I’ve had this situation happen a few times lately when I have acted for the seller: the buyer waived the financing condition, or didn’t put in a condition of financing at all, and found out shortly before closing that their financing was not actually approved. How does this happen?
It comes down to pre-approvals. When you are pre-approved for a mortgage loan, they are just looking at you: what your income is, what other debts you have, what other assets you have. That gives you a rough range of how much you can afford. However, it doesn’t tell you whether you could buy any specific house.
In order to be specifically approved for a particular house, the bank will want to see how much you paid for that house, and determine whether you overpaid. If they think you did, they can refuse to give you the loan, which leaves you on the hook for the house with no mortgage in sight.
Real estate is starting to pick up with the warmer weather arriving. Unless you know that the house you are offering on has been appraised, be very careful before waiving (or eliminating) a financing condition unless you know that bank has actually looked at that house.