Indication is verbal pricing range; LOI and term sheet are interchangeable terms for a written indicative offer subject to credit approval; commitment letter is the binding offer issued after the credit committee approves. Most bake-offs run on LOIs or term sheets at the first round, with commitment at award.
How to read each document type
Indication: a verbal or short-form written pricing range from the loan-officer level. Useful for quickly screening which lenders are within striking distance on price; not a basis for award decisions because the indication is unsupported by credit-committee review.
LOI / term sheet: a written indicative offer signed at the desk level after a preliminary credit screen. Material loan terms (amount, rate, term, recourse, prepay, reserves) are stated; subject to credit approval and acceptable diligence. Most bake-offs run first round on this document type with a 7-to-14-day response window.
Commitment letter: the binding lender offer issued after the credit committee approves. All material terms locked; closing conditions defined. The borrower's signature plus the good-faith deposit triggers the closing process.
Application: a hybrid form used by some agency lenders and some banks that combines indicative pricing with a deposit and a defined process for moving into commitment without a separate term sheet.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1