What Is A Loan Contingency Deadline?

When purchasing a home, many clients misunderstand or ignore a very critical deadline in their contract – The Loan Contingency Deadline.  If the purchase is conditioned upon the Buyer getting financing, the Loan Contingency Deadline is the date by which the buyer needs to have a firm commitment from their lender that they will receive financing.

When the buyer applies for a loan, the seller wants clarity on whether or not the buyer will actually be able to get a loan and how long this process will take.  The seller sets a deadline by which the buyer needs to have a loan commitment in place, after which the buyer is on the hook to purchase the property, whether or not they can actually obtain the loan.    Many Realtor® forms we see in our office refer to this deadline as the “Loan Contingency Deadline.”

What confuses many buyers is that getting a document from a lender titled “Pre-Approval,” “Preliminary Commitment,” “Loan Commitment,” or other similar phrase does not mean that the buyer has a firm commitment from the lender.  The lender has not yet unconditionally agreed to fund the loan, and may ultimately decline to if the buyer fails to meet certain conditions.

Buyers can then find themselves in a difficult position if the loan contingency deadline has passed, and their lender has not agreed to fund the loan.

If you have a question about the loan contingency deadline in your contract, or are unsure about what you have received from your lender, please call our office at (314) 862-2237.

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