Conditional on financing in Ontario (2026): how it works

An offer that is "conditional on financing" means the deal only becomes firm if your lender approves a mortgage for that specific home by a date written in the offer. It exists because a pre-approval is not a final approval: CMHC's 2026 homebuying guide says the property still has to be evaluated so the price and condition are acceptable to your lender. There is no number of days set in law. You and the seller agree on it, so ask for enough time for your lender to do its checks on the actual property.

Below: what the lender checks in that window, why a pre-approval doesn't replace the condition, and how to decide on the number of days.

No guaranteeWhat a pre-approval gives youFinal approval still depends on the property (FCAC, CMHC)

60–130 daysTypical pre-approval rate holdDepends on the lender (FCAC)

Set by youDays in the financing conditionNegotiated in the offer; no legal standard

+2% or 5.25%Qualifying rate for uninsured mortgagesWhichever is higher (OSFI)

Under $1.5MPrice limit for an insured mortgageNeeded when you put down less than 20% (CMHC)

30–60 daysUsual time from agreement to closing on a resale homeLonger for new homes (CMHC)

General information. Your own agreement and lender decide what applies to you.

Source: Financial Consumer Agency of Canada; CMHC Homebuying Step by Step (2026); OSFI; RECO.

What a financing condition is

An offer to buy a home becomes a binding agreement once the seller accepts it. A condition is a term that has to be met before the deal is final. CMHC defines a conditional offer as one with one or more conditions, such as the buyer being able to get a mortgage, that must be met before the sale can be completed, and its guide notes that the contract only becomes final once all the conditions are met.

A financing condition usually says three things:

• What has to happen: you arrange a mortgage on terms you can accept.
• By when: a specific date and time.
• What happens if it doesn't: the agreement ends and your deposit is returned. The exact wording is in your offer, so read it with your agent and lawyer.

If you remove (waive) the condition or confirm it's been met before the deadline, the deal is firm. From then on, not closing is a breach of the agreement. Our article on backing out of an accepted offer covers what that can cost.

Why a pre-approval is not enough

A pre-approval tells you how much a lender may lend and at what rate. The Financial Consumer Agency of Canada (FCAC) is direct about its limits: the process does not guarantee approval, and the pre-approved amount doesn't guarantee you'll get a mortgage for that amount. FCAC adds that before a lender approves the loan it will check that the property meets its standards, which vary from lender to lender, and that the approved amount depends on the property's value and your down payment.

RECO, Ontario's real estate regulator, makes the same point to buyers: pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.

The gap is the property. Your pre-approval was based on you. The final approval is based on you and the home: its value, its condition, its type, and your finances on the day the lender looks again.

What the lender checks during the condition

CMHC's guide says that once your offer is accepted, you go back to your lender or broker to verify and finalize the mortgage. It lists what you'll likely need to provide:

• the signed offer to purchase and the property listing (or photos)
• the legal description of the property and a land survey
• a home inspection report and the building specifications
• the most recent property tax assessment and heating and utility costs
• an appraisal
• estimates for recent or planned renovations
• condominium fees, if it's a condo

CMHC also notes that a lender may ask for an appraisal before approving you. That's where a financing condition earns its keep: if the lender values the home below the price you agreed to, the approved amount can be lower than you planned, and you'd have to cover the difference yourself.

The lender also re-checks you. FCAC's pre-approval page lists the documents lenders ask for, such as ID, proof of employment, proof of your down payment and closing costs, and your debts. Self-employed buyers may need CRA notices of assessment for the past two years. Changes since your pre-approval, like a new car loan or a new job, can change the answer.

How many days to ask for

No law or regulator sets the number. It's a term you negotiate, like the price and the closing date. Base it on what has to happen, not on what you think the seller wants to hear:

• Ask your lender or broker first. Before you offer, ask how long they need from a signed agreement to a written approval, and whether an appraisal will be needed for this kind of home.
• Count the steps. The appraisal has to be booked and done, the documents gathered, and the file underwritten. A condo adds condo fee and building information. A home that needs a mortgage insurer's approval adds another party.
• Mind weekends and holidays. Write the deadline as a date and time, and check it isn't a day your lender's office is closed.
• Line it up with your other conditions. If you also have an inspection condition, the inspection report is one of the documents CMHC says the lender may want.

When a seller pushes for fewer days, the trade-off is yours. Too short, and you may have to waive before your approval is in writing. You can ask for an extension, but the seller doesn't have to agree.

A worked example: $900,000 in Mississauga

Say you agree to buy a $900,000 home in Mississauga, conditional on financing. These numbers are only an illustration.

• Minimum down payment: FCAC's rules are 5% of the first $500,000 and 10% of the part above it, so $25,000 + $40,000 = $65,000. With less than 20% down ($180,000 here), you need mortgage loan insurance, which CMHC says is only available on homes priced under $1.5 million. Your lender arranges the insurance, so the insurer's sign-off is part of what has to happen before your deadline.
• With 20% down: you'd borrow $720,000 on an uninsured mortgage. OSFI expects federally regulated lenders to qualify you at the higher of your contract rate plus 2% or 5.25%. If your rate were 4.5%, you'd be qualified at 6.5%.
• If the appraisal comes in low: if the lender values the home below $900,000, it may lend less than you planned. With a financing condition still open, you have room to make up the gap, renegotiate, or, if you truly can't get approved, let the condition fail. Without one, the gap is your problem.

Run your own numbers in the mortgage calculator before you offer, and add closing costs and land transfer tax on top of the down payment.

Use the condition in good faith

A financing condition is not a free option to walk away. The Ontario Real Estate Association (OREA), which publishes the standard forms, notes that courts expect both sides to use reasonable efforts, in good faith, to satisfy a condition. Apply promptly, send what the lender asks for, and keep records.

If the condition does fail, the deposit doesn't move on its own. OREA points out that wording in a condition clause doesn't replace a mutual release signed by both sides, which the brokerage holding the deposit needs before it pays the money out. See our guide to the deposit on a house in Ontario.

Firm offers and competing offers

In a multiple-offer situation, RECO warns that it can be tempting to remove conditions that are meant to protect you. A firm offer with no financing condition commits you to close whether or not your lender approves the home at that price.

If you're thinking about a firm offer, do the lender's work in advance where you can. Get a pre-approval with a rate hold (FCAC says these typically last 60 to 130 days, depending on the lender), ask your lender whether it will need an appraisal for this property, and be honest with yourself about how you'd close if the approved amount came in lower. RECO also notes that in Ontario the seller's agent must tell every buyer who has made a written offer how many competing offers there are, so you know what you're up against.

What this means for GTA buyers

• Get pre-approved early, but don't treat it as a final yes. Ask your lender how long the rate hold lasts, whether a lower rate applies if rates fall, and whether the pre-approval can be extended.
• Ask your lender how many days it needs before you write the offer, and put that number in.
• Have your documents ready on day one. The list above is a good start.
• Know the market you're bidding in. Compare similar homes for sale on the map and set an alert for new ones, so you have a sense of the competition before you decide how firm your offer needs to be.
• Go to open houses to compare homes before offer night, so you aren't deciding under pressure.
• Talk to an agent about your conditions and the seller's position. You can buy with an agent through Dibz.

FAQ

What does "conditional on financing" mean?

It means the deal becomes firm only if you get mortgage approval on that specific home by the date in the offer. If you can't, despite real effort, the agreement typically ends and the deposit comes back to you after a mutual release is signed.

How many days should a financing condition be?

There is no legal standard; it's negotiated. Ask your lender or broker how long it needs from a signed agreement to a written approval, including any appraisal, and set the deadline to match.

If I'm pre-approved, do I still need a financing condition?

RECO says pre-qualifying does not safely remove the need for one. FCAC and CMHC both say a pre-approval isn't a guarantee: the lender still has to approve the property, and the approved amount depends on its value.

What happens if the appraisal is lower than my offer?

The lender may lend less than you expected, and you'd need to cover the difference with more down payment or renegotiate. A financing condition that is still open gives you time to sort it out.

Can the seller refuse a financing condition?

Yes. Conditions are part of the negotiation, and a seller can accept, change or reject them. Weigh the risk carefully before you agree to a firm offer.

Sources

• CMHC: Homebuying Step by Step, your guide to buying a home in Canada (2026): pre-approval, conditional offers, documents the lender needs after an accepted offer, appraisals, closing timelines
• Financial Consumer Agency of Canada: Getting preapproved for a mortgage
• Financial Consumer Agency of Canada: Down payment
• CMHC: General requirements to qualify for homeowner mortgage loan insurance
• OSFI: Minimum qualifying rate for uninsured mortgages (modified January 29, 2026)
• RECO: Competing offers
• OREA: The fate of the deposit if the deal falls through (reasonable efforts and mutual releases)

This article is general information, not legal, tax or financial advice. Rules change; confirm the details with your lawyer, lender or the official source.