Definition
A mortgage commitment letter is the official document by which a lender contractually commits to granting a mortgage loan under precise conditions: amount, interest rate, term, amortization, payment frequency, and pre-funding conditions.
It is issued after final file approval (income verification, property appraisal, down payment confirmation). It is more binding than a pre-authorization: pre-authorization is conditional on the property and final file, while the commitment letter is specific to an identified property and a verified complete file.
Typical pre-conditions include: home insurance confirmation, employment confirmation (recent employer letter), no new debt since application, and notarial documents submission. Meeting these conditions triggers fund disbursement.