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A lot happens between the time you submit a mortgage loan application and its approval. So before you pack your bags and hire a moving truck, Navy Federal loan officers are here to help you learn about an important part of it: the underwriting process.

Q. What is underwriting?

A. Underwriting is the process of determining your creditworthiness for a mortgage. A loan officer investigates and verifies the information you provide on your loan application and decides whether to approve the loan.

Q. What do loan officers look at during underwriting?

A. Loan officers typically:

  • check credit scores
  • compare your debt-to-income ratio to determine whether you can afford the monthly payments
  • assess the Loan-to-Value (LTV), which is the amount of the loan compared to the appraised value of the asset (a high LTV is considered riskier for the lender)

Basically, they're looking at the three C's of credit: 1) your capacity to repay the loan, 2) your credit history and 3) the collateral (the asset).

Q. I have a great credit rating. Does that guarantee I'll be approved for a mortgage?

A. Credit scores over, say, 740 (the max is 850) will certainly work in your favor, but it doesn't guarantee your mortgage will be approved.

Loan officers look at all factors, so borrowers with high credit scores can be denied if their income is too low or the LTV is too high.

On the other hand, a lower credit score (within reason) doesn't automatically mean a denial if income, assets and LTV are all within guidelines. However, it may mean paying a higher interest rate than someone with a better credit score because the lender is taking on more risk.

Q. What can trip up the underwriting process?

A. Discrepancies between income reported on the application and income reported by employers or on tax returns are major red flags. Poor credit scores can also contribute to a denial of your mortgage loan.

Q. What can I do to help the underwriting process?

A. Before applying for a mortgage loan, check your credit reports and correct any errors. Then, fill out your loan application completely and accurately. Provide any supporting documentation requested by the loan officer and respond promptly if more information is requested.

Q. What happens when underwriting is completed?

A. There are three things that could happen:

  1. You're approved for the mortgage loan.
  2. You're approved for the mortgage loan with conditions (which may involve providing more documentation or a bigger down payment).
  3. You're denied for the mortgage loan.

Your loan officer will contact you with the news.


This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.