Modern home with solar panels

As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.

The process for getting a mortgage can be intimidating, especially for first-time home buyers. You have to fill out an application and send in some paperwork. You’ll probably get some sort of preliminary approval and then get asked to send in more paperwork. And it can seem like sending in paperwork just triggers requests for even more paperwork.

Is all of that paperwork necessary? Where does it go? What is it used for? Let’s take a look.

Mortgage Documents

There’s a simple explanation why all the paperwork is required: The paperwork allows your lender to determine whether or not they think you’ll be able to pay back the loan. There’s a certain amount of risk inherent in any financial transaction, and since mortgages can be hundreds of thousands of dollars, lenders want to make sure they’re limiting their risk to the greatest extent possible.

All of the paperwork you submit will be sent to an underwriter, a person who’s basically a risk analyst for mortgages. The underwriter will review all your documentation and figure out the likelihood that you (the borrower) will pay back the loan. What kinds of things are underwriters looking for to make that determination? Although there are statutory requirements, requirements for different types of loans, and differing standards for each lender, there are four basic areas that underwriters attempt to verify when they review your documentation: income, property, assets and credit.



The first of the four parts of the underwriting process is income. This is where the underwriter takes a look at your employment history, your monthly income and how it relates to your debts, and figures out how easy it’ll be for you to make your expected mortgage payments.

What are they looking for? Well, gaps in your employment history or changing jobs a lot may make them feel that you’re a riskier bet than someone who’s been at the same job for 20 years, since any employment disruption can make it harder for you to make payments.

In addition to verifying that you’re employed and for how long, they’ll take a look at the past couple of years of your income history. Underwriters are interested in a steady income, so fluctuations could be problematic for you, even if your income is on the upswing. If your income goes back down to previous levels, will you still be able to make your payments? How likely is your income to remain at the level it is now, and with it your ability to make payments? These are some of the questions that an underwriter attempts to answer.


This can mean a couple of different things. Some loan programs and lenders may have restrictions based on whether or not the property you’re trying to get a mortgage for is a single family home. So the type of property, be it a co-op, condo, mobile, modular or newly constructed home, can affect how the loan gets underwritten.

Most importantly, the underwriter is looking for the value of the property. Issues can arise if the property is worth less than the value of the mortgage sought. Some loan options and lenders may have restrictions based on loan-to-value (LTV) ratios, so taking a look at the appraisal or other home valuation documents will be a crucial step in the underwriting process.


Just as looking at your income and employment history is important, so too is looking at your assets when determining whether or not to approve you for a mortgage. The underwriter looks at your current bank balances and other assets, primarily to make sure you have the money to make a down payment or pay other out-of-pocket expenses like closing costs. They also look at the source of deposits to make sure the money is actually yours and hasn’t been deposited into your account as a gift or a loan.

Again, this is all in an effort to assess the risk. Someone with a lot of assets in the bank will be better prepared to make mortgage payments should unforeseen difficulties come up. And if some of the funds in your account are actually loans that need to be repaid, the underwriter will worry that these debts will affect your ability to pay back your mortgage.


One of the better predictors of your ability to pay back a mortgage is how you’ve handled credit in the past. Typically, lenders examine your credit score as reported by the three credit reporting agencies, and use that figure to help make a determination on your loan. The higher your credit score, the better your interest rate generally will be, and if your score is low you may need to raise the interest rate on your loan to qualify. Some lenders and loan options may have minimum credit scores needed to qualify; some lenders may even have loan options specifically designed to accommodate the needs of borrowers with lower credit scores.

What This Means for You

Although there may be minimum requirements for all of these categories, there are no checkbox rules about how a loan gets underwritten. The four factors work into a matrix, and are evaluated by underwriters who are guided by government and company guidelines. If you’re weak in one area but strong in the other three, that one area of weakness may not hurt you very much. Each case is evaluated on its own merits, so it’s hard to say how they all play out since the four factors are evaluated together to determine your eligibility for a home loan.

Keep in mind that other documentation may be required depending on your specific situation. It’s important to discuss with your lender the required documents needed to complete your loan successfully.

Have any other questions? Ask them in the comments below!


Related Posts

This Post Has 14 Comments

  1. Hi, my wife and I are first time home buyers. We have decent credit scores (above 680) no late or delinquent payments on anything we have. However I dont have 2 years work history at my job and was actually out of work a few months ago but my wife does have 3 years at her current employer. My concern is the DTI. Would my debts have to be factored in even if I do not want to be on the loan? Also are there any special loan programs availiable with QL for first time home buyers?

    1. Hi Steve:

      It’s hard to give you a definitive answer on the DTI question without knowing more, but I can tell you what goes into that. If you live in a community property state and are getting an FHA or VA loan, your debts would have to be factored into her DTI. If you go with a conventional loan, your debts aren’t factored in as long as she’s the only one on the loan.

      The only program we have that’s specific to first-time home buyers is one through Fannie Mae where you can get closing cost assistance if you buy a property owned by Fannie Mae. All of our other programs are open to everybody. If you’d like to go over your options, you can get a preapproval online through Rocket Mortgage. Otherwise, one of our Home Loan Experts would be happy to help find the loan program that’s right for you if you give us a call at (888) 980-6716.

      Kevin Graham

  2. Sir, We are new in USA, have spent less than 2 yrs in the US so have less than 2 yrs of work experience.. We have excellent credit score though. Will we qualify for the loan Pre approval.

    1. Hi Maria:

      I can’t comment on your chances for preapproval on the blog because we would have to look into your situation. One of our Home Loan Experts would be better able to advise you on this. You can get in touch with them by filling out this form or calling (888) 980-6716.

      Kevin Graham

  3. The matrix comment that being strong in 3 areas is not true. I have been in the same job for 3 years. I am only 26. So this is not too bad given my age.. I had the downpayment up of 10 percent and had assets worth half the house I was interested in. Which historically had an upwards trend in value even in recent years. My credit admittedly is not the best. But no late payments in the last 2 years and credit cards under 30 percent. Strong in 3 areas but your Matrix dqs people purely on the credit side. No consideration given on the other fronts.

    1. Hi Adam:

      I understand your frustration. Unfortunately, mortgage investors do require a minimum credit score in order to accept loans from us. The good news is, credit is something that can be worked on. I’m going to have someone reach out to you to help go over your personal situation, but in the meantime, here’s a blog post with tips on how to build that score back up.

      Kevin Graham

  4. I am applying for a refinance of a home. I have excellent credit, loan to debt radio is excellent. bills always paid on time. I have worked at the same job for almost 40 years. My daughter rents a room out ($300 a month) and now the underwriters want me to show proof I live in the home. I have given them any and all documentation that I have except the two things they are asking for which is a Cable and Landline phone which I do not have. How would that be prove I live here??”

    I have provided utility bills, credit cards, car notes, savings, checking accounts, car insurance, car insurance billing each month, W-2’s, Pay stubs, etc. and they still are not accepting proof I live in the home. The one thing I did not give them was medical bills which is a privacy act on my part or is this something they want too. They are requesting a cable and Landline. ????? I am totally confused and frustrated if this is how a customer is to be treated. With todays society allot of people do not even have internet and/or landlines. I find this unbelievable as a requirement to finance a loan. It was explained to me that is a Fannie Mae Requirement. Can you provide me with that information that states this is a requirement, Thanking you in advance.

    1. Thanks for your message, Judy. Our team is looking into how we can best assist you. Our client relations team will send you an email to get some more information.

  5. I am legally married but have been separated over a year and I want to get a home mortgage by myself. Can I still apply or what do I have to do.

    1. Hello, Mayra! I’ve sent your question to our home loan experts, and they’ll be sending you an email shortly. In the meantime, take a look at this article for more information: Have a good day!

  6. Question: What if a couple is legally separated and one of them tries to apply for mortgage on a different home with someone else, who is not yet divorced – would this pose a problem for an underwriter? Thanks!

    1. Hi bbqpitmaster! I’ve passed this on to our team of mortgage experts who will reach out with more info.

Leave a Reply

Your email address will not be published. Required fields are marked *