What is it?
A commitment letter (approval letter) is the document in which a bank or other lender officially approves lending you a stated amount, on stated terms, for a specific home. It arrives before the full mortgage contract.
Ontario’s Financial Services Regulatory Authority (FSRA) explains that it signifies financing has been officially approved and that, once signed, it is a formal, binding contract between you and the lender. It sets out the loan amount, rate, term, fees and other conditions.
It is different from a pre-approval. A pre-approval says “we are interested and this is roughly what we could lend”; a commitment letter is the approval that comes after both you and the property have been assessed.
How it differs from a pre-approval
| Pre-approval | Commitment letter | |
|---|---|---|
| When | Before you look at homes | After your offer is accepted and the property is assessed (appraisal and so on) |
| What was reviewed | Your income, debts and credit | You and the property |
| Binding? | No. The lender can still decline later | Yes, once signed |
| Used for | Setting a budget, holding a rate | Waiving a financing condition, sending to your lawyer |
What it contains
- Loan amount, rate (fixed or variable), term and amortization, monthly payment.
- Conditions: documents to provide, appraisal results, insurance and other items the approval depends on. While conditions remain, the approval is still conditional.
- Fees and charges: FSRA says the letter contains information about fees and charges payable by you. Read it carefully and ask about anything you do not understand.
- Expiry: usually up to the closing date. If closing is delayed, confirm it again.
Why it matters to a buyer
- If your offer has a financing condition, it is safest to waive it only after you receive and check this letter. If you waive it on the strength of a pre-approval and the loan is later declined, the contract still stands.
- Your lawyer needs it to prepare closing (the schedule for sending the balance of the money).
- Before signing, read everything, as FSRA advises, and ask questions or get legal advice on any clause you do not understand.
What the law and official sources say
Quotes are copied word for word. The "In plain words" lines are our explanation, not an official translation.
Before receiving the full mortgage contract, you will receive a letter of commitment (also known as an approval letter). It signifies that financing has been officially approved and represents a formal, binding contract between you and the lender once signed. This letter outlines the terms and conditions of the loan.In plain wordsYou get the commitment letter before the full contract. It means financing is officially approved, it becomes a binding contract once signed, and it lists the loan terms.
Source: fsrao.ca/consumers/mortgage-brokering/signing-mortgage-contract · checked Oct 30, 2026
When a lender preapproves you for a mortgage, it is not a guarantee that they will enter into a mortgage contract with you. A preapproval means the lender is interested in offering you a mortgage. A lender might choose not to offer you the mortgage after closely assessing you or the property.In plain wordsA pre-approval is not a guarantee. It means the lender is interested, and it may still decline after looking closely at you or the property.
Source: fsrao.ca/consumers/mortgage-brokering/signing-mortgage-contract · checked Oct 30, 2026
Common questions
Does a commitment letter mean the loan is final?
Once every listed condition (documents, appraisal, insurance and so on) is met and you sign, it is a binding contract. While conditions remain it is still conditional, so ask your broker or bank what is outstanding.
When should I waive the financing condition in my offer?
Safest after you receive the commitment letter and confirm the amount, rate and conditions. If it has not arrived within the condition period, you can ask for an extension.
What if closing is delayed?
The letter usually has an expiry date. If the date changes, tell the lender and confirm the approval still stands.
Guides that use this term
Sources checked
- FSRA, Signing a Mortgage Contract · checked Oct 30, 2026