Make sure you compare lenders and have the new loan officer check with their underwriter before you apply so you don't run into this issue again. I suspect that the "26 acres within city limits" may have complicated your appraisal issues based on the underwriter's reaction. From what I have seen, many lenders won't consider a mortgage loan if the land is more than 5 acres unless the collateral is treated as rural/farm property. A small regional portfolio lender is more likely to do this type of loan. Speak to a knowledgeable LO that works closely with the underwriter before you ever apply. I would stay away from a big box bank.

You should ask the lender on what basis that the loan being denied, especially since you are bringing 40% down.

is there some sort of 'farm/ranch credit lending' in your area?

I had a similar issue 10 yrs ago (with my current property) - appraiser had a tough time find comparable; in the end the seller had to reduce contract price by $5K, and I was putting almost 40% down also. Seller was happy to do that as she had previous offers by folks who could not get financing.

No. You won't get you money back on the appraisal. Consider it a loss. The appraiser did their job. The loan didn't meet the underwriter's criteria. It's an underwriting problem. The loan doesn't meet their investor's requirements. It's not even worth the effort. Find another lender. A good choice would be a credit union that holds their own loan portfolio and doesn't plan to resell it in the mortgage market.

I had the same situation - except I was the seller - and we didn't get the final go ahead to close until day of at 10:30 am, and closing was for 1:00. The bank managers were getting involved, a second appraisal from a different party was ordered (came in the same), and I heard there was a lot of back and forth. Don't give up!! The bank wants to make it work, the realtors want it to work, and of course you and the seller.... so a lot of people pushing to get it done.