The Mortgage Underwriting Process Explained

February 10, 2021
What happens when your loan goes to underwriting? Let’s break down the details.

Before you close on your mortgage loan and get the keys to your new home, your loan will need to go through underwriting.  But what does that even mean?

What is Mortgage Loan Underwriting?

Underwriting is the process of thoroughly inspecting your loan application and financial situation to ensure you meet the specific criteria for your mortgage loan. In simpler terms, it’s the mortgage lender’s way of assessing the risk of providing you with a large home loan.

If you’ve been pre-approved, a portion of this inspection will already be complete. When your loan goes to underwriting, it will just be a deeper dive to give the final seal of approval.

Many mortgage lenders, including Waterstone Mortgage, use an automated system to underwrite loans. However, we still have a talented team of underwriters who ensure all information is provided and use their expertise to assess each situation. They evaluate things such as your debt-to-income ratio, income verification, credit history, and more.

What Information Do I Need for Underwriting?

Once you complete your loan application and we've provided you with a loan estimate, you’ll be asked to provide several documents including:

  • A copy of your driver’s license 
  • Last 2 years of W2 statements from your employer 
  • Last 30 days of pay stubs 
  • Last 2 months of bank statements (both checking and savings)
  • Last quarter (3 months) of stocks/bonds/mutual funds/401(k)

…and potentially more.

This is the information your underwriter will use to determine your loan eligibility. Your loan originator will also pull your credit report and provide that to the underwriting team as well.

What Happens After my Mortgage Loan is Underwritten?

Once your loan goes through underwriting, you’ll either receive final approval and be clear to close, be required to provide more information (this is referred to as “decision pending”), or your loan application may be denied.


If your loan is approved, it means the underwriter has deemed you (and your co-borrower, if you have one) a trustworthy candidate and appropriate fit for the loan program you’ve applied for. At this point, you’ll move forward to the next step of getting all your documents previewed and signed, then closing your loan. 

Conditional Approval

Your loan may be approved with conditions, which just means that certain conditions must be met for a full approval. For example, you may need to provide additional documentation like your P&L (if you're a business owner) or college transcripts (if you graduated within the last 2 years) before your loan can be funded. 

Decision Pending

Sometimes, the underwriter will need additional information to approve your loan. In this case, you will need to provide additional documentation before your loan can get approved. A pending decision or suspension is different from a conditional approval in that it means there is a larger question about your application that requires clarification.


If your loan application is denied, chat with your loan originator to find out exactly why, especially if you were initially pre-approved. In many cases, you might be eligible for a different loan program. Denial often occurs due to insufficient funds or poor credit. Your loan originator can offer insight on how to remedy this – it might just take some time.

Tips for Entering the Underwriting Process

Avoid large purchases. It might be tempting to charge that new sofa or entertainment center, but wait until after your loan closes to make any major purchase – especially on a credit card. This changes the credit usage in your credit report and may affect your loan eligibility or debt-to-income ratio.

Keep your financial situation as unchanged as possible. Now probably isn’t the best time to change banks, switch jobs, sign up for new credit cards or deposit or withdraw large sums of cash – anything out of the ordinary, that is. While everyone’s situation is unique and of course life happens on its own timing, try to keep your financial situation as steady as possible while your loan is going through final approval. The approval is largely based on a review of your financial situation, so it should represent your day-to-day as best as possible.

Last but not least: be patient! A few days might feel like a lifetime when you’re eager to move into your new home, but you can rest assured that the team at Waterstone Mortgage is working diligently to get you to the closing table as quickly and efficiently as possible.

To learn more and view a step-by-step guide to getting a mortgage loan, visit our Home Loan Process page.