Lonestar Financing

Manual Underwriting Vs. Automated Underwriting: The Complete Guide

The mortgage underwriting process helps mortgage lenders determine if your financial status is solid enough to repay the home loan you’re applying for. Because anyone’s financial condition can change, the underwriting process considers whether the property you want to buy is worth enough to repay the loan if the lender has to foreclose. In a nutshell, a mortgage underwriter analyzes your ability to repay the loan as well as the collateral that will secure the loan.

The mortgage underwriting method entails all of an underwriter’s processes when you apply for a home loan to examine your borrowing capacity and collateral. Validating your identification, evaluating the consistency and quantity of your income, verifying your employment, analyzing your tax returns, studying your financial records, checking your credit scores, and scanning your credit reports are all measures to ensure you can afford the loan.

To evaluate if you’re dependable enough for the loan, the mortgage underwriter investigates every aspect of your finances that mortgage lenders want to know about. In essence, the underwriter must show the lender that you are likely to repay the home loan. With a Texas conventional home loan or a VA home loan, the mortgage lender decides your potential to repay the loans by looking at the underwriter’s evaluation.

Here are some of the criteria mortgage lenders may consider when determining your potential:


Is it enough to cover your mortgage, as well as property taxes, insurance, and homeowners’ association fees?

Your Debt:

What will your front-end and back-end debt ratios look like if you acquire this loan? Do you have any other responsibilities like paying alimony or providing child support?


Is the house assessed at the same amount as the sale price?

A Glimpse through Automated & Manual Underwriting

A mortgage underwriter can physically assess your loan application or run it via a computerized program known as automated underwriting to determine whether or not to approve you for a loan. Computerized and automated underwriting is often faster than traditional underwriting. 

However, because the assessment is done with a computer, it has inherent limitations that may not be suitable for borrowers with unique circumstances, such as variable income. In some cases, manual underwriting may be more successful than computerized underwriting in qualifying a borrower. To analyze risk, lenders may use a combination of automated and human underwriting.

A lender may choose to underwrite a loan under the following circumstances manually:

  • A strong credit score is built on debt repayment. However, if you live a debt-free life, you may not be having a recorded FICO score. This does not imply that you have bad credit; instead, it means that you have none. If this is the case, your lender will have to analyze your repayment capacity manually.
  • Building credit may take years. If you are a young adult or have recently moved to the United States, you may not have a credit score. In this case, your lender may opt to underwrite your loan personally.
  • After a bankruptcy or foreclosure, purchasing a home may look complex, but it is not impossible. Even if you have a low credit score, your mortgage lender may choose to give you a loan if you have a large down payment and a lot of money. This, on the other hand, requires personal underwriting before approval.
  • DTI and credit score criteria are used by lenders or government agencies to ensure that borrowers can properly repay their debts. If your DTI is too high, but you can demonstrate that it is transitory or a regular element of your business, you may be able to demonstrate your creditworthiness via the manual underwriting approach.

How Long Does it Take to Underwrite a Mortgage?

The mortgage underwriting process can take several days to several weeks, depending on whether the underwriter requires extra information from you, how busy the institution is, and how efficient the business’s operations are. The earlier you gather your paperwork and answer the lender’s information demands, the easier and faster the procedure.

Several factors, including: influence the length of the mortgage underwriting process:

  • The lender’s application volume and personnel levels
  • The loan officer’s knowledge
  • The lender’s underwriting procedure
  • The underwriter’s experience
  • The type of loan you’re looking for 
  • How quickly you respond to underwriter documentation requests
  • How complex your financial condition is
  • The result of the house appraisal

Tips to Ensure a Smooth Underwriting Process 

Your lender handles a large portion of the underwriting. 

There are, however, things you may do to guarantee that your experience is smooth.

Maintain Vigilance on Your Debt

While your loan is being processed, avoid acquiring new debt or making other financial modifications, such as canceling credit cards or other accounts. Anything that affects your debt-to-income ratio may affect mortgage approval.

Keep in Touch with Your Lender

There may be questions or need for further information during the underwriting process. Responding to these questions as quickly as feasible will allow your application to continue. Our online loan application makes it easy for you to obtain the necessary information while remaining in contact with a reputable mortgage loan officer throughout the process.

Be Open about Your Financial Situation 

Don’t conceal or lie about your income, credit history, or assets. Instead, provide comments and explanations for anything that jumps out on your credit report or invoices, such as a missed payment, to assist the underwriter in reaching a decision as swiftly as possible.

Find Your Mortgage & Get Started 

Are you planning to apply for a loan? Well, there are many things you need to do to make sure you are eligible for a loan. 

Finding the best local Texas lender who can help you get Texas conventional home loans, Texas USDA home loans, and Texas Jumbo loans is crucial to getting approved.

With years of experience and expertise in the industry, Lone Star Financing stands out among the list of mortgage lenders in Texas. We provide in-house underwriting and processing to make judgments quickly and finalize loans on schedule – often in 28 days or less. To learn more about VA loans in Texas and other loan options, please contact us today.

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