’t want to lend more than what the home is worth because the property acts as collateral in case you default on the loan. The underwriter will evaluate your loan-to-value ratio (LTV) and the size of your down payment.

4. Conditional Approval And Additional Documentation: A Week Or So

If everything looks good, your lender may approve your loan, or they might give you conditional approval. As long as you can meet the conditions of the conditional approval, you’ll be cleared to close. This might mean that your loan otherwise looks good, but you need to provide additional documentation.

How long this stage lasts depends on how long it takes you to get the necessary information to your lender, and how long it takes them to process it.

5. Final Underwriting And Clear To Close: At Least 3 Days

Once the underwriter has determined that your loan is fit for approval, you’ll be cleared to close. At this point, you’ll receive a Closing Disclosure. This document goes over the final details of your loan, including the loan amount, your interest rate, estimated monthly payment, closing costs and the total amount of cash you’ll need to bring to closing.

You’ll receive your Closing