Appraisal Gap Scenario Planner

The appraisal came in low. Now what?

Enter the price you agreed to, the value the appraiser gave the home, and the cash you have. We’ll show the size of the gap and what each way of handling it would cost you.

The lender lends on the lower number
Before approving your loan, the lender orders an : an independent estimate of the home’s value. It sizes the loan on the appraised value or the price, whichever is lower.
The difference is the gap
If the home appraises below your price, the shortfall is the . Example: a $500,000 price and a $480,000 appraisal leave $20,000 the loan won’t cover.
You choose how to close it
Challenge the value, pay the gap in cash, renegotiate the price, or walk away. An appraisal in your contract is what lets you walk away and keep your .

If the appraisal isn’t back yet, try a few values to see how big a gap your cash could absorb. How the appraisal process works covers what happens and when.

The deal

The price in your contract, the appraiser's value from the appraisal report, and what your contract says about backing out.

Contract price

Appraised value

Earnest money

% of price

Did you waive the appraisal contingency?

Your money and loan

What you planned to put down, any extra cash you could add, and your loan terms.

Down payment (planned)

Extra cash available

Interest rate

Loan length

Appraisal gap

$20,000

Real decision. Weigh losing the house against paying $20,000 over appraised value.

Appraisal gap

$20,000

shortfall vs contract

Size of the gap

Medium

real decision

Gap as % of price

4.0%

of contract price

Your spare cash

$25,000

covers the full gap

What this means

The appraiser valued the home at $480,000, $20,000 below your $500,000 price. Your lender will size the loan on the lower value, so to buy at the contract price you’d bring $120,000 to closing (your $100,000 down payment plus the gap), not counting closing costs. Your $25,000 of extra cash covers that, with $5,000 left over. Because you kept your appraisal contingency, you can also cancel and get your $10,000 earnest money back, so the seller has a reason to negotiate.

Contingencies expire a set number of days after the contract is signed. Talk with your agent before yours does. Negotiating offers

Your options

Roughly in the order to try them. Each shows the cash you’d bring, the loan you’d end up with, and the monthly loan payment.

1Ask the appraiser to reconsider (ROV)

An is a formal request to recheck the value. Submit comparable sales the appraiser may have missed and ask, through your lender, for the appraiser to reconsider. It's free. Since late 2024, Fannie Mae and Freddie Mac (at FHFA's direction) require lenders to offer a borrower-initiated ROV, generally one request per appraisal; FHA and VA have similar processes.

Cash needed: $100,000Loan: $400,000: 80.0%: $2,528/mo

Do this first; it costs nothing. A materially different value is rare but possible if the original appraiser missed strong comparable sales. Ask your lender how long its review takes so you can extend the contract dates if needed.

2Cover the gap with cash

You bring extra cash to closing to cover the difference between contract price and appraised value.

Cash needed: $120,000Loan: $380,000Loan-to-value: 79.2%Monthly P&I: $2,402/mo

Get the house. Your loan is $380,000 (79.2% of the appraised value).

3Renegotiate to appraised value

Ask the seller to lower the contract price to the appraisal. Most likely to work in a buyer's market or with motivated sellers.

Cash needed: $100,000Loan: $380,000Loan-to-value: 79.2%Monthly P&I: $2,402/mo

Save $20,000 on price. No extra cash needed. Seller may say no.

4Meet in the middle

Negotiate seller to come down half the gap, you cover the rest with cash.

Cash needed: $110,000Loan: $380,000Loan-to-value: 79.2%Monthly P&I: $2,402/mo

Pay $10,000 extra cash. Seller takes $10,000 less.

5Switch lenders for a new appraisal

Your current lender generally won't order a second appraisal just because the value came in low (only if the first is deficient). Moving to a new lender means paying for a new appraisal (~$500-800). FHA and VA appraisals stay with the property for months, so this mainly helps on conventional loans.

Cash needed: $100,600Loan: $400,000Loan-to-value: 80.0%Monthly P&I: $2,528/mo

Long shot and slow. A new appraiser often lands near the first value, and restarting the loan can push past your closing date and rate lock.

6Walk away

Use the appraisal contingency to back out cleanly and get your earnest money back.

No deal. Keep shopping

Lenders use the lower of contract price or appraised value to size the loan. That’s why all “buy at contract” options leave you with the same loan amount. You’re paying the gap with cash, not borrowing more. The ROV and new-appraisal figures assume the value comes back at the contract price. Over 80% loan-to-value, a conventional loan adds mortgage insurance ().

Results are estimates based on your inputs and the assumptions on this page, not quotes or advice. A lender, servicer, or tax advisor will give you different numbers. Disclaimer

Something look off? Report it

Terms used on this page

The terms that come up when an appraisal lands below your price.

Appraisal: An independent estimate of a home’s value, ordered by the lender before it approves your loan. It’s based mostly on recent sales of similar nearby homes.
Appraisal gap: The difference when a home appraises below the contract price. The loan won’t cover it, so it has to come from your cash, a lower price, or a revised value.
Contract price: The price you and the seller agreed to in your signed purchase contract.
Appraisal contingency: A clause in your contract that lets you cancel and keep your earnest money if the home appraises below the price. Waiving it makes an offer stronger but riskier.
Earnest money: The good-faith deposit you paid when your offer was accepted. You can lose it if you back out for a reason your contract doesn’t allow. More
ROV (Reconsideration of Value): A free, formal request through your lender asking the appraiser to review comparable sales they may have missed. Usually the first step after a low appraisal. More
LTV (loan-to-value): Your loan divided by the home’s value. With a low appraisal, lenders measure it against the appraised value, not the price. More
PMI (private mortgage insurance): A monthly charge conventional lenders add when your loan is more than 80% of the home’s value. It protects the lender if a borrower stops paying. More

Keep learning

Next steps

Closing cost estimator: the rest of the cash you’ll need at closing
Gift funds wizard: if family help could cover the gap
PMI calculator: what mortgage insurance would cost if your down payment shrinks
Inspection negotiation: the other big renegotiation point before closing