Getting a warehouse line of credit means lining up three things before you apply: the state licenses and agency seller/servicer approvals that make you eligible to originate and sell loans, the financial strength to clear a warehouse bank’s net worth and liquidity floors, and a documentation package thorough enough to survive 30 to 60 days of due diligence. If you have those pieces in order, the path to a signed master warehouse agreement is straightforward. If any one of them is missing, no warehouse provider will advance you a dollar.
A warehouse line is a short-term revolving facility that funds mortgages at the closing table, with the note itself serving as collateral until you sell the loan to an end investor and the investor’s payment pays down the draw.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2 Everything a warehouse lender asks of you reflects that structure: they need confidence you can originate cleanly, deliver to the secondary market quickly, and absorb a loss if a loan goes bad.
Licensing and Agency Approvals You Need First
Before a warehouse lender will open your file, you need the regulatory foundation. That means state mortgage lending licenses in every state where you originate, registration through the Nationwide Multistate Licensing System (NMLS), and approval as a seller/servicer with at least one government-sponsored enterprise or agency.
The agency approvals matter twice. They give you an outlet to sell loans, and they set a de facto financial minimum the warehouse lender will rely on. Ginnie Mae, for example, requires single-family issuers to hold a base net worth of at least $2.5 million, plus additional amounts scaled to outstanding obligations. Issuers of securities backed by Home Equity Conversion Mortgages must hold at least $5 million.2Ginnie Mae. Chapter 3 – Eligibility Requirements Fannie Mae and Freddie Mac run their own approval processes with their own thresholds. Warehouse providers lean on these agency floors because without a reliable buyer on the other side, the loans you fund can’t come off the line.
Financial Thresholds Lenders Expect
On top of agency requirements, warehouse lenders impose their own numbers. They vary by provider and by the size of the line you’re asking for, but the benchmarks cluster predictably.
- Adjusted net worth of roughly $1 million to $2.5 million for a basic facility, scaling to $5 million or more for larger lines. One publicly filed warehouse agreement required tangible net worth to stay above $3 million at all times.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2
- Liquidity in unencumbered cash or cash equivalents. The same agreement set a floor of 5% of the maximum line amount, meaning a $10 million facility needed $500,000 in liquid reserves.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2
- Personal credit scores above 700 for principals and owners, since the lender’s exposure runs partly to the individuals who control the entity.
- Monthly origination volume of roughly $3 million to $5 million at a minimum. Below that, the warehouse bank’s administrative overhead doesn’t justify the relationship.
- At least two years of continuous mortgage production. Startups face a harder path and usually need principals with substantial origination experience to compensate.
These are guidelines, not rigid cutoffs. A warehouse bank writing a $50 million facility will expect far more cushion than one offering $5 million. What stays constant is the lender’s underlying question: can you absorb a loss on an individual loan without putting the whole line at risk?
Documents You’ll Need to Submit
The application package is extensive because the warehouse bank is lending against your ability to manufacture and sell loans, not against a static asset. Expect to produce:
- Two to three years of audited financial statements prepared under GAAP, showing consistent profitability and manageable debt.
- Current balance sheets and income statements covering liquidity, leverage, and earnings trend.
- A business plan covering growth strategy, target markets, geographic footprint, and projected volume for the coming year.
- Corporate governance documents: articles of incorporation, bylaws, operating agreements, and organizational charts.
- Management resumes emphasizing mortgage experience and any prior warehouse relationships.
- Your federal Employer Identification Number along with disclosure of corporate structure, ownership percentages, and affiliates.
- Full disclosure of existing banking and warehouse relationships, including balances, terms, and lender names.
- Regulatory history covering any legal actions, sanctions, consent orders, or license revocations against the company or its principals.
Quality control documentation gets particular attention. Warehouse banks want to see your QC plan: how you audit files pre- and post-closing, how you track defect rates, and what corrective procedures you follow when problems appear. Weak QC is one of the fastest routes to a declined application, because defective loans create repurchase exposure for both sides.
The Due Diligence and Approval Timeline
Once you submit the full package through the lender’s secure portal, the warehouse bank’s underwriting team begins its review. For a new relationship, plan on 30 to 60 days, longer if your documentation needs cleanup or you’re slow responding to follow-up requests.
During due diligence, the lender runs the backgrounds of all principals against government exclusionary lists and industry databases. The relevant ones include the GSA’s System for Award Management, HUD’s Limited Denial of Participation list, and FHFA’s suspended counterparty program. Appearing on any of them is disqualifying. The lender’s legal team reviews the proposed warehouse agreement in parallel, confirming the covenants, default triggers, and collateral provisions are in order.
A UCC-1 financing statement is filed to establish the warehouse lender’s security interest in the mortgage notes you’ll fund through the line, giving the bank priority over other creditors. Filing fees vary by state but are modest in the context of the overall facility.
Final approval produces a master warehouse agreement spelling out the credit terms, advance rates, interest calculations, reporting requirements, and default provisions. After signing, the lender issues system credentials and operational manuals so you can begin submitting individual loan funding requests.
Choosing Between a Credit Line and a Repurchase Agreement
Warehouse facilities come in two legal structures, and you’ll encounter the choice at the agreement stage.
A traditional warehouse line of credit works like a secured revolving loan. The warehouse bank lends against the mortgage notes as collateral, and you retain ownership of the loans.
A master repurchase agreement (MRA) is structured differently. You technically “sell” each funded loan to the warehouse bank with a commitment to repurchase it in the near future, which typically happens simultaneously with the sale to the end investor.3Mortgage Bankers Association. Warehouse Lending Fact Sheet The warehouse bank holds legal title during the dwell period, which gives it stronger protections in bankruptcy because the loans are off your balance sheet. Day-to-day operations feel similar under either structure. The practical differences surface in default handling and accounting treatment, and most large warehouse banks today use the MRA form.
Pricing You’ll Be Quoted
Warehouse lines are priced as a variable rate over the Secured Overnight Financing Rate (SOFR), with a spread that reflects your risk profile and the competitive market. SEC filings from one publicly traded mortgage company show spreads ranging from 1.15% to 1.75% as of late 2025.4SEC EDGAR. Warehouse and Other Secured Lines of Credit (Tables) Stronger companies with longer track records and higher volumes negotiate the tighter spreads.
Beyond the interest accrual on each funded loan, warehouse banks charge a per-loan funding fee on each draw.3Mortgage Bankers Association. Warehouse Lending Fact Sheet Some lenders impose unused line fees if you consistently draw well below your approved capacity, and most charge an annual renewal fee when the facility comes up for its yearly extension. Legal costs for document preparation and the UCC filing add to the upfront expense of establishing the line. The facility itself typically carries a one-year term with annual renewal.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2
Staying Qualified After Approval
Approval is the starting point, not the finish. Warehouse agreements include financial covenants you have to maintain for the life of the facility, and the lender monitors them actively.
Common ongoing requirements include a minimum tangible net worth, a liquidity floor, and leverage limits. One publicly filed warehouse agreement required the borrower’s net worth to equal or exceed 5% of total liabilities at all times.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2 Compliance is reviewed monthly or quarterly, and lenders can require interim reporting if market conditions deteriorate.
You should also plan to deliver regular financial reporting, including updated balance sheets, income statements, and borrowing base calculations, along with prompt notice of material events like changes in key personnel, regulatory actions, significant litigation, or shifts in investor relationships. One SEC-filed agreement treats a “material adverse change” in financial condition as a standalone event of default.1SEC. Mortgage Warehouse Loan and Security Agreement: EX-10.2 That language gives the lender broad discretion to act if your financial health slips, even if you haven’t breached a specific numerical covenant.
Depending on severity, a covenant breach can lead the warehouse bank to freeze further draws, raise haircuts on new fundings, demand additional collateral, or terminate the facility. Losing a warehouse line without a backup relationship in place shuts down your origination operation, which is why experienced mortgage bankers keep active relationships with at least two providers, even when one handles the bulk of their volume.