When you put an offer on a house, the bank will not loan you more than the house appraises at. If your offer is higher than that appraised value, you have two options.
1) If you have an appraisal contingency, you can threaten to use that contingency and cancel the offer. That will allow you to negotiate the price down with the seller.
2) If you do not have an appraisal contingency or if you were unable to negotiate the price down to the appraised value, then you must pay the difference between the appraised value and the loan amount in cash.
So for example, assume you submit an offer of $100,000 for a house with 10% downpayment. Then assume that house appraises at $90,000. The bank will still lend you $90,000 with a 10% downpayment (which is now $9,000). If you’re unable to negotiate the price down and still want to buy the house, you would need to pay the $10,000 difference out of pocket. (So you can think of your downpayment costs as being $19,000, which is $9,000 for the 10% downpayment and $10,000 to make up what the bank would not lend you).
The appraised value is what the bank thinks they’ll be able to sell the property for if you are unable to pay the loan and they have to repossess the house. So if you buy a house for more than the appraised value, then you’re likely paying more than you’ll be able to get for it if you had to sell it yourself in the short term. Do so at your own risk.
Enter the value at which you think the house will actually appraise. (You can estimate this based on similar properties that have sold in the last 6 months or so within a one mile radius).
Enter the percentage you want to put for the downpayment. (You typically need 20% down to avoid paying mortgage insurance. Some first-time homeowner loans may allow you to put as little as 3% down.)
The calculator will show you the maximum offer price assuming that you’ll spend all of the money you’ve put towards your downpayment to cover the difference between the offer price and the appraised value. It will also show you the absolute maximum you could offer if you did not set aside anything for repairs, furniture, etc.
Enter expected or actual appraised value here:
Enter downpayment percentage here:
Maximum Offer Price
Absolute Maximum (Including furniture money)
Create an Offer
Estimated Interest Rate:
Note: This is APR, but if you only have simple interest the estimate should be similar
You can right click a photo in Chrome and select “Copy image address” to use here.
Estimated Monthly Insurance Payment:
Days to close:
Appraisal Contingency Days:
Set this to zero to indicate waiving appraisal contingency
Inspection Contingency Days:
Set this to zero to indicate waiving inspection contingency
Loan Contingency Days:
Set this to zero to indicate waiving loan contingency
Loan Length (in years):
Create the Offer:
Fill in the missing information to create an offer. Please enter the Street Address. Please enter the City. Please enter the Zip Code. Please enter an Offer Price. Please choose a Downpayment Percentage. Please choose an Interest Rate.
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