Loan Commitment
A formal written agreement from the lender promising to fund a loan, subject to specific conditions.
A loan commitment goes a step beyond pre-approval. It's issued after the lender has underwritten the file, reviewed income, assets, credit, and property, and confirmed the loan will fund as long as a list of remaining conditions is satisfied.
Commitments come with two kinds of conditions: prior-to-docs (must be cleared before closing documents are prepared) and prior-to-funding (must be cleared before money disburses). Most are routine: a final pay stub, a clear title commitment, evidence of insurance.
Sellers in competitive markets often prefer offers backed by an underwritten loan commitment rather than a basic pre-approval letter because the commitment signals materially less risk of the buyer's financing falling through.
Related terms
Other terms you'll see alongside Loan Commitment
A lender's preliminary commitment to lend you a specified amount, based on a review of credit, income, and assets.
The lender's formal review of a loan application to confirm it meets program guidelines and is acceptable to fund.
The standardized three-page disclosure a lender must provide within three business days of a complete loan application.
The five-page final-numbers document a lender must deliver to the borrower at least three business days before closing.
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