How does a Finance Contingency work in a Real Estate Contract


A Finance contingency is part of the offer and it simply states that your offer to purchase the property you are interested in, is subject to you actually get financing. If you buy a property and put down earnest money on a property, and the financing does not go through, you are entitled to get your earnest money back under the contract.

The financing contingency also states that it’s subject to you being able to borrow a certain amount for a certain down payment.  It also states the maximum interest rate you will pay.

There are a number of clauses in financing contingency that protects you as a buyer when making an offer on the property. So, if the interest rate were to come back extremely high because of your credit, you are no longer obligated to buy the home.   Your realtor will insert the financing contingency based upon the loan program that you are interested in using.  If you are doing this on your own be sure to include a financing contingency.