Underwriting is the process of evaluating a loan application to determine the risk to the lender if the lender granted the loan to the borrower. When the underwriter evaluates the loan package by addressing the credit, collateral, and character of the applicant and property, the underwriter may determine that either there is a risk that the borrower might eventually default (in which case the loan will be denied) or the risk is acceptable and a loan will be offered to the borrower.

To assist the underwriter in assessing the quality of the loan, lender guidelines and computer models are used to analyze the various factors relating to the borrower and the collateral (i.e., the property the loan is for). Once completed, this evaluation provides recommendations regarding the risks involved in offering the loan to the borrower. The underwriter's findings are typically presented in what is referred to as Preliminary Underwriting Findings.

The loan package which the underwriter evaluates is prepared and forwarded to the underwriter by the mortgage loan originator or loan processor.