How it protects you
When you make an offer, you put down earnest money to show you're serious. A financing contingency says that if you can't get your loan approved by a certain date, you can cancel the contract and usually get that deposit back.
Without it, if your loan falls through, you could lose your earnest money and may be in breach of the contract.
Typical timeline
Financing contingencies often run 21 to 30 days after the contract is signed, but the number is set in your contract. Your agent can suggest a deadline that fits your loan and local practice.
Know what your contract requires. Many need written notice to the seller before the deadline. If the date passes without notice, the contingency may be treated as removed, even if your loan isn't final. Your agent can confirm what form the notice should take.
Financing vs. appraisal contingency
These two often travel together, but they're different. A financing contingency covers your loan approval. An appraisal contingency covers a home that appraises below the price. Some contracts combine them and some separate them, so read yours closely.
Keep your loan on track
- Send your loan consultant documents as soon as they're requested
- Don't change jobs or reduce your hours
- Don't open new credit or take on new debt
- Don't make large, unexplained deposits or move money between accounts
- Check in with your loan consultant before the contingency date
Waiving the contingency
In a competitive market, some buyers waive the financing contingency to make their offer stand out. That can work, but it shifts risk to you. If your loan isn't approved, you may lose your earnest money.
If you're thinking about waiving it, make sure your income, assets and credit are already fully reviewed, and that you could handle the loss of your deposit.
Start with a strong pre-approval
CapCenter's pre-approval starts with a soft credit check, which doesn't affect your score, and takes about 15 minutes. A full credit check happens once you're under contract. You need a credit score of at least 620 for a CapCenter loan. A loan consultant can talk through realistic contingency dates before you write an offer.
