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Underwriting conditions — called stips (short for stipulations) — are specific items a hard money lender requires before they will issue a Clear to Close and fund the loan. Common stips include hazard insurance, clear title commitment, signed entity documents, verified contractor information, and completed loan applications. Clearing every stip as fast as possible is the single most important thing a broker or borrower can do after loan submission to protect their closing timeline.
When an underwriter reviews a loan file, they check every element of the deal against the lender's program requirements. Anything that is missing, incomplete, or that requires verification before the lender is comfortable funding becomes a condition — a stip.
Stips are the lender's version of: "We're willing to fund this deal, but first we need you to provide or confirm these things."
A stip is not a decline. It is a list of homework. Clear the list, get the Clear to Close, close the loan.
Hazard insurance binder The lender must be named as additional insured on the property's hazard insurance policy. The borrower needs to contact their insurance agent, obtain a policy for the subject property, and provide a binder (proof of insurance) listing the lender's name correctly. This is the single most common missing item at submission — submit it with the initial file and this stip disappears.
Title commitment The title company's preliminary commitment showing that title to the property is clear — no outstanding liens, judgment liens, ownership disputes, or encumbrances that would prevent the lender from taking a valid first lien position. Some title issues (unpaid contractor liens, old judgments) must be cleared before the title commitment can be issued.
Executed entity documents Articles of organization, operating agreement, and sometimes a certificate of good standing for the borrowing entity (LLC, corporation, etc.). The lender confirms the entity is properly formed and authorized to take on debt.
Personal guaranty The borrower's (and any guarantors') signed personal guaranty, often requiring notarization.
Verified contractor information License number, certificate of insurance (general liability and workers' comp), and sometimes a signed W-9 for the general contractor. Required on fix and flip and construction loans.
Updated bank statements If the initial file showed statements from 30+ days ago, the lender may require updated statements to verify current liquidity.
Appraisal The lender-ordered appraisal must be completed, reviewed, and support the ARV used in underwriting. If the appraisal comes in lower than expected, the loan amount may be adjusted.
Survey For some commercial or unusual properties, the lender may require a current survey of the property boundaries.
Environmental report On commercial properties, especially industrial or gas station sites, a Phase I Environmental Site Assessment may be required.
Rule 1: Anticipate common stips and submit them upfront. Hazard insurance, entity documents, contractor information — these are standard stips on almost every deal. Submit them with the initial file and eliminate the round-trip.
Rule 2: Respond within 24 hours. When stips arrive, respond within 24 hours with the requested documents or a clear status update on when they will arrive. A stip that sits in a borrower's email unread for 4 days is 4 days off the closing timeline.
Rule 3: Resolve the hardest stip first. If there is a title issue, start working on it immediately — do not wait until everything else is cleared. Title problems can take days or weeks to resolve. Front-load the effort on the slowest items.
Rule 4: Do not provide partial responses. If the lender asks for insurance and the borrower provides a declaration page but not the binder with the correct lender info, the stip is not cleared. Provide the complete item — not a partial response that generates a follow-up.
Rule 5: Communicate proactively if there is a delay. If a stip will take more than 2-3 days to clear (e.g., waiting for a title company to resolve a lien, waiting for an insurance agent to issue a corrected binder), tell the AE. Do not go silent. An AE who knows what is happening can manage the underwriter's expectations. An AE who hears nothing assumes nothing is happening.
If stips are not cleared before the loan term expires or before the borrower's contract deadline:
This is why clearing stips fast is not just good practice — it is deal preservation.
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