The Reality of Warehouse Lending: What to Expect When Applying

Slump in refinance and decrease in ARMs - takeaways from non-agency market  report | Mortgage ProfessionalIf you’re in the mortgage industry, chances are you have ever thought about warehouse lending. This blog post will give you an overview of the lending warehouse process and what to expect when applying.

What is Warehouse Lending?

Warehouse lending is a type of short-term loan that allows mortgage lenders to fund loans and keep them in their portfolios until they can be sold to investors. Warehouse lines of credit are typically used by small- to medium-sized mortgage lenders who may not have the capital on hand to fund all of their loans. 

The Advantages of Warehouse Lending

There are several advantages to using warehouse lending, including: 

  • Increased Flexibility: Mortgage lenders can hold onto loans for longer, giving them more flexibility in how they price and sell them. 
  • Greater Control: Warehouse lines of credit give mortgage lenders more control over their loan portfolios. They can choose when to sell their loans and to whom they sell them. 
  • Faster Turnaround Times: Because warehouse lenders provide funding upfront, mortgage lenders can get their loans funded faster than if they were waiting for investor approval. 

The Disadvantages of Warehouse Lending 

There are also some disadvantages to using warehouse lending, including: 

  • Higher Costs: Warehouse lines of credit typically come with higher costs than traditional forms of financing, such as portfolio loans. 
  • Increased Risk: Because mortgage lenders have more control over their loan portfolios when they use warehouse lines of credit, they also assume more risk. If a loan goes wrong, the mortgage lender is on the hook for the entire amount. 
  • Less Liquidity: Mortgage lenders who use warehouse lines of credit may have less liquidity than those who use other forms of financing because they may not be able to sell their loans as quickly.

How Do I Get Approved For Warehouse Lending?

If you’re considering applying for warehouse lending, you should know a few things:

  • The first thing you need to do is find a reputable warehouse lender. You can ask your colleagues for recommendations or look for online reviews. Once you’ve found a few potential lenders, you should compare their terms and conditions to see which one fits your needs best.
  • Next, you’ll need to fill out an application. The application will ask for information about your business, including your financial history and the types of loans you’ve previously funded. The warehouse lender will use this information to determine whether or not you’re a good candidate for their financing.
  • Finally, you’ll need to provide collateral. Collateral is typically in the form of a mortgage or deed of trust on a property. The value of the collateral will be determined by the warehouse lender and should be equal to or greater than the value of the loan you’re requesting.


If you’re considering applying for a warehouse line of credit, you should know a few things. This blog post gives you an overview of the warehouse lending process and what to expect when applying. We’ve also discussed some of the advantages and disadvantages of using warehouse lending so that you can make an informed decision about whether or not it’s right for your business.