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Financing Condition

Learn what a financing condition is in Canadian real estate, how it protects buyers, and why it’s important when making offers on property.

Financing Condition

May 22, 2025


What is a Financing Condition?

A financing condition is a clause in a real estate purchase agreement that makes the offer contingent on the buyer securing mortgage approval within a set timeframe.

Why Financing Conditions Matter in Real Estate

In Canadian real estate, the financing condition protects buyers by giving them time—usually 3 to 5 business days—to obtain a mortgage commitment without risking their deposit.

If financing is not secured:
  • The buyer can back out with no penalty
  • The deposit is refunded in full
Removing this condition (as in a firm offer) increases risk if mortgage approval later fails. In hot markets, buyers may feel pressured to waive it, but doing so requires full financial confidence and professional advice.
Understanding the financing condition ensures buyers make informed decisions about risk tolerance, offer strength, and financial readiness.

Example of Financing Condition

A buyer includes a five-day financing condition in their offer, allowing time to receive final approval before committing to the purchase.

Key Takeaways

  • Gives buyers time to secure financing.
  • Allows withdrawal without penalty.
  • Standard in most residential deals.
  • Waiving increases risk.
  • Part of offer negotiation strategy.

Related Terms

Additional Terms

Rent Control

Rent control refers to government regulations that limit how much landlords can increase rent for residential tenants each year.. more

Receivership

Receivership is a legal process where a court or secured creditor appoints a receiver to take control of a borrower’s assets, such as property or. more

REALTOR

A REALTOR is a licensed real estate professional who is a member of the Canadian Real Estate Association (CREA) and adheres to its Code of Ethics and. more

Property Use History

Property use history refers to the documented past uses, functions, and occupancy of a property, which may affect environmental risk, zoning, or. more

Property Management

Property management is the oversight and administration of real estate assets on behalf of the owner, covering leasing, maintenance, financial. more

Property Maintenance

Property maintenance refers to the ongoing upkeep, repair, and management of a building or land to preserve its safety, functionality, and appearance.. more

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