What Is a Financing Contingency in Washington?
A financing contingency protects the buyer if their lender cannot approve the home loan.
In Washington, this protection is written using NWMLS Form 22A.
If the buyer’s financing fails for reasons allowed in the contract, the buyer can terminate the agreement and receive their earnest money back.
What This Means for the Buyer
The buyer is protected if:
- The lender denies the loan
- The appraisal comes in low and affects approval
- Loan conditions cannot be satisfied
As long as the buyer follows the timelines in Form 22A, their earnest money is protected.
What This Means for the Seller
The seller accepts the risk that the buyer’s loan approval is not guaranteed.
Because of this, offers without a financing contingency are often viewed as stronger.
Why This Is Important in Seattle & Snohomish County
In competitive markets, some buyers waive Form 22A to make their offer more attractive — but this removes a major layer of protection.
Understanding this form is critical before submitting an offer.
How This Connects to Other Forms
Financing contingency is closely connected to:
- Appraisal gaps (Form 22AD)
- Low appraisal situations
- Earnest money protection
Bottom Line
Form 22A gives buyers protection if their loan cannot be approved, but it can make an offer less competitive in multiple-offer situations.
FAQ
What is Form 22A?
The NWMLS financing contingency that protects buyers if their loan fails.
Can a buyer get earnest money back if financing fails?
Yes, if they follow the timelines in Form 22A.
Why do some buyers waive this form?
To make their offer stronger in competitive markets.
Is waiving financing risky?
Yes. It removes loan approval protection.