Finance category
Mortgage, loan, investing, tax, and money calculators.
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
Max you agreed in the contract to bring to close if the appraisal comes in low.
Financing
LTV is calculated against the lower of purchase price and appraised value.
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.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Appraisal Gap Calculator is built to give a quick, browser-based estimate for appraisal gap. 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. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the appraisal gap result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this appraisal gap estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
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.
Related Calculators
Earnest Money Calculator
Size earnest money deposits in the same offer that includes a gap coverage clause.
Closing Cost Calculator
Roll gap cash into your total cash-to-close budget.
Down Payment Calculator
See how covering an appraisal gap effectively raises your down payment percent.
Mortgage Calculator
Model the new monthly payment on the smaller loan the lender approves.
PMI Calculator
Check whether a reduced loan changes your PMI obligation.
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