FRU News · Answers
What Happens If Your Home Appraises Low?
What usually happens to the loan when a home appraises below expectations, the typical loan-to-value caps, and what an FHA appraiser checks.
51 sec · Captions available on the player · Presented by AI-generated presenters, with every line taken from the FreeRateUpdate page it answers.
Source: FreeRateUpdate answer page, Sept. 29, 2026; Fannie Mae
Transcript
This is FreeRateUpdate News. I'm Edmund Ledger. Today's question: what happens if your home appraises lower than expected?
Usually the loan amount shrinks to match the lower value. Lenders use the value they measure, not an online estimate.
It happens most on refinances. A conventional cash-out refinance is generally capped at 80% of the value.
For HELOCs and home equity loans, lenders commonly cap combined loan-to-value around 80% to 85%, and some go to 90%.
If the lower value pushes you past the lender's limit, the loan may be reduced or declined.
On FHA loans, the appraiser also checks the home's condition, and a safety issue usually has to be fixed first.
I'm Edmund Ledger, for FreeRateUpdate News.
What the charts show
One on-screen table of typical loan-to-value caps: a conventional cash-out refinance is generally capped at 80% of value; a HELOC or home equity loan is commonly capped at 80% to 85% combined, and some lenders go to 90%.