When buying a home, getting “under contract” is a huge milestone—but there are often still a few important steps that need to happen before the transaction officially reaches the closing table.
That’s where contingencies come in.
Mortgage contingencies are conditions written into a contract that must be met in order for the home purchase to move forward. They help protect both the buyer and seller during the transaction process.
Here’s a breakdown of some of the most common contingencies buyers may come across.
Financing / Mortgage Contingency
One of the most common contingencies is the financing contingency (also called a mortgage contingency).
This protects the buyer in the event they are unable to secure final mortgage approval within a specified timeframe.
Even with a pre-approval, the loan still must go through:
- Underwriting
- Appraisal review
- Title review
- Final approval conditions
If financing ultimately cannot be obtained, this contingency may allow the buyer to exit the contract under the agreed terms.
Appraisal Contingency
An appraisal contingency helps protect the buyer if the home appraises for less than the agreed purchase price.
If the appraised value comes in low, buyers and sellers may:
- Renegotiate the purchase price
- Cover the appraisal gap
- Adjust loan structure
- Or potentially cancel the contract depending on the terms
This contingency is especially important in competitive markets where offers may exceed recent comparable sales.
Home Inspection Contingency
A home inspection contingency allows the buyer to have the property professionally inspected before fully moving forward with the purchase.
The inspection may uncover:
- Structural concerns
- Safety issues
- Major repairs
- Deferred maintenance
Depending on the findings, buyers may negotiate repairs, request credits, or move forward as-is.
Home Sale Contingency
Some buyers include a home sale contingency, which means the purchase depends on the successful sale of their current home first.
This can help buyers avoid carrying two mortgage payments at once, although sellers may view these offers differently depending on market conditions.
Title Contingency
Before closing, title work is completed to confirm the property has clear ownership and no unresolved liens or legal issues that could impact the transfer of ownership.
A title contingency helps ensure these issues are resolved before closing takes place.
Why Contingencies Matter
Contingencies help create structure and protection throughout the transaction process.
They establish timelines, expectations, and safeguards for both parties while important parts of the loan and property review are completed.
Not every contract includes the exact same contingencies, and terms can vary depending on:
- Loan type
- Market conditions
- Negotiation strategy
- State-specific practices
The Bottom Line
Contingencies are a normal and important part of the homebuying process. While they may sound intimidating, they’re designed to help protect buyers and sellers as the transaction moves toward closing day.
If you’re preparing to buy a home and have questions about how contingencies work, we’re always happy to help walk you through the process and what to expect along the way.