After months of searching and having several offers rejected, you’re finally under contract. Congrats! But how long will you have to wait until you can close on the sale? The current average is 45 days, which is down from an average of 58 days in Jan. 2021, according to ICE Mortgage Technology, Inc. (formerly Ellie Mae, the mortgage applications processor). But the numbers may differ slightly, depending on your mortgage type, and they can be influenced by a number of factors.
Key Takeaways
- Ask both your lender and your real estate agent for an estimate of the closing timeline.
- Lock your rate quickly and respond to every question and documentation request from your lender as quickly as possible.
- Conventional mortgages close in an average of 45 days, though that timeframe can vary.
- More complex mortgages, such as Federal Housing Administration (FHA) loans, can sometimes take longer.
Closing Timelines by Mortgage Type
Average closing timelines for mortgages on the purchase of a home tend to rise and fall from month to month. Keep in mind that these are averages; your timeline may be shorter or longer depending on the specifics of your situation. Here are some sample timelines for different types of loans.
Conventional Mortgages
Conventional mortgages are the most common type of mortgage. They are made through private lenders, such as banks and credit unions, and they usually require a higher credit score to qualify than a government-backed loan does.
In Jan. 2021 (the most recent complete figures available), it took an average of 57 days to close on a conventional mortgage on a home purchase, according to ICE Mortgage Technology. But the average time to closing in July 2020, just six months earlier, was 47 days.
Federal Housing Administration (FHA) Mortgages
Federal Housing Administration (FHA) loans are mortgages that are insured by the government and offered by lenders that are approved by the FHA. These loans are designed to help low- and moderate-income families afford their own homes. Mortgagees pay both upfront and ongoing mortgage insurance premiums on these loans.
It may take a bit longer to close an FHA loan due to additional documentation requirements. For example, during underwriting, the loan has to be found to meet not just the lender's minimum criteria for approval, but also the minimum eligibility criteria established by the Department of Housing and Urban Development (HUD), which sets the guidelines for the FHA mortgage insurance program.
In Jan. 2021, ICE Mortgage Technology found that FHA loans took an average of 61 days to close. However, six months earlier, they took 45 days, on average.As of Jan. 2024, they are taking the same amount of time as a conventional mortgage: 45 days.
U.S. Department of Veterans Affairs (VA) Mortgages
U.S. Department of Veterans Affairs (VA) loans are designed to help military members and veterans afford to own a home. They are only available through VA-approved lenders, who have to comply with additional requirements that include complex underwriting rules. And a buyer has to provide a VA loan certificate of eligibility (COE), which can sometimes take extra time. As a result, VA loans can take an average of 40-50 days to close.
USDA Home Loans
The U.S. Department of Agriculture also has a home loan program for low- and very-low-income residents of rural areas who don't qualify for conventional mortgages and need help in getting out of unsafe or unhealthy conditions and into a home that has modern utilities and adequate space. These loans also have more complicated underwriting processes, which may extend the time to closing.
According to New York State's single family direct home loan program under USDA auspices, "Processing times vary depending on funding availability and program demand in the area in which an applicant is interested in buying and completeness of the application package."
Steps of the Closing Process
Once your offer is accepted, there are still several steps to your closing process. You can save a lot of time during closing by choosing your lender, your loan type, and your home inspector in advance. You also will want to get pre-approved with your preferred lender and have all of your documents in order before you ever go under contract. Note that some of the following steps can be completed out of order depending on your lender.
- Schedule your home inspection right away. Depending on your area, home inspectors may be in high demand and scheduling several weeks out.
- Authorize a hard credit pull with your lender.
- Lock your rate.Determining when to lock your mortgage rate can be difficult, but decide it quickly so that your loan can close on time.
- Have your lender schedule your appraisal right away. Appraisers are frequently booked several weeks out.
- Provide documentation to your lender. This will depend on your personal situation, but at a minimum, you should be prepared to submit bank statements, pay stubs, two years of tax returns, a photo ID, and your Social Security card.
- The home inspection is completed. Negotiate any issues that are found with the seller to you and your lender's satisfaction.
- The appraisal is completed. If there is a discrepancy between the appraised amount and the sale amount, you’ll have to cover the difference, secure alternate financing, or negotiate with the seller to lower the sale price.
- Respond to any of your lender’s questions or requests for additional information as quickly as possible.
- Receive and review your closing disclosure. By law, your lender is required to give you a closing disclosure at least three business days before you close.
- Close on your new home!
Important
Don't forget homeowner's insurance, which most lenders require as a condition of your loan. Be sure to get quotes in writing from several companies to compare the cost and coverage amounts.
Closing Guarantees
A number of lenders, including Chase, NBKC Bank, and others, have started offering a closing guarantee. The terms of each offering vary, but most agree to pay you a set amount if they can't close your loan on time. Chase's guarantee was $5,000 for a new home or investment property, but is up to $20,000 until July 2024. NBKC Bank offers a $5,000 guarantee that is divided equally between the buyer and seller. Other lenders' offers are not as generous: New American Funding's guarantee, for example, is a $250 credit toward closing costs if closing doesn't happen within 14 business days.
Be sure to read the fine print. Delays attributable to the borrower, seller, a third party, weather events, or natural disasters are common exclusions.
How Can I Speed Up the Closing Process?
The best way for you to speed up the closing process is by providing exactly what your lender asks for as quickly as possible. If your lender needs every single page of your bank statements, including the blank ones, send every single page of your bank statements.
The documentation requirements for a mortgage often seem tedious, but cooperating as quickly as possible is the single most important action you can take to speed up your closing process.
What Can Delay the Closing Process?
Major changes to your creditworthiness, such as applying for a new line of credit or switching jobs, are notorious for delaying a closing. Even if you desperately need a new auto loan to replace a totaled vehicle, or if you just can’t stand your boss anymore, wait until after your closing if you want to buy your house. Other common issues that can delay closing are changing your lender, limited availability of local appraisers, issues arising during an inspection that must be resolved, and delaying locking-in your mortgage rate.
What Happens if I Don’t Close on Time?
If you don’t close on time, the property seller could cancel the transaction and potentially sue you for performance depending on the terms of your contract. This is more likely if the seller has received better backup offers or is depending on this sale to close on time so that they can close on their next home. In this case, you also would lose your earnest money.
When the buyer or seller is unable to close on time, the parties frequently will agree to an amendment to the original contract that extends the deadlines. This isn’t guaranteed, though, so do your best to stick to your original contract, because it can be expensive if you fail to do so.
Should I Waive My Inspection to Close Faster?
Your lender will usually require an inspection—and if you’re getting a Federal Housing Administration (FHA) loan, it’s required. If an inspection isn’t required in your situation, you do have the option to waive it. Doing so could increase the likelihood that your real estate offer will be accepted and perhaps allow you to close on your loan faster—but at great risk. The biggest risk is that the home you’re buying needs major and costly repairs that could have been discovered during the inspection. Before you choose to waive your inspection, be sure to consider the risks.
The Bottom Line
How long your mortgage takes to close depends on the type of loan you choose, scheduling timelines of appraisers and home inspectors in your area, and the complexities of underwriting, among other factors. Respond to all of your lender’s requests as quickly and accurately as possible to keep things moving. And make sure that you don’t make any drastic changes to your financial situation while you’re waiting. Congratulations, homeowner!
