5 min read Feb 16, 2024

Manual Underwriting: All You Need to Know

Higher credit scores better and quick the loan process easier. If the credit score is not at its optimum then it would lender would take the path of manual underwriting.

Let’s see below how it works

What is Underwriting a Mortgage?

Underwriting a mortgage means assessing the borrower’s information, such as their creditworthiness and the property they want to buy. The underwriter checks different factors to make sure the borrower can repay the mortgage before approving the loan.

What is Manual Underwriting for a Mortgage?

Manual underwriting is a different approach to evaluating a borrower’s creditworthiness and ability to repay a mortgage. It also involves a thorough and individualized review of the borrower’s financial situation.

Additional documentation, like bank statements and rental history, may be required to assess creditworthiness using a broader range of factors. Manual underwriting aims to consider the borrower’s overall financial picture and determine their eligibility for a mortgage.

Manual Underwriting Vs. Automated Underwriting

Manual underwriting and automated underwriting are two different approaches. Also, lenders use these methods to assess mortgage loan applications. Here are the key differences between the two:

Manual Underwriting

  • Process: A human underwriter conducts a detailed review of the borrower’s financial information
  • Documentation: Additional documentation, like bank statements, rental history, and utility bills
  • Flexibility: Manual underwriting offers more flexibility in assessing non-traditional credit profiles and considering various factors beyond credit scores
  • Personal judgment: The underwriter uses their expertise and judgment to evaluate the loan application and make a decision based on the borrower’s overall financial situation


Automated Underwriting

  • Process: Computer algorithms and software are used in automated underwriting to evaluate loan applications according to predetermined lending guidelines and criteria.
  • Speed and efficiency: Automated underwriting is faster and more efficient because it can quickly analyze large amounts of data and provide instant decisions.
  • Credit scoring: It primarily relies on credit scores and credit history to assess the borrower’s creditworthiness and risk.
  • Limited flexibility: Automated underwriting follows strict rules and guidelines, allowing little room for subjective evaluation or consideration of individual circumstances.

Both approaches have their individual advantages to serve the same purpose.

When Is Manual Underwriting Done?


Lenders use manual underwriting when automated underwriting systems cannot approve a loan. They also use it when the borrower’s financial profile does not meet the requirements for automated approval.

Here are some common situations where this process may be necessary:

  • Limited credit history: If the borrower has a light credit file with insufficient credit history then manual underwriting can be used. It would also help the lender assess the borrower’s creditworthiness like rental payment history or other bill records.
  • Low credit score: a lower credit score would require, manual underwriting by the lender to review their financial situation.
  • Complex or unique financial situations: Manual underwriting may be necessary for borrowers with complex financial circumstances. This mainly includes self-employed individuals with varying income sources, non-salaried income, or applicants with irregular employment histories.

In these situations, manual underwriting allows lenders to make a more informed decision.

How Does A Manual Underwriting Mortgage Work?

A manual underwriting mortgage involves a more thorough and individualized evaluation of a borrower’s financial situation and creditworthiness. Here’s how the process generally works:

  • Application submission: The borrower submits a mortgage application, including the necessary documentation such as income verification, employment history, bank statements, and any other relevant financial records.
  • Manual review: A human underwriter carefully also reviews the application and supporting documents. Moreover, they assess the borrower’s creditworthiness, debt-to-income ratio, employment stability, and other factors that contribute to the ability to repay the loan.
  • Additional information: If needed, the underwriter may request further documentation or clarification on certain aspects of the application to gain a comprehensive understanding of the borrower’s financial situation.
  • Evaluation of non-traditional credit: In cases where the borrower has a limited credit history or unconventional credit sources, the underwriter may consider alternative credit data, such as rent payment history, utility bills, or other forms of consistent payment records.
  • Decision and conditions: Based on their assessment, the underwriter makes a decision regarding the mortgage application. They may approve the loan, deny it, or approve it with certain conditions or requirements that must be met by the borrower.
  • Communication with the borrower: The underwriter communicates the decision to the borrower and may provide instructions on any additional steps or conditions that need to be satisfied before finalizing the loan.
  • Closing and funding: If the loan is approved, the borrower proceeds with the closing process, including signing the necessary documents. Once all requirements are met, the mortgage is funded, and the borrower can proceed with purchasing the property.

Bottom Line

The manual underwriting mortgage process involves lenders thoroughly assessing the borrower’s financial situation in a personalized and detailed manner. This process allows for more flexibility in evaluating creditworthiness, especially for individuals with non-traditional credit profiles or complicated financial situations.

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Frequently Asked Questions

1. Can you buy a house with no credit?

Yes, it is possible to buy a house with no credit. Either you can pay it in cash or you need to convince a co-signor with good credit history. Also, you can check for the lenders who offer manual underwriting that consider factors beyond credit history.

2. Can a loan officer override an underwriter?

The underwriter verifies the documents and takes his final decision on the loan approval. Although, a loan officer can give his inputs in the borrower's transaction but the ultimate decision remains with the underwriter.

3. What are mortgage underwriters looking for?

Mortgage underwriters look at different aspects before granting the loan. These aspects can be the borrower's creditworthiness, income details, employment history, house appraisal, etc. Depending on these factors, underwriters draw the borrower's ability to repay the loan and the overall risk associated with the mortgage.

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