A mortgage commitment letter is a document from a lender indicating that a loan has been conditionally or fully approved, subject to certain terms and requirements. It typically comes later in the mortgage process than pre-approval.
Pre-approval vs. commitment letter
Pre-approval is an early review of borrower qualifications. A commitment letter usually follows a more detailed review, including underwriting and property-related conditions.
What a commitment letter may include
- Loan amount
- Loan program
- Interest rate or rate lock information
- Property address
- Conditions that must be satisfied
- Expiration date
- Required documentation
- Closing requirements
Conditional vs. final commitment
A conditional commitment means certain items still need to be completed before closing. A final commitment generally means the lender has completed required reviews, though closing still depends on final documentation and transaction steps.
Preparing to buy and want to understand possible financing paths?
Why sellers may care
In a purchase transaction, a commitment letter can provide confidence that financing is progressing. However, it does not remove every risk, and final closing still depends on satisfying all lender and transaction requirements.