The Gap Jar

The big idea

What is an appraisal gap?

In an appraisal gap, lenders lend on the appraisal, not on your offer.

If the appraisal comes in lower, the seller holds the price and you go ahead, the gap comes out of your cash.

See it in an example

Example

A $310,000 offer, a $300,000 appraisal.

Your down payment jar: $40,000. You offer $310,000; it appraises at $300,000. A $10,000 scoop pours out to cover the gap. $30,000 left.