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A mortgage commitment letter is a lender’s formal, signed offer to finance a specific property on stated terms — rate, amount, term, and any remaining conditions — once the file has cleared underwriting.
A pre-approval estimates what a lender might offer before a property is chosen; a commitment letter is issued after a specific address, purchase price, and full application have gone through underwriting. It names the exact loan amount, interest rate, term, and any remaining conditions the underwriter still needs satisfied before funds advance.
Most purchase agreements in Canada include a financing condition that the buyer must remove by a set date. The commitment letter is typically what the buyer’s lawyer and real estate representative need to see before that condition is waived, because it confirms the lender is actually prepared to fund — not merely that the borrower looks qualified in principle.
Timing matters: commitment letters are usually issued only after the property, appraisal (where required), and supporting documents have all been reviewed — later in the process than a rate hold or pre-approval.
Conditions still apply: many commitment letters are issued as a conditional approval rather than an unconditional one, with items such as confirmed income documents or insurance still outstanding.
Every province, same role: mortgage agents (Ontario, FSRA), submortgage brokers (BC, BCFSA), mortgage associates (Alberta, RECA), and courtiers hypothécaires (Quebec, AMF) all rely on the commitment letter to confirm financing before a purchase closes.
Expiry dates apply: a commitment letter is tied to the rate and term quoted and typically expires on a stated date, after which the file may need to be resubmitted or re-priced.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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