Appraisal Waivers on Conforming Mortgages

Some conforming mortgages for refinances or home purchases may not require an appraisal. It all boils down to what the response is from Fannie Mae or Freddie Mac’s automated underwriting systems on whether or not an appraisal is required. You may have perfect credit and tons of equity in your home, yet no appraisal waiver if Fannie or Freddie’s underwriting systems determine it’s not eligible.

Your next conforming mortgage might be eligible to not have an appraisal if it meets the following criteria:

  • Single family dwelling, including condos.
  • Primary Residence
    • Purchase: up to 80% total loan to value. (NOTE: total loan to value includes second mortgages and total HELOC credit limits).
    • Rate/Term or Limited Cash Out Refi: up to 90% total loan to value
    • Cash Out Refi: up to 70% total loan to value
  • Second Homes
    • Purchase: up to 80% total loan to value
    • Rate/Term or Limited Cash Out Refi: up to 90% total loan to value
    • Cash Out Refi: up to 70% total loan to value
  • Investment Property
    • Rate/Term or Limited Cash Out Refi: up to 75% total loan to value.

Here are some factors that may cause the loan to not be receive an appraisal waiver:

  • 3-4 unit property
  • Manufactured home
  • Rental income is needed to be used for qualifying
  • If mortgage insurance is required and the PMI issuer requires an appraisal
  • If the underwriter determines an appraisal should be required.

Not having an appraisal required can be a nice feature since it reduces the closing cost and is one less step from the mortgage process. A majority of my clients have benefitted from not having to have an appraisal, which I’m sure they especially appreciate during a pandemic.

Whether or not an appraisal may be required is determined after the initial loan application is submitted, the credit report is ran and the application is submitted to the automated underwriting system of Fannie Mae or Freddie Mac. Sometimes Fannie or Freddie might not provide a waiver, so it’s nice to have both options available to submit a scenario to try to obtain the appraisal waiver. You should wind up with an answer on whether or not an appraisal is required pretty quickly after completing the loan application.

If you are buying a home and your application qualifies with an appraisal waiver, you may want to consider going forward with the appraisal, depending on your scenario and if you want to rely on the opinion of the appraiser for the value of your new home. The decision is ultimately up to you as the home buyer.

If you are interested in buying or refinancing a home located anywhere in Washington state, my team and I are happy to help you! Click here to start the preapproval process or here for a rate quote based on your scenario.

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