The Veridian Blog

A: I am well-qualified to borrow the money required to purchase this new house but how long should my financing contingency be, if any?

Q: In most instances we will defer to the realtor who is familiar with the subject property, neighborhood market, dealings with the listing agent and the their negotiation history.  What we offer is advice based on our confidence level with the buyer’s ability to obtain financing.  Only in rare seller’s markets will we recommend a financing contingency waiver – which was not at all uncommon during the so distant housing boom of the early 2000’s.  Aside from that, we usually require 3 to 5 days, but more recently 7 to 10 days because of the mine-riddled new RESPA disclosure laws.  The good news is that in today’s mortgage market, it doesn’t take long to get an answer given all the automated underwriting that wholesalers have finally implemented into their online submission paths.  If there are red flags or issues we are concerned with, we will recommend a longer contingency period – to allow time for the file to be reviewed by the underwriter for official approval.  That way, we will be able to see the approval conditions and ascertain the likelihood of funding with much greater clarity. 

If you are well-qualified in terms of Debt-to-Income ratio, Loan-to-Value and FICO scores, then we probably wouldn’t hesitate to recommend a 3 to 5  day contingency period – even with the market’s tightened lending standards.