The lender's binding offer to fund the loan on specified terms.
A loan commitment is the lender's binding written offer to fund a loan on specified terms, subject to specified conditions. The commitment is issued at the end of underwriting and is the lender's "yes" — assuming the borrower satisfies any remaining conditions, the loan will fund.
The loan commitment is the milestone where a deal moves from "probably going to close" to "going to close unless something specific breaks." Until the commitment is issued, the lender can still walk away based on what they find in underwriting. After commitment, the lender is bound — unless a specifically listed condition fails to be satisfied.
There are two flavors. Conditional commitment is issued before final underwriting items are complete, with a list of remaining conditions to satisfy (appraisal, title, insurance, etc.). Firm commitment (or "clear to close") is issued after all underwriting conditions are satisfied — the loan will fund at the scheduled closing date with no remaining contingencies.
Typical conditions precedent on a commercial loan commitment: satisfactory final appraisal, clear title insurance commitment, evidence of property insurance, closing of the purchase (if applicable), execution of formation and entity docs, satisfactory background check, certificate of good standing, evidence of equity, and any deal-specific conditions identified in underwriting. Each condition has to be satisfied before funding.
For borrowers, the commitment is leverage. A binding commitment letter can be shared with the seller to demonstrate ability to close, used to remove financing contingencies in the purchase contract, and provides the certainty needed to make the rest of the closing process work smoothly. Commitment timing is therefore a major negotiating point on every closing schedule.
| Day 0 | Term sheet signed, exclusivity begins |
| Day 1–10 | Property and borrower file collection |
| Day 7–15 | Appraisal ordered, Phase I, title commitment |
| Day 15–25 | Underwriting analysis |
| Day 20–30 | Credit committee approval |
| Day 25–32 | Conditional commitment issued |
| Day 32–45 | Conditions cleared: appraisal review, title clear, insurance bound |
| Day 45 | Firm commitment / clear to close |
| Day 45+ | Closing scheduled |
The lender's binding written offer to fund a loan on specified terms, subject to specified conditions. Issued at the end of underwriting.
Conditional commitment has remaining items to satisfy (appraisal, title, insurance) before funding. Firm commitment ("clear to close") has no remaining conditions — the loan will fund at closing.
Approval is the lender's internal decision to lend. Commitment is the formal written offer extended to the borrower. The commitment letter is the document that proves approval and binds the lender.
Generally no — the commitment is binding. The lender can only walk if a specifically listed condition precedent fails. "I changed my mind" isn't a valid basis for backing out of a binding commitment.
Typically 30–60 days. The expiration date is specified in the letter. If closing slips beyond expiration, the commitment may need to be re-issued (potentially at updated terms).
Matrix issues commitment letters with conditions we can actually clear, on timelines we can deliver. Real certainty for your closing.
