You just got an email from your loan officer: "Great news — you're conditionally approved!" Followed by a list of 8-15 items you need to provide. Your heart sinks. What does this even mean? Are you approved or not? Is this normal? Should you be worried?
I've been on the other side of this process for 8 years — reviewing files, requesting conditions, and watching borrowers panic unnecessarily. So let me give you the insider perspective: conditional approval is genuinely good news. It means an actual human underwriter reviewed your entire financial picture and said, "I'm ready to approve this, I just need a few more pieces of the puzzle."
About 90% of conditionally approved loans close successfully. The conditions are usually straightforward documentation requests. Let me demystify the entire process for you.
The Underwriting Journey: Where You Are Right Now
Think of the mortgage process as a road trip. Here's where "conditionally approved" falls:
The 3 Types of Underwriting Conditions
Not all conditions are created equal. Understanding the difference helps you prioritize and reduces anxiety:
Prior to Docs (PTD) — Most Common
These must be cleared before closing documents are prepared. They're the most common type and usually the easiest to satisfy. Think: updated pay stubs, bank statements, letters of explanation.
Timeline: You typically have 5-10 business days to provide these. The underwriter reviews them in 1-3 business days.
Prior to Closing (PTC) — Time-Sensitive
These must be met before closing day. Often related to the property: proof of homeowners insurance, final inspection sign-off, HOA documents, or title clearance items.
Timeline: Must be cleared before the scheduled closing date. Start working on these immediately — some (like insurance) take time to set up.
Prior to Funding (PTF) — Final Step
These must be satisfied before the lender releases the money. Usually administrative: signed closing documents, proof of wire transfer for closing funds, final title policy.
Timeline: Handled at or immediately after closing. Your title company and loan officer usually manage these.
The 12 Most Common Underwriting Conditions (And How to Clear Them)
After reviewing thousands of condition lists, these are the ones I see on almost every file. I've included exactly what the underwriter wants and how to provide it:
#1: Updated Pay Stubs
EasyWhat they want: Most recent 30 days of pay stubs covering the period closest to closing
How to provide it: Download from your employer's payroll portal (ADP, Workday, Gusto). Make sure they show YTD earnings, deductions, and employer name. If you're paid bi-weekly, you need 2-3 stubs.
#2: Updated Bank Statements
EasyWhat they want: Most recent 2 months of statements for all accounts used for down payment and closing costs
How to provide it: Download directly from your bank's website — all pages, including blank ones. The underwriter needs to see the account number, your name, and all transactions. No screenshots — full PDF statements only.
#3: Letter of Explanation (LOE)
EasyWhat they want: Written explanation for credit inquiries, job gaps, large deposits, address discrepancies, or derogatory credit events
How to provide it: Write a brief, factual letter: "On [date], [what happened] because [reason]. The situation has been resolved because [resolution]." Sign and date it. Keep it under one page. Don't over-explain or get emotional.
#4: Proof of Homeowners Insurance
MediumWhat they want: Evidence of a homeowners insurance policy with the lender listed as mortgagee
How to provide it: Contact an insurance agent, get a policy bound, and have them send the declarations page (also called an "evidence of insurance" or "binder") directly to your lender. Make sure the coverage amount meets the lender's minimum.
#5: Gift Letter
MediumWhat they want: If any down payment funds came from a family member, a signed letter confirming it's a gift (not a loan)
How to provide it: The gift letter must include: donor name, relationship to you, gift amount, property address, and a statement that no repayment is expected. Both you and the donor sign it. The underwriter may also want a bank statement from the donor showing the withdrawal.
#6: Verification of Employment (VOE)
MediumWhat they want: Confirmation from your employer that you're still employed, your position, and your income
How to provide it: Your lender handles this — they contact your employer directly (or use a third-party service like The Work Number). If your employer is slow to respond, ask your HR department to prioritize it. This is a common bottleneck.
#7: Explanation of Large Deposits
MediumWhat they want: Documentation for any deposit over $200-$500 that isn't a regular paycheck
How to provide it: Provide the source: tax refund (show IRS letter), sold a car (show bill of sale), bonus (show pay stub), gift (provide gift letter). Cash deposits without a paper trail are the hardest to document — avoid them during the mortgage process.
#8: Tax Returns or Transcripts
MediumWhat they want: IRS tax transcripts (Form 4506-C) for the past 2 years to verify reported income
How to provide it: Your lender orders these directly from the IRS. If there's a discrepancy between your application and your tax returns, you'll need to explain it. Self-employed borrowers: this is where things get complicated — make sure your CPA is available.
#9: Appraisal Conditions
HardWhat they want: The appraiser flagged items that need to be addressed: peeling paint, missing handrails, broken windows, etc.
How to provide it: The seller typically handles repairs. Get a contractor to fix the items, then schedule a re-inspection with the appraiser ($150-$200). For FHA loans, appraisal conditions are stricter — health and safety issues must be resolved.
#10: Title Clearance Items
HardWhat they want: Issues found in the title search: liens, judgments, boundary disputes, or missing documents
How to provide it: The title company handles most of these. You may need to pay off a lien, get a release from a previous lender, or provide documentation. Old mortgages that were paid off but never recorded are surprisingly common.
#11: Proof of Funds to Close
EasyWhat they want: Evidence that you have enough money for down payment + closing costs + reserves
How to provide it: Provide your most recent bank/investment account statements showing the required amount. If funds are in multiple accounts, provide statements for all. The underwriter calculates: down payment + estimated closing costs + any required reserves (usually 2 months of payments).
#12: Debt Payoff Letters
MediumWhat they want: If you agreed to pay off a debt to qualify, proof that it's been paid
How to provide it: Pay the debt, get a payoff confirmation letter from the creditor, and provide a bank statement showing the payment. The underwriter needs to see the balance is zero and that the payment came from your verified funds.
7 Tips to Clear Conditions Fast
Speed matters. Every day you delay is a day closer to your rate lock expiring or your closing date passing. Here's how to move fast:
If you're still in the early stages and haven't chosen a lender yet, compare lenders who are known for fast underwriting — some can go from application to clear-to-close in under 2 weeks.
Looking for a Faster Lender?
Some lenders close in 14 days. Compare options and find the right fit for your timeline.
Compare Fast-Closing Lenders →When Should You Actually Worry?
Most conditions are routine. But there are a few red flags that signal potential trouble:
How Long Does Underwriting Actually Take?
Initial underwriting review: 3-7 business days. Condition review after you submit: 1-3 business days. Total from submission to clear-to-close: 2-4 weeks on average. Complex files (self-employed, multiple properties, non-traditional income) can take 4-6 weeks. Rush processing is available at some lenders for an additional fee.
| Loan Type | Avg Underwriting Time | Common Conditions |
|---|---|---|
| Conventional | 2-3 weeks | 5-10 conditions typical |
| FHA | 3-4 weeks | 8-15 conditions (stricter property requirements) |
| VA | 3-4 weeks | 8-12 conditions + COE verification |
| Jumbo | 4-6 weeks | 15-25 conditions (extensive documentation) |
| Self-Employed | 4-6 weeks | 15-20 conditions (income verification complex) |
Frequently Asked Questions
What does "conditionally approved" mean?
The underwriter reviewed your file and is willing to approve — but needs additional documentation first. About 90% of conditionally approved loans close successfully. It's good news.
How long does underwriting take?
Initial review: 3-7 business days. Condition review: 1-3 days. Total: 2-4 weeks average. Complex files can take 4-6 weeks.
What are PTD vs PTC vs PTF conditions?
Prior to Docs = before closing docs prepared. Prior to Closing = before closing day. Prior to Funding = before money is released. PTD is most common.
Can I be denied after conditional approval?
Yes, but only 5-10% of conditionally approved loans are denied. Usually due to inability to satisfy conditions, financial changes, or appraisal issues.
What if I can't meet a condition?
Talk to your loan officer immediately. Alternative documentation may work. The loan may need restructuring (different program, larger down payment) in some cases.
How many conditions is normal?
5-10 for conventional, 8-15 for FHA/VA, 15-25 for jumbo or self-employed. More conditions doesn't necessarily mean trouble — it's about the nature of the conditions.
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