A mortgage contingency is the part of a purchase contract that deals with your loan. Freddie Mac’s page says it “specifies the time limit for finding financing for your loan”. Freddie Mac’s page also says that if a buyer is “not able to obtain a loan during the agreed upon time frame”, that buyer “can walk away from the home purchase without legal repercussions”.
The Consumer Financial Protection Bureau, or CFPB, has a page about the loan closing. It points to the same clause in your sales contract: “This will tell you whether your deposit will be refunded if the sale is cancelled because you are unable to get a loan.”
The wording sits in your own contract, not in either page. A buyer who guesses, or who treats that date as the closing date, can find out too late. The questions worth asking come before the signature.
What Does a Mortgage Contingency Do in a Home Purchase?
Freddie Mac’s page on contingency clauses describes contingencies as conditions a buyer can add to a home purchase agreement. The financing clause is one of the types that page covers. It deals with your loan and with the window your contract sets for finding one. The page speaks in general terms, not about any one deal.
That page says contingencies are “specific conditions you can add to your home purchase agreement to protect yourself”. It names this one directly. The clause is “also called a financing contingency”, the page says, and it puts a time limit on finding your loan.
Freddie Mac’s page then sets out the condition: being “not able to obtain a loan during the agreed upon time frame”. Freddie Mac’s page says a buyer in that position “can walk away from the home purchase without legal repercussions”. That’s what the page describes for a buyer who has the clause in the agreement. The details depend on your contract.
Is the Mortgage Contingency Date the Same as the Closing Date?
The two pages describe two different things. Freddie Mac’s page describes the clause as the time limit for finding financing. The CFPB page says the contract can limit the time you have to close the sale. Both live in your own contract, so read it for each date rather than assuming they match.
The CFPB page puts the closing side plainly: “The contract may limit the amount of time and flexibility you have to close the sale.” Freddie Mac’s page, on the financing side, describes the clause as setting a time limit for finding a loan. Different pages, different terms. Your contract is where to look for both.
Find where each date is written in your contract. Then ask your agent or an attorney which date controls what. Neither page says how the two relate, so don’t assume an order between them.
What Happens to Your Deposit If the Loan Falls Through?
The Consumer Financial Protection Bureau answers a related question about signing at the loan closing. Its answer sends a buyer who already has a purchase contract to the mortgage contingency clause, also called the financing or loan contingency clause, to see whether a deposit is refunded. That page is general consumer information, not a rule for any one contract.
The CFPB page says to review that clause in your sales contract, “also known as the financing or loan contingency clause”. It says the clause will tell you whether your deposit gets refunded if the sale is cancelled because you can’t get a loan.
For a buyer who walks away, the CFPB page says, “You may be able to secure a new mortgage or extend the period to close the sale.” If you can’t do that, the page says, “you may lose the deposit you paid to the seller”.
The page’s instruction on that is short: “Review your contract or seek the advice of an attorney”. That’s where the answer lives, not in a general rule.
What to Weigh Before Giving Up a Contingency
Freddie Mac’s page frames contingencies as a trade-off. They’re conditions you can add to a purchase agreement, and the page also names costs to having them. It doesn’t tell you which way to go.
The page says “too many contingencies can make your offer less attractive”. It adds that “they can also prolong the closing process”.
Its advice on that choice is direct: “Before you consider dropping contingencies, be sure to speak with your real estate agent about the possible risks.”
If you also need to sell a current home first, how a home sale contingency affects your offer and your loan covers that separate clause.
Where Your Loan Fits in the Contract Dates
Between them, the two pages explain the clause and the deposit question. Neither says how long a loan takes, what a lender requires, or whether a loan gets approved. Those answers come from a loan officer reading your actual file and the dates in your contract.
Fellowship’s mortgage process page describes what its team looks at: “We holistically assess income, debt-to-income ratio, credit score, employment trajectory, and property type to determine eligibility.” It adds: “Each loan program has different sets of eligibility guidelines.”
Fellowship’s home purchase page puts it this way: “Depending on your circumstances, one home loan may be better than another.” That’s why the dates in your contract are worth talking through with a loan officer before you sign.
A low appraisal is a different trigger, and what happens when a home appraises for less than the offer walks through it.
Frequently Asked Questions About a Mortgage Contingency
What is a mortgage contingency?
Freddie Mac’s page describes it as a condition a buyer can add to a home purchase agreement, “also called a financing contingency”. The page says it sets out how long you have to find financing for your loan. The exact wording and the date come from your own contract.
What is a mortgage contingency date?
Neither page uses that exact term. Freddie Mac’s page says the clause “specifies the time limit for finding financing for your loan”, so the date is wherever your contract writes that time limit down. Ask your agent or attorney to point to it in the paperwork.
What does waiving a mortgage contingency mean?
Freddie Mac’s page talks about dropping contingencies rather than waiving them. It says, “Before you consider dropping contingencies, be sure to speak with your real estate agent about the possible risks.” It also says “too many contingencies can make your offer less attractive”, so it’s a trade-off to discuss with your agent.
Is a mortgage contingency clause the same as a financing contingency?
Both pages use both names. Freddie Mac’s page says the clause is “also called a financing contingency”. The CFPB page says to review the clause in your sales contract, “also known as the financing or loan contingency clause”. The names point to the same term in a purchase contract.
Does a mortgage contingency guarantee my deposit comes back?
The CFPB page doesn’t promise a refund. The CFPB page says the clause “will tell you whether your deposit will be refunded”, which puts the answer in your contract rather than in a general rule. Ask your attorney or your agent to read that part with you.
Who can read my contract with me?
The CFPB page says, “Review your contract or seek the advice of an attorney”. Freddie Mac’s page points you to your real estate agent before you consider dropping contingencies. A loan officer can talk through the loan side.
Questions to Bring Before You Sign
Your contract is where the financing deadline, the deposit wording and the closing date are written down. Neither page can tell you what yours says. So bring questions to the people who can read it with you, and bring them before you sign rather than after.
- What date does my contract set for finding financing, and where does it appear?
- Is my deposit refunded if I can’t get a loan by that date, and what does the clause say?
- How does that date compare with the closing date in my contract?
- Can either date be extended, and who has to agree?
The loan side is worth talking through before you sign. When you’re ready, you can talk with a Fellowship loan officer about your purchase loan and the dates in your contract.
This is general education about what Freddie Mac and the Consumer Financial Protection Bureau publish, not legal, lending or financial advice, and not a commitment to lend.
