Is a term sheet a rate lock?

Not on its own. Whether and when a rate locks varies by lender; ask specifically when your number becomes firm.

Can the rate go up after the commitment letter?

It should not, absent a material change such as a new lien or a credit event, but always confirm the commitment's own conditions before assuming it is final.

What happens if I can't clear a condition?

The file cannot reach clear-to-close, and closing is delayed until the condition is satisfied or waived by the underwriter.

Do all lenders use these three names?

No. Naming and the number of steps vary by lender, so ask which stage any document you receive represents.

Should I sign a lease or notify a tenant before clear-to-close?

Wait for the clear-to-close where possible, since terms can still move earlier in the process.

LESSON 2 OF 64 MIN READ

Term sheet, commitment letter, clear-to-close: what does each one actually bind?

A term sheet is an early, conditional quote issued before the appraisal or verifications are complete, and it can still change. A commitment letter is issued after underwriting has reviewed the file and states the terms the lender will fund on, subject to a shorter list of remaining conditions. A clear-to-close confirms every condition has been satisfied and closing can be scheduled; it is the only one of the three that means the numbers are final. Practice on naming and sequencing these documents varies by lender, so always ask which stage a given letter represents.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

The term sheet

A term sheet is issued right after application, based on what the borrower has represented about the property, the rent and their credit. It quotes an indicative rate, LTV, DSCR band and prepayment option, and it is explicitly subject to appraisal, title and verification of every input. It signals intent to proceed on both sides, but it is not a funding commitment, and it is the document most likely to move if the appraisal comes in below the contract price or the rent is lower than represented.

The commitment letter

Once underwriting has reviewed the appraisal, title, credit and income documentation, a commitment letter sets out the terms the lender is prepared to fund on, along with any remaining conditions — typically a smaller, more specific list than the original document request. It is a meaningfully firmer document than a term sheet because the underlying facts have been verified, but it still is not unconditional: outstanding items must clear before funds move.

The clear-to-close

A clear-to-close means every condition on the commitment has been satisfied and the file is ready to schedule closing. At this point the rate, LTV and DSCR band are fixed, barring a last-minute change in circumstances such as a new lien appearing on a final title search. It is the document to wait for before booking movers, notifying a tenant, or wiring earnest money beyond what the contract already requires.

Why the distinction matters for planning

Treating a term sheet like a locked rate is the single most common source of surprise on a DSCR file. If the appraisal comes in low, or a rent comparable is lower than expected, the DSCR band and therefore the price can change between the term sheet and the commitment letter. Building in that possibility — rather than budgeting to the term sheet number exactly — avoids a scramble for extra cash to close.

What can still change after a clear-to-close?

Very little should, and what can change is narrow: a final title search revealing a new lien, a last-minute change in the borrower's credit profile, or a wire fraud or verification issue. Reputable files close within a day or two of the clear-to-close specifically to minimise that window. If a lender tries to introduce a materially different rate or fee after clear-to-close without a documented reason, that is worth querying directly.

How these differ across lenders

Some lenders use different names for these same three checkpoints, and some compress the commitment letter and clear-to-close into a single step. What matters is not the label but the substance: has the appraisal come back, has title been reviewed, and have all conditions actually cleared. Ask directly which of the three stages any letter you receive represents before treating its numbers as final.

The same loan at three stages

Term sheet, day 2	$300,000 at 75% LTV, rate quoted off application data
Appraisal returns	Value supports contract price; rent matches application
Commitment letter, day 16	Same $300,000, rate confirmed, two conditions outstanding
Conditions	Updated insurance binder, signed operating agreement page
Conditions cleared	Day 21
Clear-to-close	Day 22 — terms now fixed
Closing	Day 24
Funding	Day 24, same-day wire

Illustrative sequence only. Actual document names, order and timing vary by lender.

WHAT WE NEED FROM YOU

Term sheet. The initial, conditional quote based on application data.
Appraisal report. The document that most often moves numbers between term sheet and commitment.
Commitment letter. Post-underwriting terms with a narrowed condition list.
Conditions responses. Whatever documents the commitment letter still requires.
Clear-to-close notice. Confirmation every condition is satisfied and closing can be scheduled.

FREQUENT QUESTIONS

Is a term sheet a rate lock?: Not on its own. Whether and when a rate locks varies by lender; ask specifically when your number becomes firm.
Can the rate go up after the commitment letter?: It should not, absent a material change such as a new lien or a credit event, but always confirm the commitment's own conditions before assuming it is final.
What happens if I can't clear a condition?: The file cannot reach clear-to-close, and closing is delayed until the condition is satisfied or waived by the underwriter.
Do all lenders use these three names?: No. Naming and the number of steps vary by lender, so ask which stage any document you receive represents.
Should I sign a lease or notify a tenant before clear-to-close?: Wait for the clear-to-close where possible, since terms can still move earlier in the process.

Apply

From application to funding How fast can a DSCR loan close Glossary All answers