How to Get an Appraisal Waiver
Summary: An appraisal waiver is when a mortgage lender approves the removal of an in-person appraisal. The stronger the income, credit score, and home equity, the higher the chance of receiving an appraisal waiver. Working with a mortgage lender who uses an automated valuation model (AVM) instead of an in-person appraiser is one of many ways to receive an appraisal waiver. It is always recommended to contact your mortgage lender to learn more about the requirements, qualifications, and if an appraisal waiver is right for you.
What is an Appraisal Waiver
An appraisal waiver is when a mortgage lender approves the removal of an in-person appraisal. The task of deciding the home’s worth falls on the lender. Instead of relying on an in-person appraiser, mortgage lenders use automated information and data to determine the home’s value.
Who Can Get an Appraisal Waiver?
A handful of situations and circumstances allow certain homeowners and borrowers to qualify for an appraisal waiver. The stronger the income, credit score, and home equity, the higher the chance of receiving an appraisal waiver.
Below are a few common situations where an appraisal waiver may be issued.
- Borrowers with a strong credit score purchasing a home with a significant down payment.
- Borrowers or buyers purchasing a home in a high-needs rural location.
- Borrowers or homeowners purchasing or refinancing a single-family home or condo as a primary residence or an investment property.
Similar to situations that allow borrowers and homeowners to be eligible for an appraisal waiver, there are situations that do not qualify for an appraisal waiver.
- New construction homes without an as-is appraisal on file
- Manufactured homes
- Multi-family properties
How To Get an Appraisal Waiver
Different loan types have different requirements.
To be eligible for an appraisal waiver from Fannie Mae, homeowners and borrowers need to meet the following:
- One unit property (including condominiums)
- Home purchase
- Primary residences: 90% LTV or lower
- Second homes: 90% LTV or lower.
- Investment properties: 75% LTV or lower.
- Primary residences: 70% LTV or lower.
- Second home: 60% LTV or lower.
- Investment properties: 60% LTV or lower.
Freddie Mac has an Automated Collateral Evaluation (ACE) program that allows borrowers and homeowners to be eligible for an appraisal waiver. The regulations for this program are similar to the ones for Fannie Mae listed above. Government-backed loans such as USDA loans, VA loans, and FHA loans have their own requirements.
The best path to an appraisal waiver is to work with a mortgage lender that uses an automated valuation model (AVM). An AVM is a computer algorithm that uses an array of data such as market value assessment, recent home sales within the neighborhood, and property prices to determine a home’s value. The best way to know how to qualify for an appraisal waiver is by contacting your mortgage lender and learning more about the requirements, qualifications, and if an appraisal waiver is right for you.
For more information, chat with us at callhallfirst.com or give us a call at 866-Call-Hall.