Government Sponsored Enterprise (GSE)

Updated 2026-05-17

Desktop Underwriter® (DU®) is Fannie Mae's proprietary automated underwriting system (AUS). It is designed to help lenders evaluate borrower creditworthiness and loan eligibility by processing submitted data against Fannie Mae's underwriting guidelines. DU analyzes borrower credit, capacity, collateral, and capital to assess loan eligibility and risk. It provides a comprehensive risk assessment, an underwriting recommendation, and identifies documentation requirements for the loan.

Desktop Originator® (DO®) is a related Fannie Mae tool that supports the data requirements for loan origination, particularly in conjunction with DU. DO facilitates the input and management of loan application data, ensuring that loan information is accurately captured and processed before submission to DU.

DU is a central tool for Fannie Mae-approved lenders, facilitating efficient and consistent underwriting decisions. It is often contrasted with manual underwriting, which involves a more traditional, human-driven review process.

Key Functions and Features of DU

• Automated Underwriting: DU provides an automated assessment of a borrower's creditworthiness and the eligibility of a loan, streamlining the underwriting process and helping lenders make consistent and objective credit decisions.
• Risk Factors Evaluated: DU considers a wide range of risk factors, including credit history, debt-to-income ratios, loan-to-value ratios, and property characteristics.
• Underwriting Recommendations: DU provides various recommendations, such as "Approve/Eligible," "Refer with Caution," or "Out of Scope," guiding the lender on the next steps for underwriting.
• Documentation Requirements: DU identifies specific documentation requirements for the loan. While DU can reduce some documentation, specific requirements still apply, particularly for income and asset verification.
• Data Reporting: Lenders are required to report specific loan data to Fannie Mae via DU. This includes information collected from forms such as the Supplemental Consumer Information Form (Form 1103).
• Accuracy of Data: Lenders are responsible for the accuracy of data submitted to DU. DU also has specific tolerances for data discrepancies and addresses erroneous credit report data.
• Underwriting Findings Report: DU generates a report summarizing its findings and recommendations, which lenders must retain in the loan file.
• Integration: DU's user interface supports data input from various sources, and its underlying dataset adheres to standards like MISMO V. 3.4.
• Policy Updates: DU is regularly updated to reflect changes in loan limits and other policy guidelines.

Desktop Originator (DO) Role

DO facilitates the input and management of loan application data. The data collected on the Supplemental Consumer Information Form (Form 1103) is supported within the Desktop Originator user interface, allowing lenders to input and manage this information before submission to DU.

DU Validation Service

The DU validation service is a feature within DU that allows for automated validation of certain borrower information, such as employment, income, and assets, using third-party data sources. When employment and income are validated through the DU validation service, it can provide lenders with representation and warranty relief, reducing their risk and potentially reducing documentation requirements.

Specific Data Entry and Policy Applications

Supplemental Consumer Information Form (Form 1103)

For loans with application dates on or after March 1, 2023, any data provided by borrowers on Form 1103 (regarding homeownership education/housing counseling and language preference) must be shared with Fannie Mae via DU when the loan is submitted for underwriting. The data collected on Form 1103 is supported within the Desktop Originator user interface.

Implementation of Conforming Loan Limits

DU applies new Conforming and High-Balance Loan Limits to loan casefiles submitted or resubmitted on or after a specified date. For the 2025 loan limits, DU will apply these to casefiles submitted or resubmitted on or after the weekend of December 7, 2024.

Handling Prior Ineligible Recommendations

A significant feature of DU's implementation is how it handles loans that were previously deemed "Ineligible" solely due to exceeding the prior year's loan limits. If a loan casefile was underwritten through DU before December 7, 2024, and received an Ineligible recommendation only because it exceeded the 2024 loan limit, it may still be delivered after January 1, 2025 (or in January 1, 2025 MBS pools). This is permissible if the loan amount complies with the applicable 2025 conforming loan limit value, and the loan casefile does not have to be resubmitted to DU.

Impact on Loan-Level Price Adjustment (LLPA) Waivers

The designation of a high-cost or non-high-cost area, which impacts the LLPA waiver for first-time homebuyers, is also tied to DU's implementation schedule. For loan applications dated, or loan casefiles created, before December 7, 2024, the 2024 area designation applies. On and after December 7, 2024, the 2025 designations are used.

Role During Federal Government Shutdowns

During a federal government shutdown, DU's validation service becomes particularly important. Fannie Mae's guidance clarifies that:

• If employment has been validated by the DU validation service, loans remain eligible for representation and warranty relief, provided the lender complies with the "close by" date in the DU message and other applicable requirements. This offers an alternative to manual verbal verification of employment when government agencies or employers are inaccessible.
• DU can validate certain income types using tax transcript data obtained from eligible verification reports. However, during a shutdown, requests for new verification reports may not be fulfilled by the IRS, potentially impacting DU's ability to access new data for validation. DU will continue to process validation messages for reports received before the shutdown.
• For loans underwritten through DU, the system may specify a required amount of financial reserves. During a prolonged government shutdown, Fannie Mae may temporarily require the borrower to have the greater of two months of documented reserves or the amount required by DU.

DU Data Entry for Rental Income

When calculating qualifying rental income for a principal residence with 2 to 4 units, specific instructions are provided for entering this information into DU:

• Subject Property (2-4 units): The monthly qualifying rental income (or loss) is entered as "Subject Net Cash." The full Principal, Interest, Taxes, Insurance, and Association Dues (PITIA) for the subject property is included as the borrower's primary housing expense. For refinance transactions, the mortgage is identified as a subject property lien.
• Non-Subject Property (2-4 units): The monthly qualifying rental income (or loss) is entered as "Net Rental." The full PITIA for the existing property is included as the borrower's primary housing expense.

These specific data entry requirements ensure that the rental income is correctly factored into the borrower's overall financial picture for underwriting purposes.

Use in VA-Guaranteed Loans

The Department of Veterans Affairs (VA) has approved the use of several automated underwriting systems (AUS), including Fannie Mae's DU, for VA-guaranteed loans. These systems are designed to assign a risk classification to loans, which in turn determines the level of underwriting and documentation required.

Other approved AUS include Freddie Mac's Loan Prospector, Countrywide's CLUES System (for their loans only), and Chase's Zippy (for their loans only). These systems are intended for use by VA automatic lenders on loans eligible for automatic processing.

Lender Responsibility: It is crucial to understand that automated systems do not approve or disapprove loans; they merely determine a risk classification. The ultimate decision to approve a loan rests with the lender. Lenders remain fully responsible for meeting all VA requirements for all loans, although they may take advantage of certain documentation waivers based on the risk classification provided by the AUS. The terms and conditions for using these systems are negotiated directly with the AUS providers.