Financing Contingency

A financing contingency, also called a mortgage contingency, lets the buyer cancel the purchase and recover the earnest money if they cannot get the home loan described in the contract by a set date. The clause names the loan terms and the deadline.

A buyer offering $500,000 with a $10,000 deposit might write in a 30-year loan for $400,000 and a 21-day deadline. If the lender denies the loan in that window and the buyer gives proper notice, the deposit normally goes back to the buyer.

Waiving this contingency makes an offer look stronger, but it moves the risk onto the buyer. If the loan fails after the deadline or without the clause, the seller may have a claim to the deposit. Read what happens to earnest money if financing falls through before you waive it.