What Is An Appraisal Waiver And How Does It Work?

What Is a Property Appraisal Waiver?

An appraisal waiver means the lender can complete an eligible mortgage without ordering an appraisal for that transaction. Fannie Mae calls its version value acceptance; Freddie Mac uses automated collateral evaluation (ACE). The lender submits the property and loan details to an automated underwriting system, which may return an offer. The lender still decides whether to use it, and the loan must satisfy the applicable program rules.

For a purchase, Fannie Mae accepts the lender-submitted value based on the contract price when its value acceptance offer is exercised. That does not amount to an independent opinion that the price is fair. A waiver removes the lender's appraisal requirement for the eligible loan; it does not inspect the home's condition or waive the buyer's contractual appraisal contingency.

Because the word waiver is used for several different things in real estate, ask exactly which document or decision someone means. An appraisal delivery timing waiver concerns when you receive a copy of an appraisal, while an appraisal gap or contingency waiver concerns the purchase agreement. Neither is the same as the lender accepting a loan without an appraisal.

A traditional property appraisal is an appraiser's opinion of what a home is worth, supported by property information and comparable sales. Automated valuation models (AVMs) instead use mathematical models, property characteristics and sales data to estimate value. As the CFPB explains, different valuation methods can produce different results. A lender's decision to waive the appraisal does not tell a buyer how much to offer or prove that the buyer will not overpay.

What an appraisal waiver does and does not do

• It may remove an appraisal order: There may be no appraiser visit, appraisal report or related appraisal fee for that loan.
• It does not guarantee approval: Credit, income, title, property eligibility and the remaining loan conditions still matter.
• It is separate from a home inspection: Buyers can still arrange an inspection to assess condition.
• It is separate from an appraisal contingency: The purchase contract controls whether the buyer may cancel or renegotiate if a valuation is low. Review that clause with the real estate agent or attorney before changing it.

How to Get an Appraisal Waiver

Ask your lender or mortgage broker to run the loan through the appropriate automated underwriting system and review its property valuation findings. The offer depends on the complete casefile, including the transaction, property, submitted value and loan-to-value ratio. An eligible result can change if the casefile changes, and the lender can still require an appraisal when later information warrants one.

Who may qualify?

Fannie Mae's value acceptance may be considered for eligible one-unit homes, including condos, and for certain purchases and refinances that receive a Desktop Underwriter Approve/Eligible recommendation. Its Selling Guide excludes, among other cases, two- to four-unit properties, manufactured homes, manually underwritten loans and transactions with a submitted purchase price or estimated value of $1 million or more. A prior appraisal in its collateral data is generally needed, though the system makes the actual offer. Freddie Mac's ACE has its own rules and is evaluated through Loan Product Advisor.

There is no universal 20% down payment or minimum credit score that automatically grants a waiver. Loan-to-value limits vary by agency, purpose and valuation option. Fannie Mae's published overview lists purchase value acceptance for eligible principal residences and second homes up to 90% LTV/CLTV, while its separate value acceptance + property data option can reach higher program limits. The lender's findings and any overlays control the specific loan. A 10% down payment does not itself guarantee a waiver.

To calculate a simple purchase loan-to-value ratio, divide the proposed mortgage amount by the value used for underwriting. A second lien can change the combined loan-to-value ratio, and the system's eligibility criteria cover more than this one calculation. Your broker can tell you which investor's findings apply and whether any mortgage insurer imposes a separate appraisal requirement.

What if the system does not offer one?

The lender may need a traditional appraisal. In some cases, the underwriting system offers an alternative that still gathers property information, such as Fannie Mae value acceptance + property data or Freddie Mac ACE+ PDR. A desktop or hybrid appraisal is a different assignment involving an appraiser and should not be described as a no-appraisal waiver. Ask which option your casefile actually received and whether a property visit is required.

A property data collection includes observations about the home and is distinct from a traditional appraisal. A desktop appraisal can be completed without the appraiser visiting the property, but it remains an appraisal report. These distinctions matter when comparing fees, scheduling and how much firsthand information the lender receives. You can learn more about appraisal waiver pros and cons in our related guide.

Pros and Cons of Home Appraisal Waivers

A waiver can simplify the loan process, but the decision also removes one independent valuation that a buyer might have found useful. Consider both sides before the lender exercises an offer.

If the price or property condition gives you pause, you can discuss obtaining your own independent valuation and inspection before making a contract decision. Check costs and timing with your lender and agent. An appraisal waiver can be useful without treating the system's acceptance of a value as a guarantee of market value.

There is no fixed dollar saving or guaranteed closing date for every borrower. If an appraisal has already been ordered, costs and the eligibility result may differ. The time benefit depends on local appraiser availability and the rest of the loan file. Ask for a revised loan estimate or closing-cost explanation if an appraisal fee was previously included.

When Lenders Can Waive an In-Person Appraisal

For Fannie Mae loans, the final Desktop Underwriter submission must still show a value acceptance offer, no appraisal can have been obtained for the transaction, and the offer must be no more than four months old at the note and mortgage date. The lender must order an appraisal when law requires it, when subject-property rental income is used to qualify, or when information about the property or later events makes an appraisal warranted. Mortgage insurance or lender policy can also affect whether an offer is usable. Freddie Mac's ACE rules are separate, so ask which investor and offer apply to your loan.

Practical example: A buyer contracts for a one-unit home at $400,000 and borrows $360,000. The loan-to-value ratio is 90% ($360,000 ÷ $400,000). That ratio may fall within Fannie Mae's published purchase value acceptance range for an eligible principal residence or second home, but only an actual system offer and lender review can establish whether this transaction qualifies. A lower down payment, a good credit profile or a familiar neighborhood alone is not approval.

A seller may appreciate fewer appraisal scheduling steps, but the lender's waiver is not a promise that the buyer has waived contract protections or that financing cannot change. A buyer can discuss a waiver offer with the lender while preserving the inspection and appraisal contingency terms negotiated in the purchase agreement.

For the governing details, review Fannie Mae Selling Guide B4-1.4-10 and Freddie Mac Guide 5602.3. Their eligibility requirements can differ from a lender's own conditions.

Appraisal contingency waivers and appraisal gaps

In competitive markets, buyers and sellers may negotiate what happens if an appraisal comes in below the purchase price. With an appraisal contingency, a buyer may have a contractual option to renegotiate or terminate the contract if the agreed conditions are not met. Waiving that protection can put the earnest money deposit at risk if the buyer cannot complete the home purchase. A financing contingency addresses a different issue: obtaining the mortgage loan. The exact wording and deadlines control each protection. Review the National Association of REALTORS® guide to contract contingencies and have your real estate agent or attorney explain your agreement before you sign.

A partial appraisal waiver may refer to a limited agreement to cover an appraisal gap, rather than giving up the entire appraisal contingency. For example, a contract could specify a maximum amount the buyer will pay above the appraised value. A full contingency waiver generally removes that particular valuation condition, subject to the actual contract. Neither arrangement requires the mortgage lender to lend against the higher asking price or waive its own appraisal requirement.

Hypothetical appraisal gap: You agree to buy a home for $450,000, but the property appraises at $430,000. The price difference is $20,000. If your agreement requires you to cover that gap, ask the lender to recalculate your loan and cash needed to close. Do not assume the $20,000 is the entire down payment or that the lender will finance it. Depending on the contract, buyers may seek to have the seller lower the price, contribute additional cash, or use a remaining cancellation right. An appraisal waiver from the lender is a separate decision from agreeing to make up the difference. The NAR appraisal guide explains why appraised value can affect the amount you can borrow.

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Should You Use an Appraisal Waiver?

Ask what the waiver covers, whether any property data collection is required, and whether you still want an independent valuation. Keep the mortgage decision distinct from the purchase contract's appraisal contingency and from the home inspection. Bennett Capital Partners Mortgage Brokers can review an actual underwriting result with you and explain what an appraisal requirement would mean for your timeline and costs.

Before proceeding, ask three practical questions: Which agency or investor made the offer? Does the offer require property data or another valuation step? What changes could cause the lender to order an appraisal later? If you are concerned that the agreed price exceeds market value, consider the value of independent advice even when the lender does not require a report.

Appraisal Waiver FAQs

What is an appraisal waiver?

It is an eligible lender's option to close a mortgage without a traditional appraisal for that transaction. The automated underwriting result and lender's final review determine whether it can be used.

How does an appraisal waiver work?

The lender submits the loan and property data to the applicable underwriting system. If it returns an offer and all conditions remain satisfied, the lender can accept the submitted value without ordering an appraisal.

Do I need 20% down to qualify?

No universal 20% rule applies. Eligible Fannie Mae purchase value acceptance can reach 90% LTV/CLTV for principal residences and second homes, subject to an actual offer and all other requirements. Other options and investors have different limits.

How can I find out if my loan qualifies?

Ask your lender or broker to review the automated underwriting findings for your specific loan. The property, purpose, value, loan terms and investor rules all matter.

What are the benefits of an appraisal waiver?

It can avoid the cost and scheduling of a traditional appraisal and may help the loan move sooner. It does not remove the other underwriting or closing conditions.

Do I still need a home inspection?

An appraisal waiver is not an inspection. Consider a separate home inspection to learn about the property's condition, even if the mortgage does not require an appraisal.

Is waiving an appraisal contingency the same thing?

No. The contingency is a purchase contract term governing the buyer's options if the valuation is low. The lender's appraisal waiver concerns the mortgage's valuation requirement; one does not automatically change the other.

Can a refinance receive an appraisal waiver?

Yes, some eligible refinance casefiles can receive a Fannie Mae value acceptance or Freddie Mac ACE offer. The permitted loan-to-value ratio and other conditions depend on the program and refinance type.

Are all borrowers eligible?

No. The underwriting system must offer the option for the property and transaction, and the lender must be able to use it. A strong credit score alone does not establish eligibility.

Can the lender still require an appraisal after an offer?

Yes. A casefile change, newly learned property issue, law or another applicable requirement can mean the lender must order one. Ask whether the offer remains valid before relying on a proposed closing date.