Financing contingencies in Georgia: how your loan is (and isn't) protected
If your loan fails after due diligence, whether you keep your earnest money depends on one choice you made in the offer.
Two ways to write the financing
Georgia's standard contract lets the buyer say whether the sale is contingent on financing. If it is, the contract describes the loan — type, amount, term and other details — and, if you cannot obtain that loan despite making a good faith effort, you generally have a path out on the terms the contract sets.
If the offer is not contingent on financing, you may still use a loan, but the seller is not bearing that risk. If the loan falls through after due diligence, you are exposed to losing your earnest money.
What protects you and what doesn't
| Situation | Typically protected by |
|---|---|
| You change your mind during due diligence | Due diligence period |
| Inspection finds problems | Due diligence period |
| Loan denied after due diligence | Financing contingency, if included |
| Appraisal comes in low | Appraisal contingency, if included |
| You lose your job before closing | Usually nothing specific — talk to your attorney and agent at once |
Your duties under a financing contingency
A financing contingency is not a free exit. Buyers are generally expected to apply promptly, pursue the loan in good faith, respond to lender requests, and not do anything that sabotages approval. Read the exact obligations in your contract.
- Apply with your lender within the time the contract gives you.
- Lock in documents early — see documents for a mortgage application.
- Don't open new credit, change jobs or move large sums without asking your lender first.
- Tell your agent immediately if anything changes.
Strengthening an offer without dropping protection
Sellers in competitive situations may prefer a non-contingent offer. Before you remove the contingency, get a full pre-approval, ask your lender what could still go wrong, and make sure you have enough reserves. Often you can strengthen the offer with a larger deposit or flexible dates instead.
Using due diligence to de-risk the loan
Your due diligence period is the best time to shake out loan problems. Get the appraisal ordered early if your lender allows, answer underwriting questions the same day, and ask your loan officer in writing whether anything is still open before the period ends. See the due diligence period.
Why loans fall through late
- A change in employment or income — a new job, a cut in hours, or switching to self-employment.
- New debt — a car loan or a furniture card opened before closing changes your debt-to-income ratio. See debt-to-income ratio.
- Unexplained deposits — large cash deposits the lender can't source.
- The property itself — condition issues the appraiser flags, or condo and HOA problems the loan program won't accept.
- Insurance — a home the lender won't fund without coverage you can't get at a workable price.
Describe the loan accurately
A financing contingency protects you only for the loan the contract describes. If you write a 30-year conventional loan with a set down payment and then switch to a different program, you may have stepped outside your own protection. Keep your agent, lender and contract in sync, and amend the contract if the plan changes.
If you are using down payment assistance or an FHA, VA or USDA loan, make sure the contract says so and that your closing date leaves time for the program's own approvals.
Cash buyers and bridge plans
If you are paying cash, there is no financing contingency to write. If you plan to pay cash and refinance afterwards, or to buy before selling your current home, talk to your lender about how the contract should describe it. A sale contingency on your current home is a separate special stipulation, and sellers often weigh it heavily.
A typical financing timeline
Timelines vary by lender and loan program; government loans and down payment assistance can add steps. Ask your loan officer for their own timeline before you pick a closing date.
| Stage | What happens | Your job |
|---|---|---|
| Days 1–3 after contract | Formal application, loan estimate issued | Sign disclosures, send documents |
| First week or two | Appraisal ordered, underwriting begins | Answer conditions the same day |
| Mid-contract | Conditional approval with a list of conditions | Clear every condition quickly |
| About a week before closing | Clear to close | Confirm insurance and funds |
| At least three business days before closing | Closing Disclosure | Compare it with your loan estimate |
Questions to ask before you choose
- Do you recommend a financing contingency for my situation, and what would I risk without one?
- What deadlines in the contract apply to my loan?
- What would most likely cause my loan to fail, and can we check it during due diligence?
- How much in reserves will I have left after closing?
Common questions
Is a financing contingency standard in Georgia?
It is a choice on the standard contract, not automatic. Many financed buyers include it; some leave it out to compete.
If my loan is denied, do I get my earnest money back?
If your contract is contingent on financing and you met its terms and deadlines, generally yes. Without the contingency, after due diligence, your earnest money is at risk.
Does a pre-approval guarantee my loan?
No. Final approval depends on the appraisal, the property, verification of your income and assets, and nothing changing before closing.
Can I switch lenders after going under contract?
Usually, if your contract allows and it won't delay closing. Tell your agent first — some contracts name terms tied to your loan.
Read next
General information for Georgia home buyers, not legal, tax or lending advice. Loan programs, rates, limits, tax rates and insurance terms are set by lenders, agencies, counties and insurers and change — confirm current figures with them, and have your closing attorney review anything you sign.