Contingency
Direct definition
A condition in a purchase agreement that must be met for the contract to remain binding.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Common contingencies include financing, appraisal, inspection, and sale of a current home. Failing a contingency lets the buyer exit and often recover earnest money.
Why it matters
Contingencies protect buyers from being forced to close on a deal that no longer makes sense.
Where you may see it
- Purchase contract
- Inspection report
- Appraisal report
A real-world example
The inspection reveals a cracked foundation; the buyer exercises the inspection contingency and cancels the contract.
Educational and illustrative only
A common misunderstanding
A contingency doesn't let a buyer cancel for any reason at any time — it applies only to the specific conditions and deadlines written into the contract.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026