Home / Glossary / Underwriting
Underwriting
The process by which a lender evaluates the risk of a loan application before approving it.
Definition
Underwriting is the lender's due diligence process where an underwriter reviews the loan application, property details, borrower qualifications, and risk factors to decide whether to approve the loan. For investment property loans, underwriters examine the appraisal, rent schedule, borrower credit, reserves, and entity documents. The underwriter may issue a conditional approval requiring additional documentation before final sign-off. A clean file with complete documentation upfront speeds up the process significantly. Underwriting timelines vary from a few days to several weeks depending on the lender and loan complexity.
How This Relates to DSCR Loans
DSCR underwriting focuses on the property's income potential rather than the borrower's W-2s or tax returns. The appraisal, rent schedule, and borrower credit score are the key underwriting inputs.
Related Terms
Appraisal
A professional assessment of a property's market value, required by lenders before funding a loan.
DSCR (Debt Service Coverage Ratio)
A ratio that measures whether a property's rental income covers its debt payments.
LTV (Loan-to-Value)
The ratio of a loan amount to the appraised value of the property.
Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
Compare rates from hundreds of lenders instantly. No personal info required.