Purchase Price
The amount the buyer and seller agreed to in the contract of purchase and sale.
This shows what you agreed to pay, but it does not automatically establish the value the lender will use.
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What Happens When a Mortgage Appraisal Comes In Low?
A lower-than-expected appraisal can change how much a lender is prepared to finance. What happens next depends on whether you are buying a home or refinancing one you already own.
8 min readUpdated August 2026
The Value the Lender Uses
Why doesn’t the lender simply use the purchase price?
The purchase price tells the lender what you agreed to pay. The appraisal helps the lender decide whether the property supports the mortgage being requested.
When the appraisal is lower, the lender may calculate the mortgage using that lower value instead.
Assessed Value
The value used by BC Assessment for property-tax purposes.
It can be useful background information, but it may not reflect the property’s current market value or condition.
Appraised Value
An opinion of the property’s current value prepared for the mortgage application.
The lender reviews the appraisal and decides whether it supports the financing being requested.
What This Means
A buyer can agree to pay more than the appraised value, but the lender may not finance the difference.
What Changes Next
A low appraisal does not affect every mortgage the same way.
The effect depends on whether you are buying the property or refinancing one you already own.
When You Are Buying
The financing gap may get bigger.
You may still choose to pay the agreed purchase price, but the lender may not finance the full difference between that price and the lower appraised value.
The lender may use the lower value
The mortgage amount may be based on the appraised value rather than the price in the purchase contract.
You may need more down payment
If the lender finances less than expected, you may need to cover the difference from your own funds.
The purchase may need another look
Depending on the contract and timing, the price, financing, or decision to proceed may need to be reconsidered.
When You Are Refinancing
The amount available may get smaller.
A refinance is usually based on a percentage of the accepted property value. When that value is lower, the maximum mortgage amount may also be lower.
The available equity may be lower
A lower property value reduces the amount of equity the lender can use for the refinance.
The refinance amount may shrink
There may be less money available for debt consolidation, renovations, or another planned use.
The original plan may need to change
You may need to reduce the amount requested, change which debts are being paid out, or review another option.
The Same First Step
Recalculate the mortgage using the value the lender is prepared to accept.
Start with the revised numbers before choosing what to do next.
Let’s Look at the Numbers
What can a lower appraisal actually change?
These examples are simplified, but they show why even a fairly small difference in value can change the amount of money available.
Select either situation to see how the numbers change.
Purchase Example
Buying with 20% down
The buyer agrees to pay $750,000, but the lender accepts an appraised value of $700,000.
Agreed Purchase Price
Amount in the purchase contract
$750,000
Accepted Appraised Value
Value used for this example
$700,000
Maximum Mortgage at 80%
80% of the accepted value
$560,000
Cash Needed to Complete
Purchase price less available mortgage
$190,000
What changed?
A 20% down payment based on the $750,000 purchase price would have been $150,000. In this example, the buyer now needs $190,000 to complete the purchase, a difference of $40,000.
Planning Example
The actual mortgage amount depends on the lender, application, property, insurance requirements, and the value the lender accepts.
What Can Happen Next
A low appraisal does not always mean the mortgage is over.
It usually means the value and the financing need to be reviewed before anyone decides what to do next.
Review the Value
Start with the appraisal itself.
Before changing the mortgage plan, make sure the lender and appraiser have the most accurate and relevant property information available.
Check the appraisal carefully
Look for errors, missing details, or information that may not reflect the property accurately.
Provide relevant property information
Recent comparable sales, completed upgrades, or important property details may be worth reviewing with the lender.
Ask whether another appraisal is appropriate
Another lender or appraisal may produce a different result, but there is no guarantee the value will be higher.
Recalculate the Financing
Rebuild the plan using the accepted value.
Once the value is confirmed, the mortgage, down payment, debts, and available cash can be recalculated.
Reduce the mortgage request
A smaller mortgage amount may allow the application to continue using the lower accepted value.
Add more down payment
For a purchase, additional funds may help cover the difference between the financing available and the agreed price.
Revise the original plan
The purchase price, debts being paid, cash requested, or decision to proceed may need another look.
For a purchase
Financing subjects, appraisal conditions, deadlines, and the purchase contract can affect which choices are available. A realtor and lawyer or notary can help explain the contract side.
For a refinance
The refinance may still work, but less money may remain after the existing mortgage, debts, penalty, and closing costs are paid.
Sometimes the best option is to continue with a revised plan. Sometimes it is to pause. The appraisal gives you new information, but it does not make the decision for you.
Common Questions
Questions people often have after a low appraisal
The answer can depend on the lender, property, contract, timing, and type of mortgage. Open any question to see the general starting point.
You can ask whether the appraisal can be reviewed, especially if there appears to be an error or important information was missed. The lender and appraiser decide whether anything can be reconsidered.
Sometimes. Another lender or appraisal may produce a different result, but there is no guarantee the value will be higher. Timing and cost also need to be considered.
No. The lender may use the lower of the purchase price or accepted appraised value when calculating the mortgage.
No. BC Assessment is mainly used for property-tax purposes. A lender may review it as background information, but it does not replace the appraisal used for the mortgage application.
Possibly. You may need more down payment, a lower purchase price, a different financing plan, or another acceptable option. The contract and financing deadlines also matter.
Possibly. The refinance may still work, but the maximum mortgage amount and available proceeds may be lower than originally planned.
Not necessarily. Lenders have their own appraisal requirements, approved appraisal providers, and review processes. An appraisal accepted by one lender may not automatically be accepted by another.
Related Pages and Tools
Check the numbers and the next part of the plan.
A low appraisal often affects more than one part of the mortgage. These pages can help you review the payment, available equity, approval, and purchase process.
Mortgage Tool
Mortgage Payment Calculator
Compare mortgage amounts and see how a change in financing may affect the payment.
Use Calculator
Mortgage Tool
Refinance Calculator
Estimate how much equity may be available and how a lower property value could change the refinance plan.
Use Calculator
Mortgage Minute
Can My Mortgage Be Declined After Pre-Approval?
See why the property still needs to be approved and what can change after a pre-approval.
Read Mortgage Minute
Mortgage Guide
First-Time Home Buyers
See how financing, conditions, closing costs, and the purchase process fit together.
Explore Guide
Keep the Context
A calculator can show how the numbers change, but the lender, property, contract, and timing still determine which options are actually available.
Your Numbers May Be Different
A low appraisal may change the plan, but it does not always end it.
I can help you recalculate the mortgage, look at the difference, and review the options that may still work for your purchase or refinance.