In negotiating a deal, both buyers and sellers assume risk. Just as you are taking a risk by agreeing to buy, a seller takes on risk by agreeing to sell. Naturally, a seller wants a deal with zero contingencies, to eliminate the likelihood of the buyer backing out, while a buyer wants a deal with as many contingencies as possible, should his circumstances change.
The mortgage contingency is a major contract issue for both buyer and seller, and as a buyer you want to obtain terms that are favorable to you. Failure to do this properly could jeopardize your contract deposit. The key element is to establish a maximum amount you are going to finance, and the higher the percentage you can get in the contract, the better off you'll be. The seller will try to negotiate a lower percentage, but the key is to establish a number that you are comfortable with