The Underwriting Process – What Will They Evaluate?

When a home buyer applies for a home loan, the application is accepted or rejected based on criteria that prove that the applicant is a financially stable and reliable candidate to make their payments on time. Requirements and qualifications vary based on each home loan program.

An underwriter is a hired vendor responsible for reviewing each application to assess the risk of lending to a borrower. This process not only protects the lender from potential default but also protects the borrower from entering a loan that they cannot afford.

During their assessment, they take three factors into consideration. Each factor is weighted differently based on the type of the home loan.

The Underwriting Process – The 3 C’s

To fully assess the risk of a borrower, underwriters review a borrower’s credit, capacity, and collateral. Based on their assessment, they determine if the borrower’s application matches the guidelines and qualifications of the home loan requested.


An underwriter will assess a borrower’s credit score and history to predict the borrower’s ability to make their payments on time and in full. How well an applicant has paid their debt in the past is a great indication of how well they will continue to do so in the future.

Credit history is perhaps the most important factor in a borrower’s application for a home loan. Credit scores are evaluated based on payment history, amounts owed, the length of your credit history, and types of credit. Normally, payment history and amounts owed are weighted the most heavily by an underwriter.
If you have concerns about your credit, contact one of our loan originators today to determine the best plan for obtaining a mortgage.


Assessing a borrower’s capacity answers the question “Can the borrower pay off their debt?” Capacity is evaluated based on income, employment, and current debt. These evaluations determine whether or not a borrower can afford their current obligations and a new mortgage payment.

Debt-to-income ratio is an important factor in assessing a borrower’s capacity to repay their debt. This is calculated based on several elements of a borrower’s gross monthly income versus their outgoing expenses. Low debt-to-income ratios prove that an applicant can afford their current debt and have flexibility to acquire a mortgage loan.

Lastly, underwriters may also assess the applicant’s current savings and checking accounts as well as their 401(k) to determine the ability to continue paying off their loan in case they were to lose their job or become ill.


The home that a borrower is purchasing is considered their collateral. An underwriter considers the value of the home being financed in order to ensure that the loan amount does not exceed the value of the property. To do so, they will request an appraisal of the home.

An accurate loan amount protects the lender from being unable to pay the unpaid balance of a loan in the case that a borrower does not make their payments and the home is repossessed.

Prepare for a Home Loan Application

Protect Your Credit

As you are preparing to apply for a home loan application, consistently monitor your credit score. This will allow you to identify areas of your credit history that need work and errors on your credit report that require disputing.

7 Ways to Protect Your CreditProtect Your Credit With These Seven Effective Tips

In the current economic climate, credit is more important than ever in the process of lender decision-making. Unfortunately, credit is also more vulnerable than ever to being stolen, tampered with, or breached due to the widespread accessibility of the Internet and significant advances in modern technology.

Read about them here.

Lower your Debt-to-Income Ratio

Before applying for a home loan, it is recommended to pay off any debt early. Increasing your monthly payment against debt will lower your overall debt faster, therefore lowering your debt-to-income ratio (DTI).

To keep your DTI low, avoid acquiring any new debt and hold off on any large purchases until you have a larger savings account. If you are able to put down a larger down payment for a large purchase, you will need to fund less on credit, protecting your DTI.

Ensure Employment Stability

When preparing to apply for a home loan, it is important to consider your current employment. If you are planning on changing employers, discuss this with your loan originator. Providing a stable image of your financial standing can increase your probability of acceptance.

Self-employed borrowers will need to provide additional information to determine their usable income. If you have been self-employed for at least 2 years, contact one of our loan originators to discuss the necessary information for your loan.

If you are ready to apply for your home loan now, start by filling out our pre-qualified loan application.

Chris Doering Mortgage can help you apply for home loan applications and will be there for you every step of the way! Contact our team in Gainesville, FL to get started!