What Is a Home Appraisal?
A home appraisal is an independent estimate of a property's market value, prepared by a licensed appraiser, usually ordered by the mortgage lender. The appraiser compares the home with recent sales of similar nearby properties and considers its size, condition, and features.
Why Lenders Require It
The lender bases the loan-to-value ratio on the lower of the purchase price or the appraised value. If the appraisal comes in below the price, the buyer may need a larger down payment, a lower price, or a different arrangement.
Appraisal vs. Inspection
An appraisal estimates value; an inspection examines condition.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Disclosure
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.