Making an offer

What to do when the appraisal comes in low

By the HomeBuyerMap team · Updated October 20, 2026

A low appraisal feels like a deal-breaker, but it's usually a negotiation point. Lenders lend against the lower of the purchase price or the appraised value, so a low number changes how much cash you need — not necessarily whether you can buy the house.

Why it matters: a real example

You offer $400,000 with 10% down, planning a $360,000 loan. The home appraises at $385,000. The lender will now lend 90% of $385,000, which is $346,500. To keep the $400,000 price, you'd need $53,500 down instead of $40,000 — a $13,500 gap you'd have to cover in cash.

Option 1: Ask the seller to reduce the price

The seller knows the next buyer's lender will likely see the same appraisal, especially on FHA loans, where the appraisal stays with the property for 180 days. Many sellers will drop to the appraised value or close to it.

Option 2: Cover the gap in cash

If you have the savings and want the house, you can pay the difference. Some contracts include an appraisal gap clause in which the buyer agreed in advance to cover a set amount. Before paying, consider whether you'll be overpaying in a flat or falling market.

Option 3: Split the difference

In the example, the seller drops $7,500 and you add $6,000 more down. Splitting is common when both sides want to close.

Option 4: Challenge the appraisal

Ask your lender for a reconsideration of value (ROV). Provide up to three to five recent comparable sales the appraiser didn't use, or point out factual errors such as wrong square footage, bedroom count or missed upgrades. Your agent can pull the comps. Federal regulators have pushed lenders to make the ROV process clear and accessible, so ask for it in writing. Challenges succeed most often when there's a factual error.

Option 5: Switch loan type or increase your down payment

Changing loan programs doesn't change the value, but a bigger down payment can keep you under a mortgage insurance threshold or within program limits. A second appraisal is rarely allowed for the same loan.

Option 6: Walk away

If your contract has an appraisal contingency and you're within the deadline, you can cancel and get your earnest money back. Without one, walking away may cost your deposit.

VA loans: Tidewater

On VA loans, if the appraiser expects the value to come in below the price, they must notify the lender before finishing the report and give the buyer's agent a chance to submit additional sales data. This is called the Tidewater process.

Frequently asked questions

Can the seller challenge the appraisal?

The appraisal is ordered by your lender, so the request goes through the lender, typically at your request. The seller's agent can supply comps to your agent to include.

Does a low appraisal mean I'm overpaying?

Not necessarily. Appraisals look backward at closed sales. In a fast-rising market, contract prices can run ahead of recent comps. But a low appraisal is a signal worth taking seriously.

What if the appraisal comes in high?

Your loan is still based on the purchase price, but you start with instant equity, which can help with PMI removal later.

This article is educational and general in nature. Loan eligibility, rates, and requirements vary by lender, loan program, and your individual situation. Confirm specifics with a licensed lender.