Processing a mortgage approval involves submitting a completed application with required documents (pay stubs, tax returns, W-2s), followed by underwriter review to assess creditworthiness, income stability, and debt-to-income ratio. The underwriter verifies documentation, orders a property appraisal and title search, and determines loan eligibility. Conditional approval may require additional documentation before final underwriting. Once approved, the borrower proceeds to closing, signing final papers and transferring funds. Lenders typically adhere to Fannie Mae or FHA guidelines, with conventional loans requiring a minimum credit score of 620 and 20% down payment.

The mortgage approval process ensures lenders minimize risk while meeting regulatory standards. According to the Mortgage Bankers Association (MBA), 2023 data shows average loan processing times of 45 days, with 25% of denials due to insufficient income or credit score issues (CFPB, 2022). Fannie Mae’s guidelines mandate a debt-to-income ratio below 43% for conforming loans, and 30% of applicants with scores below 620 are denied (Fannie Mae, 2023). Appraisal accuracy is critical; 15% of loans are rejected due to property value discrepancies (MBA, 2023). Stringent underwriting mitigates defaults, as loans meeting Fannie Mae criteria have a 90-day delinquency rate of 1.2% (Federal Housing Finance Agency, 2023). These steps balance risk management with borrower accessibility, ensuring alignment with national housing goals and investor requirements.