The Appraisal Came In Low. Now What?

You agreed on a price, planned your down payment and started preparing for the move. Then the appraisal comes back below the price in the contract. I'd want us to work through the actual financing numbers before you decide what to do next.

A low appraisal means we need to review the value used for your loan, recalculate the cash required, and discuss any value-review or contract options before relying on the original financing plan.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, NMLS #483943, through C2 Financial Corporation.

What does a low appraisal change about my mortgage?

An appraisal supports the lender's review of the property's value. The appraisal explanation covers that process, and the appraiser-versus-inspector guide explains why it doesn't replace your home inspection.

Fannie Mae's loan-to-value guideline, also saved in the agency corpus, uses the lower of the sales price or current appraised value for an ordinary purchase transaction's value calculation. The section identifies exceptions for certain transactions. We'll confirm the rule and allowable loan-to-value ratio for your actual program.

Loan-to-value is the loan amount divided by that value. If we keep the same ratio but the value is lower, the loan amount is lower too. Your cash needed is the purchase price minus the loan, before closing costs and other adjustments.

That calculation matters more than simply adding the full appraisal shortfall to your old down payment. I'd want the loan amount and cash requirement recalculated together.

An invented example with the arithmetic shown

These numbers are invented to show the calculation. A 90% loan-to-value ratio is an assumption for this example, not a program limit or loan offer. Closing costs, deposits, credits and other adjustments are excluded.

Scenario	Price	Value used	Loan at assumed 90% LTV	Price minus loan
Original plan	$400,000	$400,000	$360,000	$40,000
Appraisal is $385,000; price unchanged	$400,000	$385,000	$346,500	$53,500
Seller agrees to $390,000; value unchanged	$390,000	$385,000	$346,500	$43,500

At the unchanged price, the illustrated cash requirement rises by $13,500, from $40,000 to $53,500. If the seller agrees to $390,000, it is $3,500 above the original plan. The seller's agreement is hypothetical; the table doesn't promise a concession, approval or closing date.

Review the report and any supported concerns

Please get the complete appraisal through the lender's process and discuss anything you believe is inaccurate. I'd want specific information, such as a possible factual error or relevant comparable sale, rather than a request to reach the contract price.

Fannie Mae's appraisal-quality requirements require lender procedures for a client-initiated reconsideration of value. Please ask about the process, required information and timing for your file. A review request doesn't guarantee a different value or extend a contract deadline.

I'd coordinate that conversation with your agent's review of the financing and appraisal contingency dates. The financing review and your contractual choices need attention together.

Discuss the options using the revised numbers

You and your agent can discuss a price change or another proposed agreement with the seller. Please let me review the financing effect before you rely on the proposal. A seller doesn't have to accept the adjustment you would prefer.

If you're considering more cash, I'd want to review the available funds and documentation. The purchase-fund paper trail guide explains why the source matters too.

We can also review whether another financing structure is available for your situation. I wouldn't promise that changing lenders or programs removes the valuation issue, produces a new appraisal or preserves the original terms. Appraisal transfer, validity and review rules need their own program-specific check.

If you're considering ending the purchase, please review the agreement, notices and deposit implications with your agent or attorney. The appraisal result alone doesn't decide whether you can cancel or recover earnest money.

Common questions

Do I always add the entire appraisal shortfall to my original down payment?

No. Recalculate the loan and total cash requirement using the actual financing structure. In the invented fixed-90%-LTV example above, the lower value also lowers the loan, so at the unchanged price the cash needed rises by 90% of the shortfall rather than the whole shortfall.

Can I request a review of an appraisal I think is wrong?

Please ask the lender about its reconsideration-of-value process and provide the information it requests. Fannie Mae requires a lender process for client-initiated requests, but a request doesn't guarantee an increase or change your contract dates.

Does the seller have to lower the price?

The appraisal alone doesn't create that obligation. Please discuss the purchase agreement and any proposed adjustment with your agent or attorney, then let me review the financing using the proposed figures.

Can I change loan programs to fix the problem?

We can review your options, but I wouldn't assume another program or lender removes the issue. Appraisal requirements, transfers, available loan amounts and your eligibility need to be confirmed for the actual file.

Please bring me the appraisal result and your contract dates so we can review the revised financing numbers alongside the payment you're comfortable with and your contract choices.

Estimates and educational information are not a loan approval or commitment to lend.