🏦 What Is a Mortgage Commitment Clause in Real Estate?

A mortgage commitment clause in real estate sets firm deadlines for the buyer to secure final loan approval and provide required lender documentation. It protects sellers by ensuring the buyer moves quickly through underwriting and avoids delays that could jeopardize closing.

How a Mortgage Commitment Clause Works

When a buyer submits an offer that includes financing, they must obtain a mortgage commitment by a specific deadline. This clause outlines what the buyer must provide to the lender and what the seller can do if deadlines are missed.

Key components typically include:

  • Mortgage commitment deadline — the date the buyer must deliver a full loan approval.
  • Lender documentation — W-2s, tax returns, bank statements, employment verification, etc.
  • Underwriting requirements — conditions the buyer must satisfy before closing.
  • Seller remedies — cancellation, extensions, or requiring proof of progress.
  • Financing conditions — interest rate limits or loan type requirements.

This clause keeps the loan process on track and provides structure to prevent financing delays.

Why a Mortgage Commitment Clause Matters

Benefits for Buyers:

  • Ensures the loan process stays organized and on schedule.
  • Prevents last-minute underwriting delays.
  • Creates a structured roadmap for obtaining final approval.
  • Improves closing predictability.

Benefits for Sellers:

  • Protects against buyers who fail to secure financing on time.
  • Reduces fall-through risk.
  • Allows sellers to cancel or extend if deadlines are missed.
  • Ensures buyers show financial readiness.

Example of a Mortgage Commitment Clause

A common mortgage commitment clause may state:

  • The buyer must obtain a written mortgage commitment within 21 days of contract acceptance.
  • The buyer must promptly provide the lender all required documentation.
  • If the buyer fails to provide a commitment by the deadline, the seller may cancel the contract.
  • The buyer must lock their interest rate within a specified timeframe.
  • The buyer must notify the seller immediately of any financing issues.

This ensures both parties understand the financing timeline and what happens if delays occur.

Why It Matters for FSBO Sellers

FSBO sellers may not be familiar with lending timelines or underwriting delays. A mortgage commitment clause gives them protection and structure.

  • Reduces the chance of financing-related fall-throughs.
  • Creates clear expectations for buyers.
  • Helps sellers avoid long, uncertain contract periods.
  • Provides stronger control over the transaction timeline.

Sellers using Flat Fee MLS through Brokerless can reduce risk by requiring buyers to meet firm mortgage commitment deadlines.

Frequently Asked Questions

What happens if the buyer misses the mortgage commitment deadline?
The seller may cancel the contract, grant an extension, or request proof of loan progress.

Is a mortgage commitment the same as pre-approval?
No. A pre-approval is preliminary; a mortgage commitment is a lender’s formal approval after full underwriting.

Can the seller ask for updates during underwriting?
Yes. Most clauses allow sellers to request status updates or proof of progress.

Does a mortgage commitment guarantee closing?
Not always—buyers must still satisfy remaining loan conditions, such as appraisal or employment verification.