Do Conventional Loans Always Require an Appraisal?

Conventional loans generally require an appraisal, but not always. Fannie Mae and Freddie Mac, which set the rules for most conventional mortgages, offer automated waivers and lighter valuation methods that can replace or skip a traditional in-person appraisal. Whether your loan needs one comes down to the property type, your loan-to-value ratio, and how confidently the lender’s automated underwriting system can estimate the home’s value from existing data.

The Default Rule: A Full Appraisal

For any conventional loan sold to Fannie Mae or Freddie Mac, the starting assumption is that you need a full appraisal. A licensed appraiser visits the property, measures it, evaluates its condition, and compares it to recently sold homes nearby. The lender uses that value to calculate your loan-to-value (LTV) ratio, which is the percentage of the home’s worth you’re borrowing. Put 10% down on a $400,000 home and the appraiser needs to confirm the value supports a $360,000 loan at 90% LTV.

LTV also determines whether you need private mortgage insurance, which is required when you put less than 20% down. PMI typically runs $30 to $70 per month for every $100,000 borrowed.¹ A full appraisal protects both sides of the deal: it confirms the property is worth what you’re paying and that it can serve as adequate collateral if you ever default.

Appraisal Waivers That Skip the Appraisal Entirely

Fannie Mae and Freddie Mac each run programs that can waive the appraisal. Fannie Mae calls its version “value acceptance”; Freddie Mac uses “Automated Collateral Evaluation,” or ACE.² Both rely on data models and historical property information to confirm value without anyone stepping inside. When your lender submits your file through the automated underwriting system, Desktop Underwriter for Fannie Mae or Loan Product Advisor for Freddie Mac, the system decides whether a waiver is available.³

Not every loan qualifies. For Fannie Mae’s value acceptance on a purchase, the property must be a one-unit primary residence or second home, and the price must be under $1,000,000. Purchases of principal residences and second homes can qualify with LTV ratios up to 90%, so as little as 10% down. Refinances also qualify, with LTV limits that vary: limited cash-out refinances for investment properties are eligible up to 75% LTV, and cash-out refinances on second homes and investment properties cap at 60% LTV.⁴

There is also “value acceptance + property data,” which pairs the automated valuation with a brief on-site visit by a trained third-party data collector (an appraiser, a real estate agent, or similar) instead of a full appraisal. That option can extend eligibility up to 97% LTV for qualifying purchases.⁴

You Can Decline a Waiver

Even if the system offers a waiver, you don’t have to take it. You can ask your lender to order a full appraisal anyway. Some buyers prefer that route because a waiver means no one has physically inspected the property on the lender’s behalf. Declining does mean paying the appraisal fee and possibly adding time to your closing schedule.

Desktop and Hybrid Appraisals

Between a full waiver and a traditional appraisal sit two lighter options from Fannie Mae. Neither is something your lender can simply pick; the automated underwriting system has to indicate the loan qualifies.

Desktop Appraisals

A desktop appraisal lets a licensed appraiser develop a value opinion without visiting the property. The appraiser works from public records, MLS data, and other external sources. Desktop appraisals are limited to purchase transactions on one-unit principal residences with LTV ratios of 90% or less. Refinances, second homes, investment properties, condos, co-ops, and manufactured homes are all ineligible.⁵

Hybrid Appraisals

A hybrid appraisal splits the work. A trained third-party data collector visits the property to take measurements, photos, and condition details, then sends the information to a licensed appraiser who develops the final value opinion remotely. Eligible property types include one-unit detached homes, attached homes, and condos. Two- to four-unit properties, co-ops, manufactured homes, and construction loans are excluded.⁶ Because someone physically inspects the home, a hybrid catches condition issues that a desktop appraisal or a pure waiver would miss.

What a Traditional Appraisal Involves

If your loan does need a full appraisal, the appraiser schedules an on-site visit. During the inspection they measure the home’s gross living area, photograph the interior and exterior, and evaluate the overall condition of the kitchen, bathrooms, bedrooms, and main living areas. They note visible defects and needed repairs.

Afterward, the appraiser researches recently sold homes nearby, called comparables or comps, that share similar characteristics with your property. They adjust for differences in size, age, features, and condition, then compile everything into a Uniform Residential Appraisal Report that goes to the lender’s underwriting team.

The appraiser also checks whether the home meets minimum condition standards for conventional financing. Problems affecting safety, soundness, or structural integrity, such as foundation settlement, active roof leaks, water seepage, or inadequate electrical or plumbing systems, can make the appraisal “subject to” repairs being completed before closing.⁷ Cosmetic issues like worn carpet, small plumbing leaks, missing handrails, or cracked window glass generally don’t.⁸

How to Prepare

You can’t control the outcome, but you can smooth the process by having the right information ready. For purchases, the lender must give the appraiser a copy of the complete, signed sales contract.⁹ Beyond that, it helps to gather:

A list of upgrades that aren’t obvious on inspection, such as roof replacements, kitchen remodels, or new HVAC systems
Permits for structural changes or additions
Land plats or property surveys that define lot boundaries
The approximate age of major mechanical systems (heating, air conditioning, water heater), since the appraiser considers whether short-lived components are nearing the end of their useful life⁸
Clear contact details for whoever will let the appraiser in

Cost and Timeline

A standard single-family appraisal for a conventional loan typically costs $300 to $600. Fees can run higher for complex properties, rural locations, or high-demand markets. If your loan receives a waiver, you avoid this cost entirely.

Turnaround varies by market. Industry data from early 2025 showed an average lender appraisal turnaround of roughly 13 to 14 business days from order to delivery, longer than many borrowers expect. Slower or rural markets can take longer still. Ask your lender for an estimated timeline upfront so you can plan your closing date.

Your Right to a Copy of the Report

Federal law requires your lender to give you a free copy of the appraisal. Under the Equal Credit Opportunity Act, the lender must deliver the report either promptly after it’s completed or at least three business days before closing, whichever comes first. You can’t be charged separately for the copy, though the appraisal fee itself is a legitimate closing cost. You can waive the three-day window with an affirmative written or oral statement at least three business days before closing.¹⁰ Waiving can make sense when you need to close quickly, but read the report either way. It’s your best window into how the property’s condition and value were assessed.

If the Appraisal Comes In Low

When the appraised value lands below the purchase price, it creates a gap the lender won’t cover. You have several ways to move forward.

Request a Reconsideration of Value. You can formally ask the lender to have the appraiser review additional information, such as comparable sales the appraiser may have missed or details about recent improvements. Fannie Mae allows one borrower-initiated ROV per appraisal report, and the appraiser must update the report to address any errors, even minor ones.¹¹
Renegotiate the price. Ask the seller to lower the purchase price to match the appraised value. Sellers often prefer to negotiate rather than lose the deal.
Cover the gap yourself. Increase your down payment to bridge the difference. That keeps LTV where the lender needs it but requires more cash at closing.
Use an appraisal gap clause. In competitive markets, some buyers commit in the purchase agreement to cover a set dollar amount if the appraisal comes in low. On a $500,000 offer with $25,000 in gap coverage, you’d pay up to $25,000 out of pocket to bridge a shortfall.
Walk away. If your contract includes an appraisal contingency, you can cancel and recover your earnest money when the home appraises below the agreed price.

An ROV is usually worth trying first because it costs nothing and addresses the most common cause of a low appraisal, which is a weak set of comparable sales. If the lender’s ROV request doesn’t meet Fannie Mae’s minimum requirements, the lender should work with you to gather the missing information before sending it to the appraiser.¹¹

1
Freddie Mac. Breaking Down Private Mortgage Insurance
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Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements
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Federal Housing Finance Agency Office of Inspector General. An Overview of Enterprise Appraisal Waivers
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Fannie Mae. Value Acceptance
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Fannie Mae. Desktop Appraisals
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Fannie Mae. Hybrid Appraisals
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Fannie Mae. Requirements for Verifying Completion and Postponed Improvements
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Fannie Mae. Property Condition and Quality of Construction of the Improvements
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Fannie Mae. Subject and Contract Sections of the Appraisal Report
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Consumer Financial Protection Bureau. Regulation B 1002.14 – Rules on Providing Appraisals and Other Valuations
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Fannie Mae. Reconsideration of Value