What happens if my mortgage financing falls through after I make an offer?

If your offer includes a financing condition and your lender declines to issue a mortgage commitment before the condition deadline, you can exercise your right to terminate the agreement. You notify the seller that the condition has not been satisfied, and you are entitled to recover your deposit in full. The deal ends without penalty to you.

The protection only exists while the condition is live. If you have already waived the financing condition — either because you received a commitment or chose to waive it without one — and then your mortgage falls through, you are in a much more difficult position. You are legally obligated to close. If you cannot, the seller can sue you for their losses, which can easily exceed your deposit.

This is why having a firm mortgage commitment (not just a pre-approval) before you waive your financing condition is so important. If your lender raises last-minute issues after you have waived the condition, speak with your lawyer immediately to understand your options.