In one sentence
A lender's commitment to fund a loan at a future date on agreed terms, common on construction-to-permanent and agency multifamily deals.
The longer version
A forward commitment locks permanent financing terms today for a loan that will fund later, often at construction completion and stabilization. It gives the borrower rate and proceeds certainty and the lender a pipeline of future fundings.
Forwards carry their own conditions and expiration, and converting a forward to a funded loan is a documented event with a checklist of completion and stabilization confirmations.
Common questions
- What is a forward commitment?
- A lender's commitment to fund a loan at a future date on agreed terms, used for construction-to-permanent financing and some agency multifamily loans.
- Why use a forward commitment?
- To lock permanent financing terms before construction or lease-up is complete, reducing refinance risk for the borrower and the construction lender.
- What conditions apply to a forward commitment?
- Completion, occupancy or income thresholds, and delivery conditions by an outside date. If they are not met, the commitment may lapse.
Keep reading