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If your lender-ordered appraisal is below the agreed purchase price, contact your loan officer promptly. Get the complete report, ask how the lower value changes your maximum loan and cash due at closing, and check your contract deadlines before deciding whether to negotiate, challenge the valuation, bring additional cash, or cancel. A low appraisal does not automatically give you the right to walk away.
What happens when the appraisal is below the purchase price?
An appraisal is a professional opinion of a home’s value. Your lender uses it to assess the property securing the mortgage. If the appraisal is below the contract price, the lender may offer a smaller loan than you expected, which can leave you needing more cash or a lower purchase price. The exact impact depends on your loan program, down payment, underwriting and contract.
For purchase underwriting, the loan-to-value calculation may use the lower of the appraised value and the contract price. That can reduce the loan available at a given loan-to-value ratio, but the gap between the price and appraisal is not automatically the amount of extra cash you must bring. Ask your lender for a revised loan estimate or other updated cash-to-close figures. The CFPB explains the financing and negotiation implications in its low-appraisal guidance; Fannie Mae describes the purchase loan-to-value approach in its research on low appraisals.
What to do first
- Get the complete appraisal report. Ask your lender for it if you have not received it. For typical first-mortgage residential loans, borrowers generally must receive copies of lender-obtained appraisals and other written valuations no later than three days before closing. See the CFPB’s guidance for details.
- Ask your loan officer to recalculate the deal. Request the revised maximum loan, estimated cash to close, any change to loan approval, and whether the closing schedule is affected. Get the figures for your actual loan rather than assuming the price-appraisal difference equals your cash shortfall.
- Check the report for specific, supportable errors. Verify items such as room count, living area and features, then review the comparable sales and adjustments. Note factual mistakes, omissions or comparables that appear inadequate. The CFPB also identifies possible prohibited bias as a concern borrowers can raise.
- Ask the lender how to submit concerns. Appraisal communications generally go through the lender, which is the appraiser’s client. Ask for the lender’s process and deadlines instead of assuming you can negotiate directly with the appraiser. Fannie Mae discusses this in its appraiser independence guidance.
- Read your signed contract and act before deadlines. Review the appraisal and financing contingencies, earnest-money terms and notice deadlines. If your rights or potential costs are unclear, consult a local real-estate attorney promptly. The CFPB advises buyers to consider contract-specific advice.
Compare your options
Consider not just whether an option could keep the closing on schedule, but also the cash it requires, the likelihood and timing of seller or lender action, your contract exposure, and whether you still believe the price is right for you.
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| Option | When it may fit | What to weigh |
|---|---|---|
| Renegotiate the price | The seller is willing to adjust, and the appraisal or relevant comparable sales support your position. | The seller can refuse. Put any agreement in a written contract amendment through the transaction professionals. The CFPB suggests asking the seller to reduce the price in its low-appraisal guidance. |
| Request reconsideration of value (ROV) | You can point to specific factual errors, omissions, weak comparable properties or other concrete concerns. | Submit focused evidence through the lender’s process. An ROV is a review, not a promise that the value will change. See the CFPB’s explanation and Fannie Mae’s ROV FAQ. |
| Bring additional cash | You can cover some or all of the shortfall while meeting the lender’s conditions and keeping adequate reserves. | You would be committing more cash to a home appraised below the contract price. Consider your remaining savings and revised loan terms; the CFPB warns that paying more than appraised value is risky in its guidance. |
| Ask about another appraisal | Your lender determines the original report is inaccurate and allows a new appraisal. | A second appraisal is not an automatic buyer entitlement or a guaranteed higher value. Freddie Mac says it must be formally requested through the lender and the original report deemed inaccurate in its buyer guidance. |
| Cancel or walk away | Your contract and applicable law give you a right to cancel, or another contract right applies. | A low appraisal alone does not automatically release you. Whether you can cancel without losing earnest money, or face other costs, depends on your contract and circumstances. Check deadlines and get local legal advice if needed; see the CFPB’s guidance. |
How to request a reconsideration of value
An ROV is a request to the lender to reconsider a valuation you believe is inaccurate. The lender’s process may vary, so ask for its instructions, required documentation and deadline. Keep the request specific and evidence-based.
- Identify factual errors, such as incorrect room count, living area or omitted features, and provide reliable supporting documentation.
- Explain why a comparable property may be unsuitable or why relevant comparable sales were left out; include the supporting information you have.
- If you believe prohibited bias may have affected the appraisal, describe the concern and provide relevant evidence.
On May 1, 2024, Fannie Mae, Freddie Mac and HUD published requirements for borrower-initiated ROVs intended to promote consistency when a borrower perceives an appraisal issue or deficiency. Fannie Mae’s FAQ was updated September 3, 2025. These requirements do not guarantee a revised value; see Fannie Mae’s ROV FAQ for program information.
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If you are the seller
If a buyer’s appraisal is low, you can ask the buyer whether they are willing and able to cover some or all of the gap, consider reducing the price, or discuss waiting for a later comparable sale before seeking another appraisal. The buyer’s lender generally bases its loan on the appraised value, so an agreement to pay more in cash works only if the buyer has the funds and still wants to proceed. Freddie Mac recommends reviewing the report for factual issues and routing correction questions through the buyer’s lender rather than contacting the appraiser directly in its seller guidance.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What low-appraisal statistics can—and cannot—tell you
Fannie Mae reported in 2016 that more than 90 percent of appraisals valued the home at the contract price or higher. That is a historical figure, not a current national rate. Its 2020 research summary found that low appraisals sharply increased the likelihood of downward price renegotiation in the study. It discussed both liquidity constraints and the information a lower appraisal gives buyers, and reported no substantial reduction in the likelihood that a loan application led to origination and no notable increase in time from contract signing to sale. Those findings describe the study, not what will happen in an individual transaction.
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