What Is Desktop Underwriting?

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Desktop Underwriter is an automated system for mortgage underwriting. It calculates whether a loan meets approval requirements. It is used by Fannie Mae or, in some cases, the Federal Housing Authority (FHA).

Key Takeaways

  • Desktop Underwriter is an automated system for mortgage underwriting that calculates if a loan meets approval requirements.
  • It is used by Fannie Mae and, in some cases, the Federal Housing Authority.
  • The program uses Form 1003 plus more than 75 third-party vendors to predict if the borrower will be approved for a loan.
  • In hot real estate markets, having a DU approval in hand can give you an edge in competing for a house.

What Is Desktop Underwriting?

Fannie Mae uses its Desktop Underwriter program to assess whether a borrower is a good risk for a loan. This is done by looking at factors such as:

  • Price
  • Income
  • Assets
  • Employment Background
  • Debt

These inputs are used to calculate whether a borrower meets the standards for a certain loan. If the requirements are met, it will issue an automated approval.

Desktop Underwriter sets the industry standard in underwriting mortgages. Since it's automated, it allows loan originators to make decisions using logic and algorithms. It removes factors such as race, gender, or other prohibited matters.

If you can't get an automated approval through Desktop Underwriter, you may need manual underwriting to secure your loan.

Alternate name: Desktop Originator (used by sponsored mortgage brokers to access Desktop Underwriter)

Acronym: DU (or DO)

How Does Desktop Underwriting Work?

Mortgage loan originators ask borrowers to complete a loan application, commonly referred to as a Form 1003 (said as form "ten-oh-three").

Some questions you can expect to see on a Form 1003 include:

  • Type of mortgage and terms of the loan
  • Property address and purpose of the loan
  • Borrower information
  • Employment information
  • Monthly income
  • Assets
  • Real estate owned
  • Liabilities
  • Details of transaction
  • Declarations

The inputs in DU align with these sections of Form 1003. The program then uses this information, plus data from more than 75 third-party vendors, to decide if you meet the risk standard for approval.


Income reported to DU is not checked. A seller who wants to review if the borrower can afford to buy the home can't verify a buyer's income. The lender does not have to verify the income until the loan processing begins. If income (or any other data) changes later, the loan case file may need to be resubmitted.

DU is only as good as what you put into the program. Wrong or missing information can damage your chances of approval. Also, DU does not address whether a loan complies with federal regulations. That part is up to the lender.

What Does Desktop Underwriting Cover?

Two major pieces of the approval process are your credit score and your debts. These play into whether you can be trusted to pay back what you borrow in a timely fashion. Here's how that works:

FICO Scores

Your credit score, or FICO score, will be part of the mix. However, you don't need to go online and buy your FICO score report. DU uses third-party vendors, such as credit reporting companies, to collect this data.


The scores you may see in your purchased report often vary from the FICO scores lenders use. The highest and lowest of the three scores reported usually get thrown out.

FHA has lower requirements for FICO scores than do conventional loans that are sold to Fannie Mae. Better FICO scores tend to draw lower interest rates and more favorable lending terms. Lower FICO scores often result in higher interest rates.

Debt-To-Income Ratios

Lenders want to see how much debt you have as a percentage of your income. This tells them how much money you have free on a monthly basis to pay your mortgage. Your debt-to-income ratio is reported as both front-end and back-end.

The front-end ratios include the entire mortgage payment as a percentage of gross monthly income. The PITI mortgage payment (principal, interest, taxes, and insurance) can also include private mortgage insurance or mutual mortgage insurance. Add on a monthly HOA fee if the home is part of a homeowners association.

The back-end ratio takes all your debts into account. This includes the total housing payment and all revolving debt payments as reported to the credit bureaus. If you have debt, such as student loans or credit card debt, this ratio will be much higher than the front-end ratio.

The lower the percentage, the better you appear as a candidate for a loan. If the ratio is too high, you are unlikely to be approved.


For many applicants, the back-end ratio will begin to approach 50%. If 50% of your gross monthly income is being used to repay debt and a new housing payment, it might be smarter to pay down some of that debt before you apply again for a mortgage.

Do I Need Desktop Underwriting?

For many homebuyers, being approved by DU is a critical part of the home-buying process. Most people cannot afford to buy a home outright and will need a loan to make the purchase.

Being approved by a mortgage underwriter is a critical step in that process.

Once your information is submitted into the DU, it will issue an automatic approval or denial. It will also indicate what documents are necessary to verify the inputs. Once the mortgage underwriter has those, the DU can be submitted again.

Before the loan can close, the DU will list several conditions that must be met. Once those are met, the loan is cleared to close.


Lenders often will not release a DU report to a buyer's agent without your formal OK. That's because it provides an intimate look at your financial picture.

For buyers in hot real estate markets, having a DU approval in hand can provide a competitive edge. It carries more clout than a pre-approval letter and gives the seller more comfort that you can borrow the needed amount to move forward with the sale.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Fannie Mae. "Applications & Technology: Desktop Underwriter Validation Service." Accessed July 5, 2020.

  2. Fannie Mae. "Applications & Technology: Desktop Underwriter & Desktop Originator." Accessed July 5, 2020.

  3. Fannie Mae. "DU Validation Service Checklist." Accessed July 5, 2020.

  4. Fannie Mae. "Form 1003 Uniform Residential Loan Application." Accessed July 5, 2020. 

  5. Fannie Mae. "Desktop Underwriter® (DU®) Validation Service." Accessed July 5, 2020.

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