Mortgage Contingency

A mortgage contingency is a clause in your purchase contract that lets you cancel the deal and recover your deposit if you cannot secure the financing you need by an agreed deadline. It protects buyers who are relying on a loan: if the lender ultimately declines your mortgage or the terms fall through, you are not forced to buy a home you cannot pay for. The clause spells out the loan amount, rate ceiling, and the date by which you must have a firm commitment. If that date passes without financing, you generally must act within the contract terms to keep your protection. Waiving or shortening this contingency can make an offer more competitive, but it also puts your deposit at greater risk, so weigh it carefully with your agent.