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3 min read Mar 29, 2023

Mortgage Commitment Letter: Everything You Need to Know

You’ll go over a lot of documents related to your home loan and the purchase of your new home. The mortgage commitment letter is one of these necessary documents.

What is a Mortgage Commitment Letter?

A mortgage commitment letter is a document that shows that your loan has been approved. It is issued by your mortgage lender. You need to complete the mortgage preapproval process to get get a loan commitment letter.

The letter contains the amount your mortgage lender approves of. You can showcase the letter to real estate agents or sellers while making an offer.

Types of Loan Commitment Letters

Mortgage letters are of two types:

Firm Loan Commitment

A firm commitment letter guarantees that the lender will issue the amount you need based on your current financial conditions. It signifies that you have met all the eligibility criteria of a mortgage process.

Typically a firm loan commitment letter contains the following:

  • Name of the lender
  • Name of the borrower
  • Property address (if you have already made an offer)
  • Type of loan
  • Loan amount
  • Interest rate
  • Date of mortgage commitment
  • Date of mortgage expiration
  • Statement of loan approval

Conditional Mortgage Commitment

As the name suggests, a lender issues a conditional letter only if the borrower meets certain conditions. It may contain the following:

  • Name of the lender
  • Name of the borrower
  • Property address (if you have already made an offer)
  • Statement of loan approval
  • Loan amount
  • List of conditions you need to fulfill before the loan approval
  • Duration of validity

Does a Commitment Letter Means I am Approved?

A mortgage commitment letter or a lender commitment letter does not approve a loan.

A lender may require you to fulfill various other criteria before approving your mortgage. These may include signing the agreement, submitting a few necessary documents, proof of title, etc.

Additionally, the lender will require you to conduct a home appraisal. Your lender won’t lend an amount greater than the appraised value of the property.

Why is a Mortgage Letter Important?

A commitment letter for a mortgage shows that you are a serious buyer. It proves that you can afford the property and are in the process of acquiring the needed funds. This increases your credibility and trustworthiness among home sellers and real estate agents.

A loan commitment letter further assures sellers of no major obstacles in the sale process. In a hot seller’s market, a loan commitment letter can load the dice in your favor.


1. How long is a mortgage commitment good for?

The length of commitment of a loan commitment letter varies depending on the lender. Typically, the length of the mortgage commitment letter is 30 days.

2. When do you get a mortgage commitment letter?

A mortgage lender issues the mortgage commitment letter you complete the preapproval process.

3. Is a loan commitment a legal document?

A loan commitment letter from a lender is a formal document that states that a lender is willing to lend you a specific amount. However, it is not legally binding. The lender can back out from the deal anytime before the closing discussions.

4. What happens after mortgage commitment letter?

You reach the end of the mortgage process after submitting the mortgage commitment letter. The letter is not a final approval, but rather a promise to the borrower that the loan will be granted if all conditions are met. You should be approved if there are no loose ends.

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