Appraisal gap calculator
See how much cash a buyer needs if the appraisal comes in low.
Extra cash needed
$6,000Buyer covers $10,000 of the $20,000 gap. The seller would need to drop $10,000.
- Appraisal gap$20,000
- Loan (80% of the lower value)$384,000
- Down payment on the appraised value$96,000
- Gap paid in cash$10,000
- Buyer's cash for the purchase$106,000
How the gap could be settled
| Outcome | Price | Loan | Buyer cash | vs plan |
|---|---|---|---|---|
| Buyer covers the full gap | $500,000 | $384,000 | $116,000 | +$16,000 |
| Buyer covers up to $10,000, seller drops the rest | $490,000 | $384,000 | $106,000 | +$6,000 |
| Price drops to the appraised value | $480,000 | $384,000 | $96,000 | –$4,000 |
| Split the gap 50/50 | $490,000 | $384,000 | $106,000 | +$6,000 |
| Walk away | – | – | $0 | Earnest back |
Earnest money back under the appraisal contingency.
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Questions
Why does a low appraisal cost cash?+
The lender bases the loan on the lower of price or appraised value. The difference comes out of the buyer's pocket unless the price changes.