An appraisal gap is the difference between your contract price and a lower appraised value. Your lender bases the loan on the lower number, so you have to cover the gap in cash, renegotiate the price, or cancel if your contract allows. In competitive markets, buyers sometimes promise to cover part of a gap to make their offer stronger.
An example
You agree to pay $450,000 with 10% down, planning a $405,000 loan. The home appraises at $435,000. The lender will lend 90% of $435,000, or $391,500. To keep your purchase at $450,000, you’d need $58,500 down instead of $45,000: $13,500 more cash.
Try it: Appraisal gap calculatorEnter your price, down payment and a possible appraised value to see how much extra cash a gap would take.Why gaps happen
Appraisers base value on recent comparable sales, which lag behind a fast-rising market. When buyers bid well over asking, prices can outrun the comparables. Gaps are most common in hot ZIP codes; check how often homes sell over asking on the market page.
Your options if the appraisal is low
- Renegotiate: ask the seller to lower the price to the appraised value or split the difference.
- Cover the gap with extra cash.
- Challenge the appraisal with comparable sales the appraiser may have missed, through your lender.
- Cancel if you have an appraisal contingency and you’re within its deadline; see the contingency risk explainer.
- Change the loan, for example a smaller down payment percentage, if you qualify.
Appraisal gap coverage in offers
To compete, some buyers write that they’ll cover a gap up to a set amount, such as $15,000. That’s much safer than waiving the appraisal contingency entirely, because your exposure is capped. Make sure you’d still have reserves after paying it. See how it strengthens your offer with the offer strength score.
Plan ahead
If you offer well above recent sales, keep extra cash available, and know exactly how much with the cash to close calculator. FHA and VA appraisals also check the home’s condition, which can require repairs before closing.
Common questions
What happens if the appraisal is lower than my offer?
You can renegotiate, pay the difference in cash, challenge the appraisal, or cancel if you have an appraisal contingency.
What is appraisal gap coverage?
A promise in your offer to cover a low appraisal up to a set amount, which strengthens the offer while capping your risk.
Can I dispute a low appraisal?
Yes, through your lender, with comparable sales the appraiser may have missed; changes aren’t guaranteed.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.