Mortgage Commitment

A mortgage commitment is a lender's formal written offer to advance funds on specified terms — the rate, term, amortization, payment schedule and outstanding conditions — issued once underwriting is substantially complete. It is the document that confirms a lender is prepared to fund the mortgage.

What a commitment letter contains

A commitment records the mortgage amount, the term and amortization, the interest rate or the formula linked to prime rate, the payment frequency, and the property being financed. It also sets out conditions precedent: items the borrower must satisfy before money is advanced, such as a signed agreement of purchase and sale, a satisfactory appraisal, proof of down payment, income and employment verification, clear title, and mortgage default insurance approval where the loan is high-ratio.

Commitment versus pre-approval

A pre-approval is an early estimate of borrowing capacity, often paired with a rate hold. It is not a promise to lend. A commitment goes further: the lender has reviewed the borrower, the property and the supporting documents, and is prepared to fund subject only to the listed conditions. Buyers who need to remove a financing condition from an offer rely on a commitment, not a pre-approval.

Conditions, deadlines and expiry

Commitments carry conditions and an expiry date. If an appraisal comes in low, documents arrive late, or the borrower's circumstances change, the lender may decline to advance funds. The commitment also reflects the qualification standard applied at approval, including the federal mortgage stress test for insured mortgages and many uninsured ones. A commitment is not a guarantee of funding; it is contingent on the conditions being met before closing. Some lenders also charge a commitment fee, so confirm costs directly.

For a borrower, the commitment is the checkpoint between an accepted offer and funding day. Read the rate, term, prepayment terms and conditions carefully before signing, and ask the lender to explain anything unclear.

Frequently asked questions

Is a mortgage commitment the same as a pre-approval?

No. A pre-approval is an early indication of how much a lender may lend, often with a rate hold, but it is generally not binding. A commitment is issued after underwriting and sets out specific terms and conditions the lender requires before funding. Confirm with your lender which document you actually hold.

How long is a mortgage commitment valid?

Validity depends on the lender and any rate hold period attached to it. Commitments usually expire on a stated date, or when the property closes, whichever comes first. If closing is delayed, ask the lender to extend in writing before the deadline passes, since an expired commitment may mean requalifying at current rates.

What happens if the conditions in my commitment are not met?

The lender can decline to advance funds. Typical conditions include a satisfactory appraisal, verified income, proof of down payment and clear title. If a condition cannot be met, tell the lender immediately — alternatives may exist, but the commitment itself does not obligate the lender to fund.