Call us at 407-630-9766

Explaining the Mortgage Contingency Clause

Published on Jul 29, 2025 | Purchasing a Home
Explaining the Mortgage Contingency Clause
Explaining the Mortgage Contingency Clause

Buying a home is a major decision, and most buyers need a loan to make it happen. That’s where the mortgage contingency comes in—a clause in your purchase agreement that can protect you if your financing falls through.

What Is a Mortgage Contingency?

A mortgage contingency gives you the right to cancel the contract if you're unable to get approved for a mortgage. It protects your earnest money deposit and gives you peace of mind as you work through the loan process.

If your financing is denied and you included this clause, you can back out of the deal without losing your deposit. It’s an important safeguard that helps reduce financial risk during a home purchase.

Why Is It Important?

  • Protects Your Deposit: If your loan application is denied, you won’t lose your earnest money.
  • Keeps Transactions On Track: It creates a clear timeline for financing approval, which helps both buyers and sellers stay on schedule.
  • Adapts to Market Conditions: In fast-moving markets, buyers sometimes waive contingencies to make offers more attractive. But this increases risk.

Recent data from the National Association of Realtors shows that about 76% of home purchase contracts included a mortgage contingency last year. In slower markets, that number can go as high as 90%. But in hotter markets, it might drop to 50% as buyers try to stand out.

What Happens If You Waive It?

Skipping the mortgage contingency may seem bold, but it comes with serious risks. If your loan is denied, you could lose thousands of dollars—or even face legal issues. For example, if you put down $10,000 as earnest money on a $300,000 home and your loan doesn’t come through, you may not get that money back.

Customizing Your Contingency

This clause isn’t one-size-fits-all. You can adjust the terms to reflect:

  • The type of loan you’re applying for (conventional, FHA, VA, etc.)
  • The interest rate range you’re comfortable with
  • The minimum down payment you’re planning to make

Bottom Line

A mortgage contingency is a smart way to protect your finances and reduce risk when buying a home. It helps you move forward with more confidence and can be a deciding factor in keeping your deal on track.

Now Is a Great Time to Buy

With interest rates showing signs of improvement and more homes hitting the market, it’s a smart time to consider your next move. Understanding the mortgage contingency is a key part of making a strong, informed offer.

Ready to explore your home financing options? Contact me today to get pre-approved and protect your purchase with the right strategy.

Recent Posts

Blog Tags

Purchasing a Home Jhenesis Mortgage VA Loans Mortgage FAQ Refinancing a Home DSCR Loan Real Estate Investing Investor Loans Mortgage Broker The Loan Process Interest Rates Real Estate Lending Trends Home Refinance Florida real estate first-time homebuyer Florida VA loans Florida zero money out of pocket VA home loans Down Payment Assistance Choosing the right home loan Mortgage questions for first-time buyers veterans home loans first-time homebuyer programs Credit low interest VA loans FHA gift funds veteran mortgage benefits Home Equity Loan down payment strategies Different types of mortgage loans down payment assistance bank statement loan 3-2-1 buydown FICO10T home equity inaccurate appraisal financial stability affordable housing first-time homebuyer Florida Housing market 2025 loan limits self-employed real estate financing Best mortgage loans for first-time buyers historic home financing What to ask your mortgage broker Improving credit for buying a house short term rental loans mortgage buydown VantageScore4 how to build home equity reconsideration of value home improvement loan hazard insurance Florida Non-QM loans for self-employed low-down-payment programs Florida veteran home loans Comparing mortgage loan types historic home maintenance Top mortgage lender questions NACA program details Homeownership FHA loans and credit scores reduce mortgage payments Jhenesis Properties home equity loan Florida school districts debt consolidation Florida homeowners insurance Flexible home financing options Florida homeownership young buyers VA loan occupancy rules historic neighborhoods Florida zero down mortgage Florida seller credits Bad credit home loans Green Real Estate affordable mortgage options CreditScoreChanges HELOC Florida school ratings tuition funding mortgage requirements Florida Non-QM loans for real estate investors Florida DTI ratio homeownership benefits Mortgage pre-approval validity buying a foreclosure in Florida How to choose the right mortgage lender Mortgage Assumption First-time homebuyer credit score requirements Sustainable Properties first-time homebuyer financing cash-out refinance Buying a home in Florida best school districts homebuying journey Florida Alternative mortgage solutions 2025 first-time homebuyer programs Florida financial benefits of owning a home How long does pre-approval last? Florida foreclosure homes Sales price vs appraised value no money out of pocket saving for a mortgage down payment mortgage interest rate reduction fixer-uppers buy a home with no down payment Florida FHA-approved gift fund sources hurricane insurance Self-employed mortgage options historic homes Florida Mortgage pre-approval expiration foreclosure pros and cons Difference between sales price and appraisal Minimum credit score for a mortgage first-time homebuyer savings 3-2-1 buydown benefits challenge low home appraisal fixed-rate HELOC homeownership Florida mortgage options Using gift funds for down payment flood insurance Florida Real estate investment for realtors buying historic house Pre-approval timeline for homebuyers foreclosure financing What happens if appraisal is lower than sales price Credit score tips for first-time homebuyers how to save for a down payment CreditScore temporary interest rate reduction Florida home appraisal borrow against home equity mortgage tips down payment assistance Florida FHA loan limits Florida mortgage for young buyers retirement planning for realtors Top mortgage options explained Florida historic properties When does a mortgage pre-approval expire? How credit score impacts mortgage rates first-time home buyer Florida down payment assistance Florida down payment assistance Florida down payment assistance Florida Down payment assistance Florida