For nearly every mortgage, yes, a home appraisal is required. What varies is the form it takes. Conventional loans sold to Fannie Mae or Freddie Mac can sometimes qualify for a waiver or a lighter alternative when the automated underwriting system is confident in the property’s value. Government-backed loans through FHA, VA, and USDA almost always require a full appraisal, with the narrow exception of streamline refinances. Cash purchases involve no lender and no required appraisal at all.
Which bucket your loan falls into determines whether you should budget for a full appraisal, a stripped-down alternative, or nothing.
Conventional Loans and When a Full Appraisal Is Required
Conventional mortgages sold to Fannie Mae or Freddie Mac generally require a full appraisal on purchase transactions. The lender has to confirm the property’s market value supports the loan amount before the GSEs will buy the loan, and that need is sharpest when the loan-to-value ratio is high and the equity cushion is thin.
Cash-out refinances get the strictest treatment. Pulling equity out shrinks the lender’s collateral protection, so virtually all cash-out refinances require a complete interior and exterior appraisal regardless of remaining equity. Rate-and-term refinances, where you’re only changing the interest rate or loan length without taking cash, are more likely to qualify for a waiver or a lighter alternative.
Investment properties and multi-unit buildings carry higher risk profiles, so lenders typically require a full appraisal at lower LTV thresholds than they would for a primary residence. The pattern is straightforward: the riskier the loan looks on paper, the more likely a full appraisal will be required.
When Conventional Loans Can Skip the Traditional Appraisal
Fannie Mae and Freddie Mac offer several alternatives that can save time and money when the automated systems trust the property’s value.
Value Acceptance (Appraisal Waiver)
The most common alternative is what Fannie Mae calls Value Acceptance, formerly known as an appraisal waiver. When a lender runs your loan through Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Product Advisor, the system analyzes the transaction type, your credit profile, and existing property data including prior appraisals and public records. If the model has high confidence in the value, it may waive the appraisal entirely. As of early 2025, purchase loans for primary residences and second homes can qualify for Value Acceptance at LTV ratios up to 90%, an increase from the previous 80% cap.1Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements
The waiver is the GSE’s decision, not yours. You cannot request or select it. The automated underwriting system either offers it or it doesn’t, based on its risk assessment of the specific transaction.
Value Acceptance + Property Data
When the system isn’t confident enough for a full waiver but doesn’t need a traditional appraisal, it may offer Value Acceptance + Property Data. A trained third-party data collector, which can be an appraiser, real estate agent, or insurance inspector, visits the property to collect interior and exterior data, but no full appraisal report is prepared. The LTV limits for this option now extend to program maximums for primary residences and second homes.1Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements
Hybrid and Desktop Appraisals
Where Desktop Underwriter doesn’t offer a waiver, a hybrid appraisal may still be available. A third-party data collector gathers interior and exterior property information, and a licensed appraiser then uses that data to complete the valuation remotely. Fannie Mae allows hybrid appraisals for purchases, limited cash-out refinances, and cash-out refinances on one-unit properties including condos, across primary residences, second homes, and investment properties.2Fannie Mae. Hybrid Appraisals Desktop appraisals, which rely entirely on public records and MLS data without any on-site visit, are also offered for certain low-risk scenarios.
None of these lighter alternatives are available for manufactured homes, co-ops, multi-unit properties with two to four units, or new construction. Those transactions still require a traditional full appraisal with the appraiser physically inside the property.2Fannie Mae. Hybrid Appraisals
FHA, VA, and USDA Loans
Mortgages insured by the Federal Housing Administration, guaranteed by the Department of Veterans Affairs, or backed by USDA Rural Development operate under stricter appraisal rules than conventional loans. The appraisal does double duty: it establishes market value and confirms the property meets the agency’s minimum standards for safety and livability. That second role makes government-loan appraisals harder to waive and more likely to flag issues that delay closing.
FHA
An FHA appraiser must verify the property is safe, structurally sound, and sanitary. That includes checking for defective paint in homes built before 1978, adequate heating and electrical systems, a sound roof, and working plumbing. Any problem the appraiser identifies as a violation of FHA’s minimum property standards has to be fixed before the loan can close. If the report notes a broken furnace, missing handrails, or exposed wiring, the seller or buyer completes the repairs and the appraiser or another qualified party verifies the work before final approval. This repair-and-verify cycle is the most common reason FHA transactions take longer than conventional ones.
VA
VA appraisals follow a similar framework with their own minimum property requirements. The appraiser must confirm the home has adequate living and sleeping space, safe mechanical systems, a heating system that maintains habitable temperatures, domestic hot water, a continuing supply of safe drinking water, a roof that prevents moisture intrusion, and electricity for lighting and equipment.3VA. VA Basic MPR Checklist Any nonresidential use of the property cannot exceed 25% of the total floor area. Deficiencies have to be corrected before closing. The VA appraisal is generally portable between lenders, so if you switch lenders mid-process, the new lender can typically use the existing appraisal.
USDA
USDA Rural Development loans also mandate a full appraisal confirming the property meets agency standards. The home must be predominantly residential, located in a USDA-eligible rural area, and free of health or safety concerns before closing. Existing homes must meet HUD property standards, and the site must comply with state and local development requirements.4USDA Rural Development. Appraisal and Property Eligibility Training The lender is responsible for verifying the property meets these standards, and any deficiencies identified by the appraiser must be corrected before closing.5USDA Rural Development. HB-1-3555 – Chapter 12: Property and Appraisal Requirements
Streamline Refinances Can Skip the Appraisal
The one area where government-backed loans relax their appraisal requirements is streamline refinancing. FHA offers a Streamline Refinance program that can proceed without a new appraisal, particularly for investment properties.6HUD. Streamline Refinance Your Mortgage The VA’s Interest Rate Reduction Refinance Loan (IRRRL) similarly allows veterans to refinance to a lower rate without a new appraisal in most cases.
These programs exist because the borrower isn’t taking cash out or changing the fundamental risk of the loan. The agency approved the property once, and the refinance simply improves the borrower’s terms. If you’re currently in an FHA or VA loan and just want a better rate, a streamline refinance is the fastest and cheapest path precisely because it can skip the appraisal step.
Cash Purchases
If you’re buying a home without a mortgage, no lender is involved and no appraisal is required. Paying for your own appraisal before a cash purchase is still a reasonable move, since you’re the one whose money is at risk if you overpay.
What the Appraisal Costs and How Long It Takes
A standard single-family home appraisal typically runs between $300 and $600, though complex, large, or rural properties can push the cost well above $1,000. FHA appraisals tend toward the higher end of that range because of the additional property-condition work involved. The buyer pays in almost every transaction, usually upfront when the lender orders the appraisal, though the fee sometimes appears as a line item in closing costs instead.
From the day the appraiser visits the property to the day you receive the completed report, expect roughly one to two weeks. In busy markets or rural areas with fewer appraisers, that window can stretch longer. If you’re on a tight closing deadline, ask your lender about turnaround times before locking your rate.
Your Right to a Free Copy of the Report
Federal law requires your lender to give you a free copy of every appraisal or written valuation connected to your mortgage application. The lender must provide it promptly when it’s completed or at least three business days before closing, whichever comes first.7Consumer Financial Protection Bureau. 1002.14 Rules on Providing Appraisals and Other Valuations The lender cannot charge extra for the copy itself, though it can require you to pay the appraiser’s fee.
If your loan falls through before closing, the lender still has to send you the appraisal within 30 days of determining the transaction won’t close.7Consumer Financial Protection Bureau. 1002.14 Rules on Providing Appraisals and Other Valuations Having the report in hand lets you spot errors, understand what the appraiser found, and use the information if you apply with a different lender.
What Happens if the Appraisal Comes In Low
When the appraiser’s value falls below your agreed purchase price, the lender will only loan against the lower appraised value. Someone has to cover the gap, and until that’s resolved, the deal stalls. You generally have four options:
- Pay the difference in cash. If your contract price is $500,000 but the appraisal comes in at $480,000, you’d need an extra $20,000 on top of your normal down payment. This keeps the deal at the original price but demands significantly more liquid cash.
- Renegotiate the price. Many sellers will lower the price to the appraised value rather than risk losing the deal entirely, especially since the next buyer’s lender will likely order an appraisal with similar results.
- Walk away under your appraisal contingency. Most purchase contracts include an appraisal contingency that lets you cancel the deal and recover your earnest money deposit if the property appraises below the purchase price. If your contract doesn’t include this clause, you may not have a clean exit.
- Challenge the appraisal. You can ask the lender to submit a Reconsideration of Value to the appraiser. Fannie Mae and Freddie Mac now have standardized policies requiring lenders to disclose the ROV process to borrowers and communicate clearly with appraisers. A successful challenge typically requires concrete evidence the appraiser missed, such as a recent comparable sale in the same neighborhood or an error in the home’s square footage. Vague disagreement with the value almost never works.8FHFA. FHFA Announces Enterprise Reconsideration of Value Policies
The appraisal contingency is your most important protection. If you waived it to make your offer more competitive, you could be on the hook for the gap or forced to forfeit your earnest money. In a market where multiple offers are common, buyers sometimes drop this contingency under pressure, and that gamble gets expensive fast when the appraisal doesn’t cooperate.