Desktop Underwriter vs. Loan Product Advisor: Navigating AUS Findings Like a Pro

Conforming loans live and die by automated underwriting systems (AUS). You can submit the same borrower profile to Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Product Advisor (LPA) and receive two very different findings. Understanding why those responses diverge—and how to answer them—turns AUS from a mysterious gatekeeper into a predictable guide. Here’s the playbook we share with borrowers before their files ever reach an underwriter.

DU and LPA look at the same inputs differently

Both systems analyze the “four Cs”: credit, capacity, collateral, and capital. DU tends to reward longer credit histories and higher reserves, while LPA occasionally gives more flexibility on debt-to-income ratios when compensating factors exist. Before you run either system, verify that the tri-merge credit report is accurate and that income documents align with the numbers in your loan application (Form 1003). AUS findings only know what you feed them—garbage in, garbage out.

Run both engines when scenarios allow it

Some lenders only use DU or only use LPA, but many have access to both. If your file sits on the edge of approval, ask your loan officer to run each engine. You might receive a DU approve/eligible with conditions or an LPA accept with fewer documentation requirements. In my own refinance, DU wanted a full letter explaining a six-month employment gap, while LPA waived it because I had 12 months of reserves. Seeing both sets of findings let me choose the friction level I preferred.

Decode the findings line by line

When AUS spits out a multi-page report, don’t let your eyes glaze over. Highlight these sections:

1. Eligibility status. Approve/eligible, refer/eligible, or refer with caution. If you see “refer,” the file needs manual underwriting or additional changes.
2. Key ratios. Maximum allowed DTI, loan-to-value, and reserve requirements.
3. Documentation messages. DU might require a written VOE, tax returns, or a profit-and-loss statement. LPA could ask for additional asset verification.
4. Risk factors. Look for reason codes tied to late payments, previous foreclosures, or disputed accounts.

Ask your loan officer to walk through each line so you understand what the underwriter will look for later.

Use “what if” simulators before making big changes

Most AUS platforms include a “what if” tool that lets lenders adjust variables without pulling a new credit report. Want to see how paying off a credit card impacts findings? What happens if you increase the down payment from 5% to 10%? By testing these scenarios early, you avoid re-running the file multiple times and creating inconsistent data trails. Remember that AUS records every submission; too many versions can trigger red flags.

Common issues and how to solve them

• High DTI: Try moving debts to another borrower, paying off installment loans, or adding verifiable income sources. LPA often tolerates higher ratios when reserves are strong.
• Limited credit depth: Consider non-traditional tradelines (rent, utilities) or adding an authorized user account with perfect history. DU values length and depth.
• Property type concerns: Multi-unit and investment properties carry stricter requirements. Double-check LPA’s collateral feedback messages for appraisal instructions.
• Undocumented large deposits: Provide paper trails for gifts, bonuses, or asset sales before AUS even asks.

Coordinate with your processor

Processors translate AUS findings into condition lists. If the findings call for IRS transcripts, the processor might order them automatically. Stay in sync so you’re not duplicating efforts or missing deadlines. Share updated documents through the lender’s secure portal, label each file clearly, and confirm receipt. Organized borrowers move through underwriting faster because processors trust their documentation.

Know when manual underwriting makes sense

AUS “refer” findings are not death sentences. Some borrowers choose manual underwriting because of unique income situations, recent credit events, or complex properties. Manual reviews require stricter ratios and reserves, but they also allow human judgment. Discuss the trade-offs with your loan officer. In certain markets, a manual underwrite with a strong compensating factor can secure approval when AUS refuses to budge.

Final checklist before submission

1. Review the 1003 for accuracy.
2. Verify that pay stubs, W-2s, and bank statements match the numbers entered.
3. Label deposits and transfers before AUS asks.
4. Confirm that disputed accounts are resolved.
5. Decide which engine’s findings you prefer if both approve the file.

Treat AUS like a collaboration, not an adversary. When you understand how DU and LPA evaluate risk, you can make proactive adjustments, deliver cleaner documentation, and breeze through underwriting with fewer conditions. Education is your best approval tool.