No Appraisal on Purchase Home Loans

No Appraisal on Purchase Loans

Conventional home loans now allow Appraisal waivers.  In fact,  Fannie Mae and Freddie Mac adopted the new rule at virtually the same time.   Therefore, as of Sept, 2017 all Conventional loans now allow appraisal waivers in certain scenarios.

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What is an Appraisal Waiver?

In short, appraisal waivers are a blessing to everyone involved in a home loan transaction.  Appraisal waivers allow mortgage lenders to skip the appraisal on a home loan transaction.  As a result, buyer’s and sellers both benefit in the following ways:

  • Buyer saves $450 (est) appraisal cost
  • No risk of low value issues
  • No risk of property repairs
  • Expedited loan processing (appraisals take 1 week est)

Fannie Mae Release on Appraisal Waivers for Purchases
Freddie Mac Release on Appraisal Waivers for Purchases

What Kind of Home Loans Get Appraisal Waivers?

Conventional purchase and refinance home loans both allow appraisal waivers. In addition, VA Streamline Refinances and FHA Streamline Refinances also allow lenders to skip the appraisal portion of the loan process.  While Fannie and Freddie now allow appraisal waivers, they are not opening the flood gates.  In fact, there are several eligibility criteria that must be met for an appraisal waiver to be allowed.  For example, one of the eligibility standards is a minimum down payment limit.  Buyer must meet the following down payment standards to even be eligible for an appraisal waiver:

Purchases and No Cash Out Refinances

  • Primary Residence 10%
  • Vacation Home 10%
  • Investment Property 25%

Cash Out Refinances

  • Primary Residence 30%
  • Vacation Home 40%
  • Investment Property 40%

In order to confirm appraisal waiver eligibility, Fannie and Freddie rely on their automated underwriting systems.  As a result, appraisal waiver eligibility is only confirmed when a loan officer reviews the automated underwriting findings for a buyers home loan.

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Appraisal Waiver Eligibility

Appraisal Waiver eligibility is a very complex determination.  Due to the number of factors involved, both Fannie and Freddie depend on their automated underwriting systems to determine appraisal waiver eligibility.  In order to do this, the automated underwriting systems consider the following:

  • Property characteristics
  • Down payment
  • Borrows credit
  • Borrower’s occupancy of subject property

Especially important is the fact that appraisal waiver eligibility is determined after a borrower is under contract.  Therefore, all buyers should go into a home purchase expecting to need an appraisal.  As a result, appraisal waivers should be viewed as a bonus rather than an expectation.

By Jeremy House

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  1. This is a big deal for buyers. I remember the appraisal as being a stressful part of the process.


  1. […] Fast forward to October 2016 and we get to re-introduce you to the Property Inspection Waiver – in other words, NO APPRAISAL NEEDED on eligible refinance transactions.  UPDATE: Appraisal Waivers now allowed on purchase transactions […]

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