A commitment letter is a lender's formal, written offer to fund your mortgage, subject to final conditions. It's delivered after underwriting and marks a major milestone in your financing, setting out your approved loan amount, terms and financing costs.
What is included in a mortgage commitment letter
Most mortgage commitment letters contain:
Lender and borrower names
Property address and security details
Loan amount, currency, and type
Interest rate, rate type, and loan term
Amortization period
Monthly payment amount and frequency
The list of conditions that must be satisfied prior to funding
Acceptance and funding deadlines
Alongside the core loan terms, the commitment letter sets out the standard provisions that govern your mortgage including prepayment options, administration fees, insurance requirements and what happens if your financial circumstances change between signing and closing.
Common conditions in a mortgage commitment letter
Conditions are tailored to the specific loan application. Common mortgage conditions include:
Identification verification
Income verification matching the amount used to underwrite
Proof of down payment sufficient to complete the purchase
Gifted deposit documentation, if applicable
Fully executed purchase agreement with all conditions waived
Property documentation (title deed, floorplan, current-year property tax bill)
Condominium documentation
A satisfactory appraisal from an approved appraiser
Final lender approval
The importance of the appraisal condition
One of the most critical conditions is the property appraisal. The appraisal must confirm that the property's market value supports the requested loan amount and that there are no adverse conditions or latent defects. If the appraisal comes in lower than expected, you may need to renegotiate the purchase price with the seller or lower the loan amount.
Important note: Protecting your approval status
Final approval can still fall through if your financial circumstances change materially before closing. New debt, a job change, or large unexplained movements of money can trigger a review and, in some cases, a re-underwrite. It's important to maintain your financial status in the and avoid making major changes before funding. If something changes, tell your lender early, not at closing.
Bottom line
A mortgage commitment letter is a major milestone in the financing process. It's the formal offer of financing and the clearest single statement of your loan's terms and conditions.
Take the time to read your commitment letter carefully when you receive it, and ask your broker or lender about anything that isn't clear before you sign.
SoBankable provides CAD-denominated cross-border mortgages to Canadians and Americans financing residential property in Mexico. Ready to get started? Apply today.