In a typical mortgage, the appraisal happens during underwriting, not before it. Most lenders order the appraisal shortly after you express your intent to proceed and pay the appraisal fee, which usually happens while your loan file is still being assembled for the underwriter.1Consumer Financial Protection Bureau. My Loan Officer Said That I Need to Express My Intent to Proceed So the question of whether the appraisal happens before or during underwriting has a simple answer: the two run on parallel tracks, and neither can finish without the other.
Two Tracks Running at Once
Think of the appraisal and underwriting as two lanes on the same highway. Your lender kicks off both as early as possible so that problems surface before anyone has invested weeks of waiting. The underwriter digs into your income, debts, and credit history. Meanwhile, the appraiser visits the property, studies recent comparable sales, and delivers a report estimating the home’s market value.
The underwriter cannot issue a final approval until that appraisal report lands in the file. The property serves as the lender’s collateral, and its value directly determines how much risk the loan carries. So while the financial review and the property review start together and move together, the underwriter’s decision waits on the appraiser’s number.
The overlap is intentional. If the appraisal reveals a value shortfall or a property condition issue, the underwriter learns about it while still working through your financial documents rather than after everything else is done. That saves everyone time. It also means a low appraisal doesn’t necessarily restart the clock on your finances, because the underwriter can often address both tracks simultaneously.
What Runs Before Either One
Before a human underwriter touches your file, most lenders run it through an automated underwriting system. Fannie Mae’s version is called Desktop Underwriter, and it assesses credit risk, confirms whether the loan is eligible for sale to Fannie Mae, and can even generate a property value acceptance offer that eliminates the need for a traditional appraisal.2Fannie Mae. Desktop Underwriter and Desktop Originator Freddie Mac runs a comparable system called Loan Product Advisor. These tools give your loan officer an early read on approval odds within minutes, but they don’t replace the human underwriter who makes the final call, and they don’t count as the underwriting review itself.
How Long Each Track Takes
The appraisal usually takes one to two weeks from the day your lender orders it to the day the completed report arrives. The on-site inspection might only last 30 to 60 minutes, but the appraiser needs additional time to research comparable sales, compile the report, and submit it through the lender’s system. In busy markets or rural areas with fewer appraisers, expect the longer end of that range or even three weeks.
Full underwriting from application to clear-to-close commonly runs 40 to 50 days, though a straightforward file with strong credit, simple income, and a clean appraisal can close faster. Delays usually come from missing documents, employment verification hiccups, or appraisal issues rather than from the underwriting review itself. Responding to document requests the same day they arrive is the single easiest way to keep things moving.
What the Appraiser Is Doing on Their Track
Your lender sends the appraisal order through an appraisal management company, which assigns an independent, licensed appraiser.3eCFR. 12 CFR Part 323 – Appraisals Federal rules require this separation so that no one involved in the loan decision can pressure the appraiser to hit a target number.
During the site visit, the appraiser walks through the home to assess its physical condition, layout, and any visible defects. They photograph the interior and exterior, measure the living area, and note features like updated kitchens, finished basements, or deferred maintenance. Back at their desk, they pull data on comparable properties that sold recently nearby and use those sales to estimate the subject property’s market value. The final product is a detailed report that gives the underwriter the property’s estimated worth and a loan-to-value ratio to work with.
Appraisal fees typically fall in the $300 to $500 range for a standard single-family home, though costs climb in metro areas or for larger and more complex properties. FHA appraisals tend to run $400 to $700 because they involve stricter inspection requirements. You pay this fee upfront when the appraisal is ordered, and it’s non-refundable regardless of whether the loan closes.
What the Underwriter Is Doing on Their Track
The underwriter’s job is to answer one question: can you reliably make your payments? They pull apart your financial life to find out, and they’re looking at both your ability to pay and the property that secures the debt.
On the income side, expect to provide at least the most recent year’s federal tax return and often two years’ worth, plus recent pay stubs.4Fannie Mae. Allowable Age of Credit Documents and Federal Income Tax Returns The underwriter also contacts your employer directly to verify you’re still working there and that your income matches what you reported. Self-employed borrowers face extra scrutiny, typically needing two full years of business tax returns and sometimes a year-to-date profit-and-loss statement.
Your credit report gets examined for recent hard inquiries, collections, judgments, and overall payment history. High balances or newly opened accounts can signal risk, especially if they appeared after you applied for the mortgage. The underwriter then calculates your debt-to-income ratio by dividing your total monthly debt payments (including the proposed mortgage) by your gross monthly income.5Fannie Mae. Debt-to-Income Ratios
Once the appraisal report arrives, the underwriter reviews the appraiser’s work to make sure the comparable sales are reasonable, the property description matches the title records, and nothing about the report raises red flags. The property value and your financial profile together determine whether the loan gets approved, denied, or, most commonly, conditionally approved.
Conditional Approval Comes First
Most loans don’t jump straight from underwriting to a final green light. Instead, the underwriter issues a conditional approval listing items you still need to provide. These conditions might include a missing signature, an updated bank statement, a letter of explanation for a large deposit, or proof that a judgment has been paid. Until every condition is satisfied, you won’t receive a clear to close. This is the stage where deals stall most often, so check your email frequently and respond to requests immediately.
When There Isn’t a Traditional Appraisal
Not every loan requires a traditional appraisal, and when it doesn’t, the sequencing question changes. Fannie Mae offers what it calls “value acceptance” for certain transactions where its automated system already has enough data to confirm the property’s value.6Fannie Mae. Value Acceptance Eligible properties are generally one-unit homes used as primary residences or second homes, and the system typically needs a prior appraisal on file for the property.7Fannie Mae. FAQs: Property Valuation Investment properties where rental income qualifies the borrower, and loans where the borrower has already obtained an appraisal, won’t receive a value acceptance offer.
When your lender receives a value acceptance offer, you skip the appraisal fee and avoid the one-to-two-week wait. The offer expires four months after it’s issued, so delays in closing can cause you to lose it. Your lender isn’t required to exercise the offer even if one appears; some choose to order an appraisal anyway as an extra layer of protection.
A desktop appraisal is a middle option. The appraiser still researches comparable sales and produces a report, but never physically visits the property. Instead, they rely on photos, floor plans, and data submitted by other parties like real estate agents or the homeowner, verified against public records and MLS listings.8Fannie Mae. Desktop Appraisals Desktop appraisals save time and usually cost less than a full inspection, but they carry more risk because the appraiser can’t catch physical problems they’d notice in person.
What Happens If the Appraisal Comes In Low While Underwriting Is Still Open
Because the two tracks run together, a low appraisal usually surfaces while the underwriter is still working. That’s the point. The lender will only base the loan on the lower of the appraised value and the purchase price, so the gap between them has to come from somewhere. You generally have a few options:
- Renegotiate the price with the seller to match the appraised value or split the difference.
- Cover the gap in cash at closing, on top of your down payment.
- Request a reconsideration of value. Federal interagency guidance requires lenders to maintain a clear process for borrowers to challenge an appraisal they believe is inaccurate. You can submit evidence of factual errors, better comparable sales, or information the appraiser may have missed.9Consumer Financial Protection Bureau. Mortgage Borrowers Can Challenge Inaccurate Appraisals Through the Reconsideration of Value Process
- Walk away, if your purchase contract includes an appraisal contingency. That contingency lets you cancel and recover your earnest money if the home appraises below a specified amount. Waive it and you’re contractually obligated to close at the agreed price even if the appraisal falls short.
After Both Tracks Finish
Once the underwriter clears every condition and the appraisal supports the loan amount, you receive a clear to close. Your lender must then provide you with a Closing Disclosure at least three business days before the closing date.10eCFR. 12 CFR 1026.19 – Certain Mortgage and Variable-Rate Transactions Compare it line by line against the Loan Estimate you received earlier; any unexplained increases are worth questioning before you sign.11Consumer Financial Protection Bureau. What Should I Do If I Do Not Get a Closing Disclosure Three Days Before My Mortgage Closing?
If certain terms change after you receive the Closing Disclosure, specifically the annual percentage rate, the loan product itself, or the addition of a prepayment penalty, the three-day waiting period resets entirely.12Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs Other minor changes can be corrected at or before closing without restarting the clock. On the day of closing, you sign the promissory note, mortgage or deed of trust, and the remaining settlement paperwork. The lender then wires funds to the escrow account for disbursement to the seller, and the deed transfers to your name once it’s recorded with the county.