What Is a Mortgage Contingency in Massachusetts and What Happens If You Miss the Date? (2026 Quincy Buyer's Guide)
Last updated: October 17, 2026
FRESHNESS: evergreen (rate figures in one section are dated and sourced)
BUYER EDUCATION
What Is a Mortgage Contingency in Massachusetts and What Happens If You Miss the Date? (2026 Quincy Buyer's Guide)
October 17, 2026 | By Krista Recker
A mortgage contingency is the clause in a Massachusetts Offer to Purchase and Purchase and Sale Agreement that lets you cancel the deal and get your full deposit back if, despite diligent efforts, you cannot get a written loan commitment from a lender by a specific date. If that date arrives, you have no commitment, and you have not sent written notice terminating or signed an extension, the protection expires and your deposit, typically 5% of the purchase price in Greater Boston practice, is exposed under the agreement's liquidated damages clause. On a $670,000 Quincy home, that is about $33,500.
That is the whole post in two sentences, and if you only remember one thing, make it this: the contingency protects you only until the date written in the contract, and only if you act in writing before that date passes. Everything below explains how the clause works in the standard Greater Boston forms, what counts as diligent efforts, what the contingency does not cover, and what to do in the week before the deadline when your lender is running behind. I am a real estate salesperson, not an attorney, and the contract language in your deal is the thing that governs, so read this as the framework and have your closing attorney confirm the specifics.
Who this applies to
This is written for you if any of the following is true:
- You are buying a home or condo in Quincy or on the South Shore with a mortgage and you want to understand what the financing contingency in your offer actually does.
- You have an accepted offer and your lender has told you the loan commitment may not be ready by the date in your Purchase and Sale Agreement.
- You are weighing whether to waive or shorten the mortgage contingency to compete in a multiple offer situation.
- You are a seller reviewing offers and want to know how much weight to put on a buyer's financing terms.
- You are a first time buyer who heard "you could lose your deposit" and want to know exactly how that happens and how to prevent it.
What does a mortgage contingency clause actually say in Massachusetts?
In the Greater Boston Real Estate Board standard form Purchase and Sale Agreement, the mortgage contingency has long appeared as paragraph 26 (the number and exact wording can shift between form editions, so check the version you sign), and it says in substance: the buyer will apply for a conventional bank or institutional mortgage loan of a stated amount at prevailing rates, terms, and conditions, and if despite the buyer's diligent efforts a commitment for that loan cannot be obtained on or before a stated date, the buyer may terminate the agreement by written notice to the seller before that date, whereupon all deposits are refunded and the agreement is void without recourse to either party.
Three details in that language decide most disputes. The first is the loan amount. The clause covers a loan of the stated amount, so if you write in a $536,000 loan on a $670,000 purchase and your lender will only approve $500,000, you have not obtained the loan the clause describes and you can terminate. If you wrote in a smaller loan than you actually need, you have narrowed your own protection. The second is "prevailing rates, terms and conditions." The clause does not let you walk because the rate is higher than you hoped; it lets you walk because no lender will commit at the rates that are generally available. The third is "by written notice ... prior to the expiration of such time." The notice has to be written, it has to go to the seller or the seller's attorney the way the contract says notices are delivered, and it has to land before the date, not on the morning after.
The same contingency, in shorter form, appears in the standard Offer to Purchase. In Massachusetts a signed and accepted offer that contains the material terms is generally treated as a binding contract, the rule the Supreme Judicial Court applied in McCarthy v. Tobin in 1999, so the financing contingency in the offer protects the initial deposit, commonly $1,000 in local practice, during the roughly two weeks between acceptance and signing the P&S. The P&S then restates the contingency with the full deposit, commonly 5% of the price, now at stake. None of those amounts or timelines is set by law; they are customs that get negotiated in every deal.
When is the mortgage contingency date and how is it set?
The mortgage contingency date, often called the commitment date, is negotiated and usually falls around 30 days after the P&S is signed, which in a typical Quincy deal puts it roughly a week to two weeks before the closing date. Nobody imposes it; it is whatever you and the seller write in the offer and carry into the P&S.
A typical sequence for a financed Quincy purchase looks like this:
| Milestone | Typical timing in Greater Boston | What is at stake |
|---|---|---|
| Offer accepted | Day 0 | $1,000 initial deposit, protected by the offer's financing contingency |
| Home inspection contingency ends | Day 7 to 10 after acceptance | Right to renegotiate or walk over condition ends |
| Purchase and Sale Agreement signed | Day 10 to 14 after acceptance | Balance of deposit paid, usually 5% of price total |
| Complete loan application deadline | Within a few days of P&S signing, often stated as 3 to 5 business days | Meeting it is what the form defines as "diligent efforts" |
| Appraisal completed | Day 14 to 28 after acceptance | Low appraisal can shrink the loan the lender will approve |
| Mortgage contingency (commitment) date | Around 30 days after P&S, roughly Day 40 to 45 | Last day to terminate for lack of financing and keep the deposit |
| Closing | Day 45 to 60 after acceptance | Deed records, you own the home |
Those windows describe a normal conforming loan with a cooperative appraiser and a complete file. An FHA or MassHousing loan, a condo that needs a questionnaire from a slow management company, a self employed borrower, or a two family with rental income to document can each add a week. Build the date to the loan you actually have, not the loan a cash-adjacent buyer would have.
What counts as "diligent efforts" to get a mortgage?
Under the standard form, you are not deemed to have used diligent efforts unless you submit a complete mortgage loan application conforming to the clause by the application deadline written into the agreement, commonly set at 3 to 5 business days after the P&S is signed, and many attorney riders add that application to one lender by that date satisfies the requirement. Both the deadline and the one-lender rule are negotiated terms that only bind the parties if they appear in the signed agreement or rider. In plain terms: apply on time, to the loan you described, and respond to your lender's document requests promptly, and you have met the standard.
Where buyers get into trouble is not the application itself but what follows. A buyer who applies on day 3, then sits on a request for two months of bank statements for three weeks, has a hard time arguing the commitment was unobtainable "despite diligent efforts." A buyer who applies for a different loan than the one described, say a loan with 5% down when the contract says 20%, has a harder argument still. Keep the paper trail: the application confirmation, every document request and the date you answered it, and the lender's written status updates. If you ever need to terminate, that trail is what shows you held up your end.
What happens if the lender is not ready by the mortgage contingency date?
You have exactly two moves before the date passes, and both have to be in writing: ask the seller for an extension of the commitment date, or send notice terminating the agreement and recover your deposit. Doing nothing is the only option that costs you.
A common approach among Massachusetts real estate attorneys is to combine the two. A few days before the deadline, your attorney sends the seller's attorney a request to extend the commitment date by a stated number of days, often 7 to 14, with the lender's written explanation of where the file stands, and states that if the seller does not agree, the buyer terminates under the mortgage contingency effective before the deadline. That puts the choice on the seller: grant the extension or lose the sale and start over. Most sellers grant a reasonable extension, because a buyer who is three business days from a commitment is a better bet than a relist in late October. The recipient, delivery method, and wording of that notice all have to match what your particular P&S requires, which is why it comes from your attorney and not from you or your agent.
What an extension looks like matters too. It should be a signed written amendment to the P&S, drafted by the attorneys, that changes the commitment date and, if needed, the closing date. A text from the listing agent saying "no problem" is not an extension, and if the deal falls apart afterward, you do not want to be arguing about what a text meant.
What happens if you miss the mortgage contingency date?
If the date passes with no commitment, no written termination, and no signed extension, the financing protection in the contract expires and you are left obligated to perform whether or not you have a loan. If you then cannot close, you are exposed to default, and under the liquidated damages clause in the standard form, where your P&S contains it, the seller keeps your deposits as their sole remedy. The exact result in any case turns on the wording of the contingency, the notice provisions, any rider, and how the parties behaved, so this is the general rule and your attorney reads the specifics.
Massachusetts courts enforce that clause. In Kelly v. Marx, decided by the Supreme Judicial Court on February 10, 1999, buyers who could not sell their own home backed out of a purchase, and the sellers kept the 5% deposit, $17,750 including the $1,000 paid with the offer, even though they resold the property for more than the original contract price and suffered no measurable loss. The court held that a liquidated damages clause in a purchase and sale agreement will be enforced when, at the time of signing, damages were hard to predict and the amount was a reasonable forecast, and 5% of the price met that test. Buyers sometimes assume that if the seller resells quickly there is nothing to forfeit. Kelly v. Marx is the case that says otherwise.
Two things soften this in practice. Sellers and their attorneys often prefer a negotiated release to a fight, and a buyer whose lender has denied the loan in writing after a timely application has a reasonable story even when the notice was late. But "reasonable story" is a negotiating position, not a right, and a seller who has already lost a month of marketing in the fall does not have to be generous. The protected path and the unprotected path are separated by one written notice sent on time.
What does a mortgage contingency not protect you from?
The mortgage contingency protects you from being unable to obtain a commitment for the loan described. On its own, it usually will not protect you from an appraisal below the purchase price, from interest rates rising between offer and commitment, from conditions in the commitment you cannot meet, or from changing your mind, unless the contingency or a rider expressly addresses that risk.
The appraisal gap is the one that surprises Quincy buyers most. If you offer $690,000 on a home that appraises at $660,000 and your lender caps the loan at 80% of appraised value, your loan drops from $552,000 to $528,000 and you need $24,000 more in cash at closing if the price and loan structure stay the same. You can still get a commitment, just a smaller one, so unless your contract states the loan amount you need and your lender will not approve that amount, or you negotiated a separate appraisal contingency, the standard clause usually does not get you out. Your realistic options at that point are to renegotiate the price, change the loan terms, bring the extra cash, or use a contractual appraisal protection if you negotiated one. Winning offers in multiple bid situations often include appraisal gap language precisely because of this, and the post on winning a bidding war in Quincy covers how to size that.
Rate movement is the second gap. Figures checked against Freddie Mac's Primary Mortgage Market Survey in October 2026: the national average 30 year fixed rate rose from 6.76% on September 10, 2026 to 7.03% on September 24, 2026, a 0.27 point jump in two weeks. That survey is a national weekly average for borrowers with 20% down and strong credit, not a quote any Quincy buyer will be offered. A buyer who was pre-approved at 6.75% and goes under contract 45 days later at 7.03% still qualifies in most cases, but at the edge of a debt to income limit a quarter point can flip an approval to a denial. If your lender denies the loan on those grounds after a timely application, the contingency does protect you, because you could not obtain the commitment. If you still qualify and simply dislike the payment, it does not. The practical answer is to lock the rate at or shortly after P&S, and to make sure the lock runs past the closing date with room for a delay, since a lock that expires during a seller's title cure period is a known and avoidable problem.
Conditions inside the commitment are the third gap. A commitment letter is almost never clean; it will list conditions like a satisfactory final verification of employment, a clear title, a condo questionnaire, or an insurance binder. The standard form treats the commitment as obtained once it is issued, so a condition you later cannot satisfy is your problem, not the seller's. Attorney riders frequently add language letting the buyer terminate if the commitment contains conditions beyond the buyer's reasonable control, and that rider language is worth asking for in every financed Quincy offer.
Should you waive the mortgage contingency to win a bidding war?
Waive it only if you can close with cash if the loan falls through, because waiving means your deposit is at risk the moment the P&S is signed, no matter what happens with your financing. For most Quincy buyers borrowing 80% or more of the price, the better competitive move is to shorten the contingency and strengthen the pre-approval rather than remove the protection.
| Option | What it does for the seller | What it costs the buyer | Who it fits |
|---|---|---|---|
| Keep the standard 30 day contingency | Standard protection; seller waits about 30 days after P&S to know the financing is firm | Nothing beyond a possibly less competitive offer in a multiple bid situation | Buyers with 20% or less down, condo buyers, anyone with income that needs documentation |
| Shorten the commitment date to 14 to 21 days after P&S | Seller learns sooner whether the deal is solid, which many sellers value nearly as much as a waiver | Requires a lender who has already fully underwritten your income and assets before the offer, and a fast appraisal | Buyers with a true underwritten pre-approval from a local lender who can commit to the timeline in writing |
| Add appraisal gap coverage, keep the mortgage contingency | Seller is protected against a low appraisal killing the deal | You commit to bringing a stated amount of extra cash, say up to $25,000, if the appraisal comes in low | Buyers with cash reserves beyond the down payment who want to compete without losing financing protection |
| Waive the mortgage contingency entirely | Seller treats the offer nearly like cash | Your full 5% deposit is at risk from P&S forward regardless of whether a lender approves you | Buyers who can close with cash or a secured bridge loan if the mortgage fails, and almost nobody else |
Sellers reading this: a shortened contingency from a buyer with a fully underwritten pre-approval often tells you more than a waiver from a buyer whose finances you cannot see. Ask the buyer's agent what the lender has actually verified before weighting the offers.
One 2025 change makes the financing terms matter more in a Quincy bidding war than they used to. Under 760 CMR 74.00, in effect for contracts signed on or after October 15, 2025, a seller of a 1 to 4 family home in Massachusetts generally cannot condition acceptance on the buyer waiving a home inspection or accept an offer that announces such a waiver, and both sides sign a state inspection disclosure on or before the first written contract. Limited exemptions exist, such as certain family transfers, foreclosures, and qualifying new construction, and a buyer can still choose on their own not to inspect after receiving the disclosure. The practical effect is that "waived inspection" is no longer the lever it was in 2022, so the strength and speed of a buyer's financing carries more of the weight when a seller compares offers.
How do you protect your deposit in a financed Quincy purchase?
The steps that keep a mortgage contingency doing its job are mechanical, and the buyers who lose deposits almost always skipped one of them.
- Get a pre-approval that has been through underwriting, not a pre-qualification based on stated income, before you write an offer. The difference is covered in the post on pre-approval versus pre-qualification.
- Write the loan amount you actually need into the offer and the P&S, and make sure the loan type and down payment described match the loan you are applying for.
- Set a commitment date your lender has confirmed in writing they can meet, with a cushion of at least a week before closing.
- Submit the complete application by the deadline in the P&S and keep the confirmation.
- Answer every lender document request within 24 to 48 hours and keep a dated log.
- Lock your rate at or soon after P&S with a lock period that runs past the closing date.
- Calendar the commitment date with reminders at 10 days, 5 days, and 2 days out.
- If the commitment is not in hand 5 business days before the date, have your attorney send the extension request paired with a conditional termination notice.
- When the commitment arrives, read every condition with your attorney the same day, and ask for rider protection against conditions you cannot control.
The Bottom Line
A mortgage contingency in Massachusetts is a right that expires on a date you chose, and it only works if you use it before that date in writing. Set the commitment date to the loan you actually have, apply on time, keep your lender fed, and treat the week before the deadline as the most important week of the transaction. If the lender is behind, an extension request paired with a conditional termination notice keeps your deposit protected and usually keeps the deal alive. Understand that the clause covers failure to obtain the loan described, not a low appraisal, a higher rate you still qualify for, or second thoughts, and negotiate separate protection for the risks that matter in your deal. In a Quincy market where a 5% deposit is routinely more than $30,000, the cost of a missed date is real money, and the cost of avoiding it is a calendar reminder and one letter from your attorney.