What is an appraisal gap?
An appraisal gap happens when a home appraises for less than your agreed price. Since lenders lend based on the appraisal, you'd need to cover the difference, renegotiate, or use an appraisal contingency to walk away.
An appraisal gap is the difference when a home appraises for less than the price you agreed to pay. It matters because your lender bases your loan on the appraised value, not the contract price — so a gap leaves a shortfall.
When it happens, you generally have options: bring extra cash to cover the gap, renegotiate the price with the seller, or — if you included an appraisal contingency — walk away and protect your deposit. In competitive markets, some buyers offer 'appraisal gap coverage' to stand out. I'll explain the risk clearly before you ever commit to that.
This answer is general education, not legal, tax, or financial advice. Your situation is unique — let's talk through the specifics together.