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Mortgage

What is manual underwriting? |Bankrate

April 28, 2025 9 Min Read
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What is manual underwriting? |Bankrate
Mortgage officers meet with borrowers.

Thomas Berwick/Getty Images

What is manual underwriting?

Manual underwriting is when a human, not technology, reviews a mortgage application. This person sees factors like borrowers Debt to income ratio, Loan to Value Ratiocredit scores and history, assets, liabilities, income and employment.

Manual underwriting is usually used when there is a response to some Questions about mortgage applications That’s if you’re likely to raise a red flag or there’s a unique situation.

Some types of Home loan Manual underwriting is required if the borrower does not meet certain criteria, such as more debt or a lower credit score. Manual underwriting may allow these types of borrowers to show why they should qualify for funding.

Manual and automatic underwriting

Manual acceptance Automatic acceptance
Who or what are you doing? people algorithm
How long does it take? It can vary, but pre-approval can take several days and full loan sign-off takes much longer Different for final approval, but conditional approval occurs in minutes
How strict are the requirements? The underwriter will work with you to collect a lot of financial information and determine your risk level You must meet the set requirements, such as your credit score and debt-to-income ratio.

In the past, all mortgage applications were manually cited. When that happens today, the underwriter will review mountains of information about your finances to determine how much you will earn, how much money you will need to spend, and how much mortgage debt you can comfortably manage.

Automated underwriting is completed through an automated system. Auto-underwriting allows lenders to collect account information, retirement funds, or stock brokerage directly from the bank and access their tax returns. This allows you to take on most loans within minutes.

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In some cases, lenders use a combination of both types (also known as blended underwriting). Lenders may want to go on a mixed route to avoid a qualified borrower being rejected or an unqualified borrower being misapproved.

How does manual underwriting work?

With manual underwriting, you can expect to perform many of the same steps as typical automatic underwriting. difference? It will probably take more time, and you may receive more questions from the underwriters along the way. Here’s a quick overview of the process:

  1. Send me your finances document. Lenders seek finances Documentation before approvalwhich may include bank statements, tax returns, Paystubs, and Brakerage Statement. They also ask for proof of employment and verification of assets.
  2. hang on. になったんです。 English: The first thing you can do is to find the best one to do.The underwriter will evaluate the documents, review the credit report and consider all aspects of the finances. Do you have a history of timely payments? How much debt do you currently have? What is your income?? Can I make a reasonable payment with a new loan? In addition to reviewing your income and assets, the underwriter can know if you can reasonably afford to spend on mortgage payments, including your debt, student loans, car loans, credit cards and other regular monthly bills.
  3. Please answer your questions. Be prepared for follow-up questions when underwriters look into your information. Don’t worry when they ask. This is a standard part of the process. Just respond honestly as quickly as possible.
  4. I will receive a decision. At this stage, the underwriter decides whether to reject the application, approve, or approve contingency, such as requiring more documents.

When will manual underwriting be done?

Lenders usually use manual underwriting if there are unusual circumstances that make automatic underwriting difficult. Some scenarios where lenders use manual underwriting can include:

  • You have no credit history: If you have never had a loan or credit card, you will not have a credit score. Therefore, automated systems cannot rely on this metric to obtain approval.
  • You have a minimal credit history: Similarly, if your credit history is long, the system may not be able to use scarce information to make accurate decisions about creditworthiness.
  • You have foreclosure or bankruptcy on the record: Having these negative marks on your credit makes it almost impossible to get a loan through automated underwriting. Lenders may be willing to manually undertake your loan if you turn things around and have a strong income stream and a large down payment.
  • High debt to income ratio: A high DTI ratio is usually disqualifying. However, if you have a good reason for high DTI and can easily process your payment or show the manual underwriter that your DTI is about to drop, you may be able to secure approval.
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Underwrite a variety of mortgages

The type of underwriting process used will vary depending on the type of mortgage you are applying for.

  • Applicable loans: Traditional Applicable loan It meets standards set by the Federal Housing Finance Agency (FHFA) and allows government-supported businesses. Freddie Mac and Fanny May Buy them in the secondary mortgage market. These typically use automated underwriting, with some exceptions that require a manual process.
  • Jumbo Loan: These loans do not comply with Freddie and Fanny’s requirements. This means there are fewer restrictions and regulations to worry about. This makes it much more common for manual underwriting Jumbo Loanespecially the large quantity.
  • FHA, VA, or other government-supported loans: Most of these government-supported loans use automatic underwriting, but manual underwriting may be permitted or in some cases required. for example, FHA loan If the applicant’s credit score is less than 620 or the debt income is greater than 43%, the lender must use manual underwriting.

What borrowers should know about manual underwriting today

Manual underwriting is the best process for applicants who have no credit history or have a particularly limited credit history. About 45 million Americans face the challenge of not having a credit score, according to a 2021 report from the US Government Accountability Office.

For those who have no history of making credit cards or loan payments, manual underwriting can be key to getting a mortgage. In such cases, the manual underwriting process can confirm other types of payments and assess the applicant’s ability to repay mortgages such as rent, mobile phone bills, tuition fees, and health insurance.

“When lenders go down the path of manual underwriting, that’s because lenders believe in borrowers and underlying loan data.”

– Mark Worthington
Branch Manager at Churchill Mortgage

Manual underwriting is an important option for individuals who are self-employed and have experienced a significant decline in their income. The Federal Housing Administration requires manual underwriters to review applications for self-employed people whose income has dropped by more than 20% in the past 24 months.

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“When lenders go down the path of manual underwriting, that’s because lenders believe in borrowers and underlying lending data,” says Mark Worthington, branch manager at Churchill Mortgage. “That means lenders are willing to work harder and take extra steps for their clients.”

Manual underwriting involves additional work for lenders and applicants, but if this approach is successful, traditional financial qualifications can be provided to applicants who lack access to homeownership.

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