What Is a Mortgage Commitment Letter?

A mortgage commitment letter is a document issued by the lender that notifies the borrower of their willingness to provide financing. Borrowers may receive a conditional commitment letter when pre-approved for a mortgage, and a formal commitment letter once all the steps of the mortgage application process are complete. 

Obtaining a mortgage commitment letter is especially important during a seller’s market when buyer competition is high. A mortgage commitment letter from a lender shows sellers you’re a serious buyer that qualifies for financing, which can increase your chances of securing a purchase contract in a competitive market.

In this article, we’ll explain what’s included in a commitment letter, how you can get one, and what receiving a commitment letter from a lender means.

What does a mortgage commitment letter include? 

A mortgage commitment letter includes details about your mortgage loan, such as the loan amount, interest rate, and the length of the loan term. The exact information listed on your mortgage commitment letter depends on the lender. Mortgage commitment letters often include:

• Property address
• Type of mortgage (conventional, FHA, VA, etc). 
• Monthly mortgage payment amount
• Total number of monthly mortgage payments
• Interest rate (fixed or adjustable) 
• Escrow account information
• Lender information
• Commitment letter expiration date 
• Conditions that need to be met before full approval can be granted

Types of mortgage commitment letters

There are two types of mortgage lending commitment letters: conditional and final. 

Conditional commitment letter

A conditional mortgage commitment letter offers loan approval if specific conditions are met before the loan is finalized. These conditions typically involve home appraisals, home inspections, income verification, homeowner’s insurance, and other documentation needed to complete the mortgage loan application. 

Loan approval is contingent upon these conditions being met within a certain timeframe, usually 30-90 days. If these conditions are not met, the lender is under no obligation to provide you with financing. If the conditional mortgage commitment letter expires, you may need to resubmit your financial documents to get a new commitment letter. 

Final commitment letter

A final mortgage commitment letter is issued once all conditions are met and you’ve signed the Closing Disclosure, which is issued no less than three days before the closing date. As long as you maintain your financial standing until the closing (usually 30-60 days), you’ll receive a final commitment letter after all required steps are complete, such as document verification, home inspection, home appraisal, and title search.

Some lenders charge borrowers a commitment fee for setting aside mortgage funds. This fee is typically 0.25% to 1% of the total loan amount and can be paid either upfront, when the commitment mortgage letter is issued, or at closing when funds are disbursed. Some lenders might waive the fee if the borrower closes within the agreed upon time frame or meets additional conditions set by the lender.

If closing takes longer than expected, the lender may require you to pay an additional fee to extend the expiration date of their commitment letter to you.

How do I get a mortgage commitment letter?

Borrowers can obtain a mortgage commitment letter by applying for a home loan and going through the underwriting process with a lender. During the underwriting process, the lender determines the borrower’s creditworthiness and risk by assessing their income, assets, credit history, and other financial information. 

You can receive a conditional commitment letter after the lender’s initial review of your mortgage application, but before all underwriting requirements are met. This usually happens once the lender has verified your financials, but is still waiting on the home appraisal and inspection to determine the home’s value.

You’ll receive a formal mortgage commitment letter after all underwriting requirements and contingencies are met and any issues are resolved, such as missing documentation, property liens, or repairs.

When do I get a mortgage commitment letter?

You can get a conditional or formal mortgage commitment letter at different stages in the mortgage application process. A lender may issue a conditional commitment letter, known as a pre-qualification or pre-approval letter, and a formal commitment letter after your mortgage application is complete.

After you're conditionally pre-qualified

Pre-qualification is an informal evaluation of a borrower’s finances that occurs before the borrower applies for a mortgage. It provides a prospective homebuyer with an estimate of how much they might be able to borrow if they’re approved for a mortgage loan. 

You may be able to get pre-qualified by self-reporting your finances, which won’t affect your credit. A lender might issue a pre-qualification letter to give a borrower an idea of their loan eligibility and encourage them to apply for a mortgage loan with that lender. When you get pre-qualified with us at Zillow Home Loans*, you’ll receive a conditional commitment letter the same day.

After you're conditionally pre-approved

Pre-approval is a formal evaluation of a borrower’s finances, which typically occurs after pre-qualification, but before making an offer on a home. It requires you to submit a formal mortgage loan application, including financial documents such as tax returns, proof of income, and debt information. 

Once you’re pre-approved, your lender will issue a pre-approval letter, which you include with your offer to show sellers you have access to adequate financing. About a third (32%) of homebuyers reported in a 2024 Zillow survey getting pre-approved by two or more lenders.

After your mortgage application is approved

A formal mortgage commitment letter is issued only after a mortgage application is complete and all conditions of the loan are met. This includes verifying all documents, conducting credit checks, home appraisals, and inspections, and concluding the underwriting process. Before your closing, your lender will make their final lending decision.

Does a lender commitment letter mean I’m approved?

A conditional commitment letter does not mean you’re approved for a mortgage. Borrowers who have received only a conditional letter must meet specific financial or property-related conditions before being clear to close. Conditions vary by lender and state law, but a few common conditions are:

• Document verification
• Purchase agreement
• Successful home appraisal
• Proof of homeowners insurance
• Down payment and closing cost funds
• Proof of clear title (no liens)
• Final underwriting approval

You’ll need to maintain your financial standing from conditional approval until closing to receive a final commitment letter. Once all conditions are met and you sign the closing disclosure, your lender will issue you a final commitment letter, which means your loan has been approved.

Final thoughts on mortgage commitment letters

Receiving a mortgage commitment letter, whether conditional or final, is a positive milestone toward securing financing for a home. This document serves as a firm notification that your loan application will likely be approved, providing you with the money you need to close on a property.

It can take 20-45 days to receive a final mortgage commitment letter from the time you apply. Once received, the letter can expire in as little as 30 days. It’s important to have all your finances in order, so you can close on time before the letter expires. 

If your mortgage commitment letter expires, you’ll need to start over with a new mortgage application. Keep in mind that your new mortgage commitment letter may be different than your first one, especially if there were major changes to your finances. 

We at Zillow Home Loans* offer several mortgage options with competitive interest rates. Start your pre-qualified process with us. It takes as little as three minutes, and you’ll receive a conditional commitment letter the same day.

*An equal housing lender. NMLS #10287