What Happens If the FHA or VA Appraisal Comes in Low in the Des Moines Market?

A low appraisal is one of the most stressful moments in a home purchase—especially when using an FHA or VA loan. In the Des Moines market, where pricing can vary significantly by neighborhood and inventory can shift quickly, appraisal gaps do happen.

The good news? A low appraisal doesn’t automatically kill the deal. But it does force a decision.

Here’s what a low FHA or VA appraisal really means—and what options buyers have when it happens.

Why FHA and VA Appraisals Matter More Than Conventional

Unlike conventional loans, FHA and VA appraisals do more than determine value. They also confirm that the home meets minimum property standards designed to protect the buyer.

That means:

• The lender will not loan more than the appraised value

• Certain repairs may be required before closing

• Price renegotiation is more common than with conventional loans

What Happens When the Appraisal Comes in Low?

If the appraised value is lower than the agreed purchase price, the lender bases the loan on the lower number—not the contract price.

At that point, buyers typically have four options.

Option 1: Renegotiate the Purchase Price

This is the most common and often the cleanest solution.

• Buyer and seller agree to lower the price to match the appraisal

• Loan proceeds based on the appraised value

• Buyer does not need to bring additional cash

In many Des Moines neighborhoods—especially when homes are priced aggressively—this is a realistic outcome.

Option 2: Buyer Covers the Appraisal Gap (With Limits)

Buyers may choose to bring cash to closing to cover the difference between the appraised value and purchase price.

Important limitations:

• FHA and VA loans cannot finance above appraised value

• The extra funds must come from verified assets

• VA buyers must sign the VA Escape Clause, protecting them if they choose not to proceed

This option only works if the buyer has sufficient reserves and is comfortable doing so.

Option 3: Request a Reconsideration of Value (ROV)

In some cases, the lender can request a reconsideration of value for FHA or VA appraisals.

This may be possible if:

• Strong comparable sales were missed

• Data used was outdated

• Market activity supports a higher value

ROVs are not guaranteed, but they can be successful in fast-moving or transitioning Des Moines markets when supported by solid data.

Option 4: Cancel the Contract

If no agreement is reached, buyers may be able to exit the contract under their appraisal contingency.

• Earnest money may be protected (depending on contract terms)

• VA loans provide additional consumer safeguards

• Buyers can regroup and move on without being forced into a bad deal

This option reinforces why strong pre-approval and contract structure matter.

Why Preparation Makes All the Difference

Low appraisals are far less disruptive when:

• Offers are written with realistic pricing

• Seller concessions aren’t inflating the contract price

• Buyers understand their cash and negotiation limits upfront

A knowledgeable lender and real estate agent working together can often prevent appraisal surprises—or at least manage them smoothly.

Bottom Line

A low FHA or VA appraisal doesn’t mean the deal is dead—but it does require a strategy.

Knowing your options before writing an offer helps you:

• Stay calm under pressure

• Protect your finances

• Keep deals moving forward in the Des Moines market

If you’re buying with FHA or VA financing, preparation is your best leverage.