What NYC buyers should know about the mortgage commitment letter

First, the bad news: receiving that mortgage commitment letter does not mean that you’ve definitively secured the loan for your New York City property. In fact, you should often think of it as a first step. That’s because there are often key contingencies in place (as you’ll see in the sample below) that must be satisfied, lest the bank rescind its offer. That’s why, if you’re thinking of submitting an offer with the mortgage contingency waived, you really need to know what you’re getting into. 

What Is a Mortgage Commitment Letter?

A mortgage commitment letter is more than just a piece of paper. It is an official document from a lending institution that signifies an agreement between you and the bank regarding the terms of your home loan. This document is often also referred to as a mortgage approval letter because it confirms that the lender is committed to providing you with the necessary funds for your home purchase.

For potential buyers, holding a mortgage commitment letter is like having a golden ticket in the real estate world. It not only spells out the kind of loan you are eligible for but also assures sellers that your financial backing is strong, greatly enhancing your chances of securing the home you desire.

Types of Mortgage Loan Commitment Letters

When it comes to mortgage commitment letters, there are two key categories to consider:

  • Conditional Mortgage Commitment Letters: These are the more common type and indicate that you will be approved for the loan, but certain conditions must be met first. These conditions may include a successful home inspection, proof of homeowners’ insurance, documentation of your down payment, and the stipulation that your credit score and income remain stable from the issuance of the letter to obtaining the mortgage.
  • Final Mortgage Commitment Letters: These letters are typically provided after all the conditions specified in your conditional letter have been met. However, in some instances, lenders may opt to issue a final commitment letter directly, bypassing the conditional stage. This letter includes detailed information about your mortgage, such as the loan term, interest rate, and loan type.

How to Obtain a Mortgage Commitment Letter

Securing a mortgage commitment letter involves a multi-step process that ensures you are well-prepared for the responsibilities of homeownership:

  • Get a Mortgage Pre-qualification: Your first step is pre-qualification, which can be completed before you even have a specific property in mind. This initial evaluation helps you understand your budget and what types of homes you should be considering. During pre-qualification, you’ll provide your financial information to the lender, including your credit history.
  • Apply for Pre-approval: Pre-approval is a more thorough examination of your financial situation. It requires you to complete a mortgage application form and provide additional paperwork, such as proof of income, bank statements, and proof of ownership for significant assets. The lender will also perform a hard credit check to ensure your creditworthiness.
  • Obtain Your Mortgage Commitment Letter: Once you’ve successfully navigated the pre-approval stage, your lender will issue your mortgage commitment letter. In most cases, this will be a conditional commitment, indicating that you need to fulfill a few more requirements before final approval. To obtain the final commitment letter, you’ll need to submit additional documentation, such as information about the property you intend to purchase, proof of your ability to cover the down payment and closing costs, and any other details necessary for the lender to finalize your approval.

When Do You Get a Mortgage Commitment Letter?

The timing of your mortgage commitment letter can vary. The conditional commitment letter can be obtained before you even have a specific property in mind, verifying that you meet the financial criteria for a loan. To secure the final commitment letter, you must have a specific property in mind and be actively engaged in the purchase process, including obtaining an estimate of the home’s value, an approved inspection, homeowners’ insurance, and other necessary details.

Does a Loan Commitment Letter Mean You Are Approved?

While a mortgage commitment letter is a significant milestone in the homebuying process, it is not equivalent to full approval. The letter confirms your eligibility for a loan, but your financial health and the details of the property must still align with the lender’s requirements before you receive your final approval.

Why Are Mortgage Commitment Letters Important?

Mortgage commitment letters are invaluable to both buyers and sellers at different stages of the homebuying process. For buyers, having a pre-approval or conditional commitment letter increases the likelihood of having their offers accepted and aids in budgeting for homes within their price range. Sellers also benefit from these letters as they reduce the chances of complications in the sale process, offering peace of mind that the deal is on solid ground. 

Sample commitment letter: 


This is an example of a standard mortgage loan commitment letter that would be issued

to a New York City condo or co-op apartment buyer. There are additional sections in this

NYC mortgage commitment letter sample you should review such as Commitment




Borrower Name(s):

Borrower Mailing Address:



Property Address:

Type of Property: [Condo, Co-op, etc.]

Commitment Expiration Date:


It is a pleasure to notify you that your application for a mortgage loan has been approved

subject to the following matters set forth below and on pages 2 and 3.


Please sign, date and return Lender’s copy of this Commitment, along with any required

fees and items requested, to the Lender at the following address, within 15 days of the

date hereof, or at the option of Lender, this Commitment shall become null and void.

Should you have any questions, please contact:

This approval is not a final commitment. Due to the fact that interest rates are subject to

change without notice, your approved payment and loan amount may change if interest

rates increase or decrease.


This commitment will become effective upon compliance with the terms herein and, if

applicable, the receipt of your check in the amount of any non-refundable commitment

fee (“stand-by fee”). It is understood and agreed that if this mortgage loan is not settled

in accordance with the terms and conditions of this commitment, the Lender shall retain

this fee as earned charges for the origination and approval of this loan.


Amount of Loan $[Amount]

Initial (Contract) Interest Rate [Rate]%

Loan Term [Number] months

Amortization Type

Balloon Term (if applicable) [X] months


Loan Type

Lien Position 1st Lien


Your initial interest only principal and interest (P&I) amount is $[Amount]. This amount

does not include any escrowed amounts and may change if there is a change in loan



[ X ] An Escrow Account is not required.

[ ] An Escrow Account is required.

Even if an Escrow (Impound) Account is not required at time of settlement, subject to

the terms of your specific loan documents, the Lender may set up and require an Account

should the taxes or insurance on the subject property ever become delinquent.


The Evidence of Title is to be provided to the Lender and must indicate no liens,

encumbrances, or any adverse covenants or conditions to title unless approved by

Lender. The Evidence of Title must be issued from a firm or source, and in a form,

acceptable to Lender. Borrower will be charged for the cost of providing such title and

the cost of recording documents, all of which will be ordered by Lender unless requested



The Lender reserves the right to terminate this commitment prior to the settlement of

the loan in the event of an adverse change in your personal or financial status, or if the

improvements on the property are damaged by fire or other casualty.


All Items Listed on the Commitment Conditions Addendum Apply.





A balloon loan matures before the loan is fully amortized. The balance of the loan will be

due in a lump sum payment at maturity.


Prior to settlement, we will require an original insurance policy and/or binder containing

fire and extended coverage (i.e., windstorm, hurricane, hail damages, or any other perils

that are normally included under an extended coverage endorsement) insurance in an

amount equal to the lesser of 100% of the insurable value of the improvements, or the

unpaid principal balance of the mortgage as long as it equals the minimum amount (80%

of the insurable value of improvements) required to compensate for damage or loss on

a replacement cost basis through a company acceptable to the Lender, and a receipt

showing premiums paid in advance for one year. The insurance policy shall also contain

a standard mortgage clause in favor of Lender. We cannot require you to obtain a policy

which exceeds the guaranteed replacement cost of the improvements securing the loan.

If the property is new construction and you are not able to occupy the property

immediately after closing, you will be required to furnish an original fire/hazard insurance

policy or binder, including a Builder’s Risk Rider. If this is a renovation of an existing

dwelling that will remain occupied, a Builder’s Risk Rider is not necessary.


Loan Commitments issued for these types of mortgage loans, including, but not limited

to FmHA, RHS, FHA, and VA, are subject to all the terms and conditions of the Agency’s

commitment, or the VA certificate of reasonable value, as well as the rules, and

regulations, and all applicable requirements of the Farmers Home Administration, Rural

Housing Service, Department of Housing and Urban Development, the Department of

Veterans Affairs, and/or other state or municipal authority.


By signing and accepting this commitment, you acknowledge that if the property

securing this loan is in an area identified as having a special flood hazard you agree to

these insurance requirements.

Our policy, in order to best protect collateral interest, is to adhere to the more common

industry practice of requiring flood coverage for the lesser of: the full 100% Replacement

Cost Value or the maximum amount of insurance available under NFIP for the particular

type of building; currently $250,000 per residential dwelling/condominium unit. A copy

of the declaration page or application signed by the agent, along with proof premium

has been paid, is required prior to closing.


Flood insurance is mandatory now or in the future if this property has been or will be

determined to be in an area which has a special flood hazard. Federal Law requires that

flood insurance, available through any agent, must cover the lowest of: the outstanding

principal balance of the loan[s]; the maximum amount of coverage allowed for the type

of building under NFIP or the full replacement cost value of the building or contents

securing the loan.


Monthly deposits and initial deposits as determined by Lender are required to cover the

payment of estimated annual real estate taxes, special assessments and, if applicable,

FHA or Private Mortgage Insurance Premiums. Lender may also require additional

deposits for hazard or other insurance if required for this loan. Such deposits are to be

placed in a separate escrow or impound account.


If required, all unpaid and future special assessment installments must be paid in full

prior to, or at time of settlement.


The mortgage or deed of trust, note and other pertinent loan documents will be

provided by Lender and must be signed by all applicants that are to be contractually

liable under this obligation. Further, the mortgage or deed of trust must be signed by

any non-applicant spouses if their signature is required under state law to create a valid

lien, pass clear title, or waive unclear rights to property. Note: Samples of loan

documents are available upon request.



Improvements are to be built in a good and workman-like manner in strict accordance

with plans and specifications furnished Lender and in compliance with applicable

building codes. After completion, said improvements shall be approved by a

representative of Lender and an occupancy permit shall be issued by local municipality.

Any changes, whether they be additions, deletions, or alterations, of the plans and

specifications, must be approved in writing by Lender in order that this loan commitment

remain in effect.


Evidence must be submitted that the net proceeds of our loan are sufficient to complete

the construction of the building, free and clear of all claims of Mechanic’s Liens for labor

and material. All disbursements will be made upon the order of the borrower upon

presentment of proper waivers of lien, subject to compliance inspections by the

Department of Veterans Affairs, the Federal Housing Administration, or Lender, not to

exceed 80% of the value of the work done. The remaining funds will be held back until

the certificate of completion and/or occupancy certificate is issued.

I (WE) accept the terms and Conditions of this Commitment and will notify Lender if there

are any changes to the information provided on the application before the closing of the


Borrower Date


Take special note of the cancellation clause listed above. If you lose your job or suffer

some other financial setback, the bank will have cause to terminate your loan



Sample Mortgage Commitment Letter



Your application for a [Bank Name] Co-op Loan has just been approved. Enclosed you

will find a commitment letter which provides you with specific details regarding your loan

approval. We urge you to read it carefully as it contains important information on the

financing terms and the documentation that is required in order to close your loan.



You must sign the commitment and return it to us within ten (10) days of the commitment

or before the expiration date, whichever is sooner with any fees specified. Please note

that this commitment letter contains two critical dates. If you elected to lock in your

interest rate and points there is a rate expiration date. If you do not close your loan on

or before the rate expiration date, the terms and conditions will change.

In addition, there is credit document expiration date. If you do not close your loan on

before this date you will need to satisfactorily update certain credit documents in order

for the terms and conditions of this commitment letter to apply. If your rate and points

have not been locked, the rate expiration date will be established once you elect to lock

in your rate. You must lock in your rate at least five business days prior to loan closing.

Please read the commitment letter and riders carefully, as they contain conditions that

must be satisfied prior to your loan closing. It is incumbent upon you to make sure that

we are in receipt of all items listed. These items must be reviewed and approved at least

three (3) days prior to loan closing. Again we must emphasize that you cannot close your

loan unless all these items have been satisfied.

We have notified the closing attorney for [Bank Name] of this loan transaction.

Arrangement and instructions for closing your loan should be obtained by contacting

the [Bank Name] attorney named in your commitment letter. A loan closing can be

scheduled shortly after all necessary documents have been received by [Bank Name].

The [Bank Name] attorney will be able to provide you with specific information regarding

the following:

-Closing Date

-Closing Location

-Prepaid Interest and Escrow Funds

-Co-op Lien Search Requirements

-Survey Coverage Requirements

-Insurance Requirements (Hazard/Flood/Condominium/Co-op)

We encourage you to have your attorney contact the [Bank Name] closing attorney to

review the requirements. This should help to ensure that your closing goes smoothly.


Thank you for choosing [Bank Name] for your financing needs. We are delighted to have

you as a client.


What are sample closing conditions in NYC?


Dear [Borrower],

We have received today from [Bank Name] a copy of a commitment letter for a co-op

loan and will represent [Bank Name] at the closing. Please be advised that we cannot

schedule a closing unless we receive confirmation that the conditions required by [Bank

Name], prior to closing, have been satisfied and the conditions required at closing will

be obtainable and brought to the loan closing.

Enclosed with this letter you will find three copies of Recognition Agreements. The

Recognition Agreement must be delivered to and executed by an Officer of the

Cooperative Corporation. The fully executed Recognition Agreement must be delivered

to our office prior to loan closing or it must be brought to loan closing. We will be unable

to close a co-op loan without the original executed Recognition Agreement with the

corporate seal.

Enclosed with this letter you will find a Uniform Commercial Code Authorization Form.

This document must be signed by each person who will be on title and promptly returned

to our office. This document is necessary for [Bank Name], to obtain a security interest

in the cooperative. Upon our receipt and/or confirmation of certain information i.e.

section/block/lot numbers of the building same will be inserted in the financing

statement prior to filing. Please be sure to note that the executed Uniform Commercial

Code Authorization Form and the check required by paragraph 3 below must be

remitted to our attention at the time you accept your commitment letter to a assure a

timely closing.

To ensure that [Bank Name] has a proper security interest, a Cooperative search of the

appropriate records will be conducted solely for [Bank Name]’s benefit. The search will

be ordered by our firm and will be reviewed and approved by our office prior to loan

closing. Payment of the lien search must be remitted to our office at the time you send


back the UCC-1 Authorization form. The cost of the search is $275.00 and the filing fee

for the UCC-1 is $100.00. Please remit a check for $375.00 made payable to [Name] for

the lien search and the recording of the financing statement.

Unless paid prior to loan closing, all charges and fees due to [Bank Name] must be paid

from the loan proceeds. If you call our office the day before loan closing, we will advise

you of the exact amount being deducted from loan proceeds.

The commitment letter has two expiration dates; one is the Commitment Expiration and

one is the Rate Lock Expiration. The loan must close and funds must be disbursed on or

before the earlier of the Commitment Expiration or the Lock-In Expiration. In the event

the loan is a refinance transaction and it is subject to the required three (3) business-

day right of recission it must close four (4) business days prior to the expiration of any

applicable rate lock agreement.

Please note that a closing cannot be scheduled until the following items have been


– We have been advised by [Bank Name] that all commitment conditions have been


– The U.C.C. -1 financing statement has been filed.

– The co-op search has been reviewed and approved

– We have a copy of the proposed Stock Certificate and the first page of the Proprietary

Lease. At closing, the original Stock Certificate and Proprietary Lease must be delivered

to [Bank Name] Closing Attorney.

– We must be in receipt prior to or at loan closing of a blanket insurance policy for the

co-op evidencing sufficient dwelling coverage.

[Bank Name] requires at least two (2) business days to schedule a loan closing.

We are committed to providing you with the highest level of customer service. If you

should have any questions please feel free to call us at [Phone Number].

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