Real estate glossary
Loan contingency
Also called: Financing contingency, Mortgage contingency
Lets the buyer cancel if they cannot get the mortgage described in the contract by the deadline.
A loan contingency protects a buyer who is financing the purchase. If their loan is not approved on the terms in the contract, they can cancel and usually keep their deposit.
The number of days the buyer has is written into the contract and can be negotiated. After the buyer removes it, being unable to get the loan is generally no longer a protected reason to cancel.
What it means for you as a seller
Ask how strong the buyer's pre-approval is. A shorter loan contingency, or none for a cash buyer, means your deal firms up sooner.
Related terms
- ContingencyA condition in the contract that must be met — or removed — by a deadline, letting the buyer cancel if it is not satisfied.
- Appraisal contingencyLets the buyer cancel or renegotiate if the home appraises for less than the agreed price.
- Earnest money depositThe buyer's good-faith deposit, held by escrow and credited toward the price at closing.
Not legal or tax advice. These explanations are general information to help you follow your own transaction. Laws, forms and customs vary by state and county, and the terms of your own contract always control. For advice about your situation, talk to your real estate agent, a real estate attorney or a tax professional. Last updated .