Appraisal Gap Calculator

Run the numbers on a low appraisal. See exactly how much extra cash a gap coverage clause commits you to, whether your cap actually covers the shortfall, and what the new loan and monthly payment look like.

Price and appraisal

Contract purchase price

Appraised value

Gap coverage cap

Max you agreed in the contract to bring to close if the appraisal comes in low.

Financing

Planned down payment

Lender max LTV

LTV is calculated against the lower of purchase price and appraised value.

Interest rate

Loan term (years)

Appraisal gap

$25,000

difference between contract and appraisal

Extra cash needed at closing

$20,000

on top of planned down payment

Total cash to close

$125,000

23.8% of price

Monthly payment change

+$130

vs no-gap scenario

How the gap plays out

Gap is $25,000 and sits inside your $25,000 coverage cap. Extra cash required at closing: $20,000.

Max loan against appraisal

$400,000

at lender's max LTV

Effective loan size

$400,000

New payment with gap covered

$2,594

vs $2,724 without gap

Most lenders base LTV on the lower of contract price and appraised value. An appraisal gap coverage clause commits the buyer to bring extra cash to close so the deal still closes. Waiving the appraisal contingency makes this cash at risk — know the number before signing.

How to Use

Enter the contract purchase price and the appraised value. The difference is your appraisal gap.
Enter your gap coverage cap — the maximum additional cash you committed in the offer contract to bring to close if the appraisal comes in low.
Enter your planned down payment and the lender's max LTV so the tool can compute the loan sized against appraisal rather than price.
Enter your rate and loan term. The tool compares the payment you'd have if the appraisal had come in at price vs the new, smaller loan and larger cash required.
Review the shortfall. If the gap exceeds your coverage cap, you'll need more cash, a price reduction, or an out under the appraisal contingency.

Frequently Asked Questions

What is an appraisal gap?

The appraisal gap is the difference between the contract purchase price and the appraised value of the home. When the appraisal comes in below contract, lenders size the loan against the lower appraised value, leaving the buyer to cover the difference in cash.

What is an appraisal gap coverage clause?

A clause in a purchase offer that commits the buyer to bring additional cash to close — up to a stated cap — if the appraisal comes in low. It's a common tool in competitive markets to strengthen an offer against the seller's concern about appraisal risk.

Should I waive the appraisal contingency?

Waiving the appraisal contingency is aggressive. It means a low appraisal does not give you an automatic out — if you walk, earnest money may be at risk. Gap coverage with a reasonable cap is a middle path: you still walk if the gap exceeds your cap, but you strengthen the offer within that window.

How do lenders handle a low appraisal?

The lender bases loan-to-value on the lower of contract price or appraised value. That usually means a smaller loan than you expected, which forces a larger cash-to-close. Some buyers renegotiate price down; others bring gap cash or walk.

Does a low appraisal also affect PMI?

It can. PMI is required when the LTV exceeds 80%. If a low appraisal pushes your LTV back above that threshold after a smaller loan, you may owe PMI you weren't planning for. The calculator shows the new LTV so you can spot this.