A home appraisal is required in most mortgage transactions, but not all of them. If you’re financing a purchase through a conventional lender or a government-backed program like FHA, VA, or USDA, expect one. If you’re paying cash, using a streamline refinance on an existing FHA or VA loan, or qualifying for a Fannie Mae or Freddie Mac appraisal waiver, you can often skip it. Whether a home appraisal is required comes down to who is lending the money, what the loan is for, and what the property looks like on paper before anyone visits.
When a Home Appraisal Is Required
Any time a lender is putting money into a property, it wants independent proof the property is worth what you’re paying. That’s the loan-to-value calculation: how much you’re borrowing measured against what the home is actually worth. If you default, the lender needs the collateral to cover the debt.
For conventional mortgages through a bank or credit union, the appraisal drives loan approval. If the appraiser values the home below your purchase price, the lender caps the loan at the appraised value. You then pay the gap in cash, renegotiate with the seller, or walk away using an appraisal contingency to protect your earnest money.1My Home by Freddie Mac. Understanding Contingency Clauses in Homebuying
Government-backed loans go further. The appraisal doubles as a habitability check.
FHA Loans
FHA appraisals confirm the home meets Minimum Property Requirements set by HUD. The appraiser checks that heating, electrical, and plumbing systems function; that the foundation, roof, and walls are sound; and that no safety hazards exist, including peeling paint in pre-1978 homes, exposed wiring, or contaminated soil. Anything flagged must be fixed before closing.
FHA also requires a second appraisal on recently flipped properties. If the seller bought the home within the past 90 days and is reselling for more than 10 percent higher, or resold between 91 and 180 days at more than 20 percent higher, the lender orders another appraisal that includes an interior inspection. The lender pays for it, not the buyer.2Consumer Financial Protection Bureau. Buying a Flipped Home and Second Appraisal Requirements
VA Loans
VA appraisals apply a similar safe-and-livable standard. What’s different is who picks the appraiser: federal law assigns VA appraisers from an approved panel on a rotating basis, so no party to the transaction can choose one.3GovInfo. 38 USC 3731 – Appraisals
USDA Loans
USDA Rural Development loans require the property to be decent, safe, sanitary, structurally sound, and functionally adequate. The home also has to sit in an eligible rural area — generally a community with a population under 20,000 outside a metropolitan statistical area. Existing homes needing repairs can qualify if the repair costs are financed into the loan.4USDA Rural Development. HB-1-3550 – Chapter 5: Property Requirements
When You Can Skip the Appraisal
Three main situations let you avoid a traditional appraisal: paying cash, qualifying for a Fannie Mae or Freddie Mac waiver, or using a streamline refinance.
Cash Purchases
No lender means no appraisal requirement. You and the seller negotiate a price and close, often much faster than a financed deal. A private appraisal is still worth considering as due diligence — it confirms you’re not overpaying and gives you a documented value for future tax or insurance purposes — but nobody is forcing you to get one.
Appraisal Waivers (Value Acceptance)
Fannie Mae’s Value Acceptance program, once called an appraisal waiver, lets qualifying transactions close with no appraisal at all. The lender runs the loan through Fannie Mae’s Desktop Underwriter, which weighs historical sales data, tax records, and prior appraisals to decide whether the stated value holds up. As of early 2025, purchase loans on primary residences and second homes can qualify at loan-to-value ratios up to 90 percent, so a 10 percent down payment can be enough.5Fannie Mae. Fannie Mae Announces Changes to Appraisal Alternatives Requirements
A related option, Value Acceptance + Property Data, extends up to the full program LTV limits — as high as 97 percent — but requires a trained professional to visit the property and collect data instead of a full appraisal.6Federal Housing Finance Agency. FHFA Announces Updates to Enterprise Policies on Appraisals, Loan Repurchase Alternatives, and Pricing Notifications
Any material change to the property — an addition, a lot split, structural damage since the last recorded data — disqualifies the transaction from a waiver, and a full appraisal is ordered.
Desktop and Hybrid Appraisals
When a full waiver isn’t on the table, Fannie Mae may accept a desktop or hybrid appraisal. A desktop appraisal is completed by a licensed appraiser working from public records, MLS data, and photos, without visiting the home. It’s available on purchases of one-unit primary residences at LTVs of 90 percent or less. Refinances, multi-unit properties, condos, co-ops, manufactured homes, and investment properties are excluded.7Fannie Mae. Desktop Appraisals
A hybrid appraisal splits the work. A trained third party inspects the property and collects data, and a licensed appraiser completes the valuation remotely. Hybrid coverage is broader than desktop, including condos and single-family attached homes, though multi-unit properties, co-ops, and manufactured homes are still out.8Fannie Mae. Hybrid Appraisals
Refinancing: Does It Require an Appraisal?
The answer depends on your loan type and how much you’re pulling out.
Conventional Refinances
For loans sold to Fannie Mae, an appraisal report older than 12 months from the date of the new loan cannot be reused. If the original appraisal is between four and 12 months old, the lender can order an update instead of a full new appraisal, but if the update shows the value has dropped, a new appraisal is needed anyway. Fannie Mae permits reuse of an existing appraisal on a limited (rate-and-term) refinance if it fits the age rules, but a standard cash-out refinance generally requires a fresh one.9Fannie Mae. Appraisal Age and Use Requirements
FHA Streamline Refinance
An FHA Streamline refinance skips the appraisal as long as the new loan amount doesn’t exceed your current balance. You need an existing FHA mortgage, a current payment status with no late payments in the past year, and at least six months of ownership. Rolling closing costs into the new loan increases the balance above what you owe, and that triggers an appraisal to confirm the equity is there.
VA Interest Rate Reduction Refinance Loan
The VA’s IRRRL, or streamline refinance, generally doesn’t require an appraisal. The program exists to lower your rate or move you from an adjustable to a fixed rate on an existing VA loan, so the VA typically doesn’t re-verify property value.
Home Equity Loans and HELOCs
Borrowing against equity requires some form of valuation, but not always a full in-person appraisal. Depending on the lender, the loan amount, and your credit, alternatives can include an automated valuation model, a desktop appraisal, or a drive-by exterior inspection. Larger loans lean toward full appraisals; smaller lines of credit often clear with a lighter review.
When an Appraisal Is Required Outside of a Purchase
A required appraisal isn’t only a lender question. Several situations outside of buying or refinancing create a need for a certified valuation.
Canceling Private Mortgage Insurance
If you put less than 20 percent down on a conventional loan, federal law lets you cancel PMI once your loan balance hits 80 percent of the home’s original value — the lesser of your purchase price or the appraised value at closing. You have to submit a written request, be current on payments, have a good payment history, and show the property value hasn’t dropped below the original value.10Office of the Law Revision Counsel. 12 USC 4902 – Termination of Private Mortgage Insurance
To cancel early based on appreciation, you generally need a new appraisal or a broker’s price opinion showing your balance is at or below 80 percent of current market value. Your servicer sets the exact form of evidence in advance and must share the appraisal results if it denies your request.11Consumer Financial Protection Bureau. When Can I Remove Private Mortgage Insurance From My Loan
Inherited Property
Inherited real estate gets a stepped-up tax basis: its fair market value on the date of the previous owner’s death. When you sell later, capital gains tax applies only to appreciation above that stepped-up value, not to what the original owner paid.12GovInfo. 26 USC 1014 – Basis of Property Acquired From a Decedent The statute doesn’t explicitly require an appraisal, but a professional valuation is the most reliable documentation if the IRS questions the basis you claim. The basis you claim also can’t exceed the value reported on the estate tax return.13Federal Register. Consistent Basis Reporting Between Estate and Person Acquiring Property From Decedent
Divorce
Divorce courts use appraisals to divide marital real estate. A certified appraisal gives both spouses and the court an objective value to work from, whether one spouse is buying out the other or the property is being sold and the proceeds split.
Bankruptcy
In a Chapter 13 bankruptcy, the court has to determine property value to figure out how much equity is available to pay creditors. Federal law says collateral value is assessed in light of the property’s proposed use and the purpose of the valuation.14Office of the Law Revision Counsel. 11 USC 506 – Determination of Secured Status If the appraisal shows a lien exceeds the property’s value, the unsecured portion of that lien may be reduced or eliminated under the plan.15United States Bankruptcy Court. Guidelines for Valuing Collateral
What an Appraisal Costs
Fees for a standard single-family home typically run $300 to $600, though location, property size, and complexity move the number. Rural properties, multi-unit buildings, and homes with unusual features cost more. VA appraisals follow state-specific fee tables that can run higher than conventional appraisals. When a second appraisal is required in a flip situation, the lender pays it.
Waivers and alternatives save real money. A full waiver eliminates the fee, and desktop and hybrid appraisals generally cost less than a traditional in-person inspection. Your lender should disclose the appraisal cost and any alternatives available early in the loan process.
If the Appraisal Comes In Low
A required appraisal doesn’t mean the number is final. Federal interagency guidance sets up a Reconsideration of Value process that lets you dispute the result through your lender. The lender should tell you early how to raise concerns about the valuation, ideally before a final credit decision.16Federal Register. Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations You can submit comparable sales the appraiser missed, correct factual errors like wrong square footage or a missed bedroom, or share information that wasn’t considered. The lender then decides whether to order a revised appraisal or hold the original value, and it has to communicate the outcome to you clearly.