In one sentence
The document by which a lender formally commits to fund a loan, stating terms, conditions, expiration, and any deposit.
The longer version
The commitment letter is the borrower's assurance the money is real and the lender's statement of what must be true before it moves. It carries an expiration that pressures the closing calendar.
Deposits and rate-lock mechanics often attach here, which is why the letter is negotiated with care even though the loan documents supersede it at closing.
Common questions
- What does a commitment letter include?
- The loan terms, the conditions to closing, the expiration date, fees and any deposit, and often the lender's right to terminate if conditions are not satisfied.
- When is a commitment letter issued?
- After the lender's credit approval, once underwriting is substantially complete. It is the document that turns a negotiated term sheet into a commitment to lend.
- What happens if a commitment letter expires?
- The lender is no longer obligated to fund. Borrowers request an extension, which may come with a fee or updated conditions, before the expiration date passes.
Keep reading