A term sheet is a written summary of the terms a lender proposes for a loan. It lays out the loan amount, rate, term, amortization, LTV or LTC, recourse, fees, and major conditions. It comes early in the process, before full underwriting, to confirm the two sides agree on the basic shape of the deal.
Most term sheets are non binding, meaning neither party is fully committed and terms can change as underwriting, appraisal, and third party reports come in. Signing usually comes with a good faith deposit that funds those reports and signals the borrower is serious.
Comparing term sheets means looking past the headline rate. Leverage, recourse, prepayment terms, reserves, and fees can matter more than a small rate difference. A higher rate loan with more proceeds and non recourse terms can beat a cheaper, more restrictive one.