The Process
What happens if the appraisal comes in low?
The short answer
If a home appraises for less than your agreed price, the lender will only lend against the lower appraised value, creating an "appraisal gap." You then choose among options: renegotiate the price with the seller, cover the difference in cash, dispute the appraisal, or — if you have an appraisal contingency — walk away. A low appraisal affects your loan because lenders base it on value, not price.
Key points
- Lenders lend against appraised value, not purchase price.
- A gap means less loan than expected.
- Options: renegotiate, pay the difference, dispute, or exit.
- An appraisal contingency protects your deposit.
Why it matters for your down payment
Because the loan is capped at the appraised value, a gap effectively raises the cash due at closing unless the price is renegotiated. Knowing this ahead of time helps you decide how to write your offer and contingencies.
Sources
Every claim above traces to a public government source.
- ViewT1What is a home appraisal?
Consumer Financial Protection Bureau · Government / primary · 2024