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Home Appraisal Explained

An appraisal is an independent opinion of a home's value that the lender orders to confirm the property supports the loan amount. It protects the lender first, and it can change your deal.

Why lenders require an appraisal

A mortgage is secured by the property, so the lender needs an independent estimate of what that property is worth before it lends against it. If you stop paying, the home is the collateral, and the lender wants confidence it can recover the balance.

The appraiser is licensed, works independently of the loan officer, and is assigned through an appraisal management company on most loans. Neither you nor the lender can select or influence the appraiser.

Who pays, what it costs, and how long it takes

The buyer normally pays for the appraisal, either up front by card or at closing. A typical single-family appraisal runs a few hundred dollars, with rural, large, or unusual properties costing more.

Turn time is usually a few business days to two weeks depending on appraiser availability in the market. Appraisal delays are one of the most common reasons a rate lock expires, which is why the order goes out early in the file.

Put it into numbers. The calculator estimates your payment and compares every loan type.

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How the appraiser reaches a number

The main method is the sales comparison approach. The appraiser finds recent closed sales of similar homes nearby, then adjusts each one up or down for differences in square footage, condition, lot, garage, bedroom count, and upgrades.

Contract price is not evidence of value. The appraiser is asked whether the market supports the price, so an accepted offer above what comparable homes sold for can still come back low.

What happens when the appraisal comes in low

The lender lends against the lower of the appraised value or the purchase price. If a home under contract at $400,000 appraises at $385,000, the lender treats $385,000 as the value and the $15,000 gap has to be resolved.

There are four usual paths. The seller reduces the price to the appraised value. The buyer brings the difference in cash on top of the down payment. The two sides split the gap. Or the buyer uses an appraisal contingency to cancel and recover the deposit.

A fifth option is a reconsideration of value, where your loan officer submits better comparable sales or corrects a factual error in the report. It succeeds sometimes, but not often enough to plan around.

Appraisal rules differ by loan type

FHA and VA appraisals include a property condition review alongside the value opinion, and the appraiser can require repairs for issues like peeling paint on older homes, missing handrails, or an inoperable heat source. An FHA appraised value also stays attached to the property for a set period.

Conventional appraisals focus on value rather than condition, and some conventional files qualify for an appraisal waiver when the down payment is large and the automated model is confident about the property. A waiver removes both the cost and the delay.

Keep learning

Closing costs

What you pay at closing

Down payments

How much to put down

Pre-approval

Before you shop

Rate lock

Delays and expirations

Frequently asked questions

Who pays for the home appraisal?

The buyer normally pays, either up front by card when the order is placed or as a line item at closing. It is a third-party cost, not a lender fee.

How long does an appraisal take?

Usually a few business days to two weeks from order to report, depending on appraiser availability in your market. Rural and unusual properties take longer.

What if the appraisal comes in below the purchase price?

The lender lends against the lower of value or price. The seller can lower the price, you can bring the difference in cash, you can split the gap, or you can cancel if you kept an appraisal contingency.

Can I use my own appraiser?

No. On a mortgage the appraiser is assigned independently so neither you, the seller, nor the loan officer can influence the result.

Is an appraisal the same as a home inspection?

No. An appraisal estimates value for the lender. An inspection is for you and evaluates the condition of the roof, systems, and structure. Most buyers should get both.

Can the appraisal be waived?

Sometimes. Some conventional loans with a strong file and a larger down payment qualify for an appraisal waiver, which saves both the fee and the wait. FHA and VA loans require an appraisal.