An automated underwriting system (AUS) approval does not mean you are clear to close. It is a favorable recommendation based on submitted loan data, with approval conditions still to satisfy. Clear to close means the lender has cleared the requirements needed to proceed to closing; signing and funding still follow. Fannie Mae’s approval guidance and Chase’s closing-stage explanation describe these separate milestones.

AUS approval vs. clear to close: who decides?

For conventional mortgages, two major automated underwriting systems are Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Product Advisor (LPA). The terminology here concerns those conventional-loan assessments.

These mortgage technology systems help evaluate a proposed loan. DU weighs credit history alongside factors including debt-to-income ratio, available reserves, the borrower’s equity, occupancy and property type. Debt-to-income ratio, or DTI, compares qualifying monthly debt payments with qualifying monthly income. As Fannie Mae’s explanation of DU risk factors shows, the assessment considers how those risks interact.

The lender must then connect the submitted information to evidence and decide whether to approve the loan. Fannie Mae’s lender responsibilities include ensuring accurate information, satisfying approval conditions and investigating contradictory facts that might justify a different decision. DU does not determine compliance with federal and state law; that responsibility also remains with the lender.

What Approve/Eligible and LPA Accept mean

The labels distinguish credit risk from eligibility for an agency to buy the mortgage from the lender.

The distinction matters when reading LPA findings: Freddie Mac’s February 2025 specifications illustrate an Accept result paired with Ineligible purchase eligibility. “Purchase” here concerns Freddie Mac buying the mortgage. It does not authorize the borrower to complete the home purchase.

What can remain after AUS approval?

Evidence supporting the borrower’s application

DU findings identify minimum documentation for income, assets and credit, along with property-related requirements. Reduced documentation can save work, but the lender may need more evidence when circumstances warrant it. DU’s documentation rules make that distinction explicit.

A request for bank statements or employment documentation can therefore remain unresolved after a favorable result. If the issue is inconsistent income information, see our guide to resolving an income-verification discrepancy.

The property, title and insurance

The lender must also establish that the property adequately supports the mortgage. An appraisal may remain outstanding, although eligible loans can qualify for a value-acceptance option that removes the appraisal requirement. The lender must satisfy that option’s conditions, as Fannie Mae’s property guidance explains.

Condominiums can require project-level review. Freddie Mac’s condominium guidance warns that a project’s lack of a Not Eligible status does not establish compliance with all project requirements.

Title and insurance require separate checks. For Fannie Mae loans, the lender must ensure compliant title insurance or an eligible attorney title opinion is in place and that the property insurer, policy and coverage meet requirements. A favorable credit assessment does not complete those tasks.

Closing disclosures, documents and funds

For most mortgages, borrowers must receive the Closing Disclosure at least three business days before closing. That timing requirement is separate from an AUS recommendation; the recommendation does not start the waiting period. The CFPB’s disclosure guidance explains the rule.

Even after clear to close, the transaction remains to be completed. The borrower must provide the required closing funds and sign the documents, and the lender must transfer the loan proceeds through settlement. The CFPB’s closing explanation describes those steps.

What changes can require another submission?

New debt, lower qualifying income, changed loan terms, different property information or reduced assets can make the actual loan differ from the version assessed. Fannie Mae requires accurate final data but permits specified tolerances, so not every change requires another DU run. Its resubmission table governs those exceptions.

Freddie Mac likewise requires resubmission for inaccurate or changed information outside its permitted tolerances. Its LPA resubmission requirements warn that the risk class or documentation level may change.

A new car payment: a hypothetical example

Assume a household has $8,000 in qualifying monthly income and $3,200 in qualifying monthly debt payments, including the proposed mortgage. Its DTI is 40%. A new $400 monthly car payment raises total payments to $3,600 and DTI to 45%.

That five-percentage-point increase triggers DU resubmission: Fannie Mae requires another submission for an increase of at least three percentage points when the recalculated DTI is 50% or less. The DU tolerance rules support this example.

The 45% ratio alone does not predict the outcome. A new submission may remain favorable, change the conditions or produce a different recommendation. Separately, an outstanding property or title requirement can hold up closing even if the credit result remains favorable.

What to ask before relying on an approval

When planning purchase financing, ask your loan officer to identify the latest AUS result, the lender’s current approval status and each unresolved condition. For every open item, establish who must supply it and who must accept it.

Agents communicating financing progress can then name the actual milestone: automated findings received, lender conditions outstanding or lender clearance to close. For a scheduled purchase, confirm which unresolved items could move the closing date.