Depending on your loan type, loan-to-value, and how your file appears in the underwriting system, you may or may not require an appraisal when refinancing. Millions of loans are now eligible for appraisal waivers through federal no-appraisal refinance programs and large loan investors, but cash-out refinances and jumbo loans still require a complete appraisal. Each borrower's circumstances are unique.
I'll start with the portion that most borrowers never understand. You don't need an appraisal. It is for the lender, the investor behind the lender, and the secondary market behind the investor. One topic is addressed by the appraisal: what is the property's current value in the event that the borrower defaults and the loan must be foreclosed upon and resold? The loan-to-value ratio, which determines whether the loan may be sold to Fannie Mae, Freddie Mac, FHA, VA, or USDA at all, is determined by that response.
That's the entire purpose of an appraisal, and it's also the reason it can be waived. The assessment is no longer helpful if the lender, the investor, and the secondary market are already satisfied with the value of your property based on information they already possess. It only adds a week to your timeline and costs you between $300 and $600.
When in-person appraisals became logistically challenging, the trend toward appraisal exemptions accelerated, and the evidence supporting these waivers has only grown stronger since. The FHA, VA, and USDA refinance alternatives were created from the beginning to allow qualified borrowers to refinance without a new valuation, and Fannie Mae and Freddie Mac developed automated valuation tools that evaluate the house against millions of recent sales, previous appraisals, and tax records. Because it is actual money for the borrower, AmeriSave's loan professionals do these waiver checks on every possible refinance before providing a final cost estimate.
For the remainder of this guide, the framing is straightforward. "Is an appraisal required for refinancing?" is not the appropriate question. Which scenario am I really in, and what does that signify for my file? is the appropriate inquiry.
Although it is limited, the FHA Streamline Refinance is one of the cleanest no-appraisal options available. It is only available to borrowers who already have an FHA-insured mortgage, the refinance must produce what the U.S. Department of Housing and Urban Development refers to as a Net Tangible Benefit, which is a quantifiable decrease in the combined interest rate and mortgage insurance premium for fixed-to-fixed refinances.1. The borrower must have made at least six payments on the FHA loan that is being refinanced, the most recent payment must have been made within the month that it was due, at least six complete months must have elapsed since the first payment due date, and at least 210 days must have elapsed since the closing date of the previous FHA mortgage. Beyond that, the property doesn't need a new appraisal or inspection, and the file frequently doesn't need new income documentation. The value of record is the previous FHA appraisal.
This is the difference that counts. The classic FHA no-appraisal candidate is a borrower who has an FHA loan with a current rate higher than the current market rate, has been making timely payments, and is merely attempting to reduce the monthly payment. It is not the same borrower who is attempting to refinance an investment property, take out cash, or refinance from FHA into conventional. Every week, AmeriSave loan officials witness this. For the borrower it fits, the no-appraisal path saves time and money, but for every borrower it doesn't, it imposes an incorrect response.
One operational point that should be reiterated is that, even under this program, the lender has the authority to request an appraisal if certain aspects of the file call for it. The new loan amount on a no-appraisal FHA refinance is limited by the current principle balance plus permitted financed charges.1. The regular 97.75% LTV cap on FHA rate-and-term refinances applies if the borrower chooses to pick a rate-reduction refinance with a new appraisal in order to roll in additional closing costs than that formula permits. The lender may still conduct a new valuation if the previous appraisal identified condition issues. The software does not contradict that. It serves as a safety valve for the lender.
One of the most borrower-friendly refinance programs in any government system is the VA Interest Rate Reduction Refinance Loan, or IRRRL, which is the Department of Veterans Affairs' version of the FHA's no-appraisal refinance. Veterans, active-duty military personnel, and surviving spouses who currently have a VA-guaranteed loan are eligible for the IRRRL, which allows them to refinance to a lower rate without ordering a new appraisal, typically without requiring new income documentation, and without requiring a new termite or pest inspection.
Unless the refinance is switching from an adjustable-rate mortgage to a fixed-rate mortgage, in which case the rate may increase, the IRRRL is required by VA Lenders Handbook M26-7 to reduce the borrower's interest rate in comparison to the current VA loan. The funding charge for a VA IRRRL is set at 0.5% of the loan amount, which is less than the funding fee for a VA cash-out refinance or buy loan.
There are two seasoning requirements that must be met before the IRRRL is accessible. A minimum of 210 days must have passed since the loan's initial monthly payment due date, and the borrower must have made at least six monthly payments on the loan being refinanced. It is necessary for both clocks to run completely, not just one.
The classic IRRRL candidate is a veteran with a 7.0% VA-guaranteed mortgage who want to lower the rate. For a kitchen makeover, the same veteran who wishes to withdraw $40,000 in equity is not. A thorough evaluation is necessary since the borrower is in cash-out territory. Every veteran's refinance call begins with the IRRRL eligibility check conducted by AmeriSave's VA team because, when it works, the program really reduces closing costs.
One common question from borrowers is that, the financing fee can typically be rolled into the new loan rather than being paid out of pocket, although the VA does cap the closing costs that can be funded into the IRRRL. This contributes to the program's effectiveness for borrowers who might otherwise be reluctant to refinance due to the upfront costs.
For the rural and small-town homes it serves, the USDA Streamlined Assist Refinance is a federal program that most borrowers are unaware of and that is actually one of the simpler routes to a no-appraisal refinance. Borrowers who currently have a USDA-guaranteed or USDA-direct mortgage who can show that the new loan lowers their principal and interest payments by at least $50 per month.
No new appraisal, no new credit qualification other than confirming that the borrower has been making timely payments for the previous 12 months, and no property inspection are necessary for the Assist program. The file is regarded as already eligible at the time the refinance is approved, but the income restrictions for the initial USDA loan still apply.
This is where it becomes helpful. A candidate is a USDA borrower who has been making timely payments for at least a year and locked their initial loan at a higher rate. It's not a USDA borrower attempting to withdraw cash. There is absolutely no USDA cash-out refinance program. If a USDA borrower has missed 30 days of payments in the previous year, they are not. For borrowers in qualifying rural areas, AmeriSave arranges USDA refinances, and when the math suggests a rate drop, we look at the Assist option first.
The USDA levies an annual fee on guaranteed loans, which is set at 0.35% of the loan total. This figure is important to know because borrowers frequently inquire about it. The upfront guarantee charge is computed on the new loan amount and is usually rolled into the loan rather than paid at closing, although that annual fee remains on the refinanced loan.
This is the one most borrowers never realize is available to them. On conventional refinances backed by Fannie Mae, the loan officer submits the file through Desktop Underwriter, which is Fannie Mae's automated underwriting system, and the system runs a check called Value Acceptance. That program used to be known as the Property Inspection Waiver, or PIW. Fannie Mae renamed it to Value Acceptance, but the older PIW name still shows up in older lender documentation and is essentially the same thing.
If the property and the loan meet the algorithm's criteria, Desktop Underwriter returns an offer to skip the traditional appraisal entirely. A Value Acceptance offer is generally available on:
One-unit primary residences and second homes for limited cash-out refinances up to 90% loan-to-value.
One-unit primary residences for cash-out refinances up to 70% loan-to-value.
Investment properties for limited cash-out refinances at lower thresholds.
The Value Acceptance offer requires that Fannie Mae already have a verifiable prior valuation on the property in its database, and that nothing about the borrower or the property triggers a kickout. Properties with prior unresolved appraisal issues, manufactured homes, certain co-op properties, and a few other categories are ineligible.
Here is what the contrast looks like. A borrower with an existing Fannie Mae loan, an estimated 75% loan-to-value, a clean payment history, and a property in a typical suburban market is a high-probability Value Acceptance candidate. A borrower trying to refinance a manufactured home, or a property that recently failed a prior appraisal, or a property in an area with limited recent comparable sales, is not. The algorithm decides. The loan officer does not get to argue with it.
When AmeriSave runs a borrower through Desktop Underwriter and the file returns a Value Acceptance offer, the borrower's closing costs drop by $300 to $600, and the timeline shortens by roughly a week. That is real money and real time, and it is the first thing we check on every conventional refinance before we even quote a final closing cost figure.
Automated Collateral Evaluation, or ACE, is Freddie Mac's own appraisal-waiver program that operates on the same idea as Fannie Mae's Value Acceptance but uses a distinct automated underwriting system called Loan Product Advisor. There is no interchangeability between the two programs. Depending on which loan investor will ultimately hold the loan and what information each system has on file, a property and borrower may be eligible for ACE through Freddie Mac's system but not for Value Acceptance through Fannie Mae's, or vice versa.
In fact, Freddie Mac provides two similar choices. Pure ACE is available on purchase and no-cash-out refinance transactions up to 90% loan-to-value on primary residences and second properties. It is governed by the Freddie Mac Single-Family Seller/Servicer Guide Section 5602.3 and completely waives the appraisal. For cash-out refinances and some other transactions, Freddie Mac uses ACE+PDR, which is regulated under Section 5602.4. ACE+PDR, which is quicker and less expensive than a full appraisal but not the same as a no-appraisal waiver, substitutes the standard appraisal with onsite property data gathering carried out by a qualified data collector utilizing the Uniform Property Dataset.
ACE+PDR offers are often accessible on:
The kickout requirements for properties with past valuation issues, specific property types, and specific geographic areas also overlap but do not meet Fannie Mae's eligibility ranges. When there is flexibility regarding which investor will ultimately hold the loan, a competent loan officer conducting a traditional refinance will review the file using both Desktop Underwriter and Loan Product Advisor. This is because the likelihood of receiving an appraisal waiver increases when both systems have a chance to review the file. For that reason, AmeriSave runs qualified files via both systems.
Pure ACE has the same practical results for the borrower as a Value Acceptance: no appraisal, reduced closing expenses, and a quicker timetable. The borrower still foregoes the standard appraisal with ACE+PDR, but they do pay for the property data collecting, which is more complicated than pure ACE but usually less costly and quicker than a full appraisal.
Because "I refinanced last time without an appraisal, so this time I won't either" is one of the most frequent ways borrowers are taken aback at closing, this is the section of the conversation I have with borrowers most frequently.
Regardless of how nice your file appears, a complete appraisal is nearly always necessary in the following refinance scenarios:
A borrower I recently worked with had a Fannie Mae loan at 78% loan-to-value on a typical suburban property; this borrower was a Value Acceptance candidate. In order to consolidate $60,000 in debt, the borrower desired to refinance into a cash-out loan, which would raise the new loan's loan-to-value to 82%. The file was transferred from the appraisal-waiver lane into a full appraisal lane with that one modification. The requirements for the waiver go beyond your identity. They concern the appearance of the new debt.
This one surprises borrowers, but it is built into every program. Even when the official rules say no appraisal is required, the lender always retains the right to order one if the file warrants it. Here are the most common reasons a lender pulls an appraisal on a no-appraisal or waiver-eligible loan:
The estimated value the borrower provides looks too high. If the borrower says the property is worth $500,000 and the automated valuation models say $420,000, the lender will likely order an appraisal to resolve the gap before underwriting the loan.
Recent property condition concerns. A previous inspection report, an insurance claim, or anything in the file flagging foundation issues, water damage, or major deferred maintenance typically triggers an appraisal even on a program that allows the waiver.
Recent significant changes to the property. A reported addition, a teardown-and-rebuild, a major renovation, or a converted use of the property all raise the question of whether the prior valuation still represents the property accurately.
Investor overlay. Even when FHA, VA, or USDA rules allow no appraisal, individual lenders sometimes apply stricter overlay rules and require an appraisal anyway. This is a lender-specific business decision and varies across the industry.
Underwriter discretion. If the file has any other red flags, including gaps in payment history, unresolved title issues, or the property being on the market within the past several months, the underwriter can and often will order an appraisal as a condition of approval.
The point is that "no appraisal required" is the program rule. The actual lender decision can be more conservative, and the borrower's job is to set expectations accordingly. AmeriSave's underwriters flag these situations early in the file review, so the borrower is not surprised by an appraisal order three days before what was supposed to be the closing.
A typical single-family home appraisal in the United States costs between $300 and $600 with higher fees on complex properties, multi-unit properties, properties in high-cost areas, and rush orders. Specialty property appraisals, such as those needed for unique architecture, properties with substantial acreage, or income-producing investment properties, can run $700 to $1,000 or higher.
VA appraisals follow a fee schedule published by the VA, with maximum allowable fees that vary by state and property type. The fee is paid by the borrower at the time the appraisal is ordered, typically several days after the loan application is submitted, and the appraisal itself usually takes about 7 to 14 days from order to delivered report. That timeline can stretch longer in markets with appraiser shortages.
For a borrower whose total closing costs on a refinance might be $5,000 to $10,000, saving $500 on the appraisal does not change the overall picture by an enormous amount, but it is real money. More importantly, an appraisal waiver shortens the timeline, which matters when interest rates are moving and a rate-lock window is in play. Cutting a week out of the closing process can be the difference between locking the rate you wanted and re-locking at a worse one.
AmeriSave's refinance team treats the appraisal-waiver question as one of the first three things to verify on a refinance file, because the answer affects the closing-cost quote, the timeline quote, and the rate-lock strategy. Borrowers who don't ask about it are usually told if the waiver is available; borrowers who do ask sometimes find out their loan officer never bothered to check.
To be eligible for an appraisal waiver, there is no secret formula. The algorithms make decisions based on information that the borrower has no direct control over. However, there are doable actions that raise the chances:
This is the second most common appraisal question I get, after "do I need one." A low appraisal does not have to kill the refinance, but it does change the math, and it sometimes changes the program eligibility.
If the appraisal comes in lower than the value the borrower expected and the new loan-to-value exceeds the program limit, the borrower has a few options. First, bring cash to closing to reduce the loan amount and bring the new loan-to-value back inside the program threshold. Second, request a reconsideration of value through the lender. The borrower or the lender can submit additional comparable sales data or property condition notes to the appraiser, who may revise the value if the new data is convincing. Reconsideration requests are most successful when the borrower can document specific factual errors or omitted comparable sales.
Third, switch to a different refinance program that allows higher loan-to-value. A borrower whose appraisal kills a conventional cash-out at 80% might still qualify for an FHA cash-out at 80%, the same loan-to-value cap with different program rules and different mortgage insurance treatment. Fourth, postpone the refinance until the property's market value catches up, the borrower has paid down more principal, or the borrower has saved enough cash to cover the gap.
A low appraisal is not a verdict. It is a data point, and there are usually three or four reasonable responses to it depending on what the borrower's actual goal is. The right loan officer walks borrowers through these options when an appraisal lands low, because the difference between "the deal is dead" and "we have three other paths" is just the phone call.
Let's return to the initial query. When refinancing, is an appraisal required? Depending on the situation you find yourself in, yes. Most likely not if you are using the FHA no-appraisal refinance to reduce your rate on an FHA loan. Most likely not if you are doing an IRRRL and you have a VA loan. Most likely not if you are eligible for the Assist option and you have a USDA loan. Perhaps not if you have a traditional loan with a clean profile and an acceptable loan-to-value. A significant portion of such files are captured by the automatic waiver processes of Freddie Mac and Fannie Mae.
Plan on an appraisal if you are taking out cash, refinancing into a different loan program, refinancing a jumbo, or refinancing a property with scant valuation information. Include the 7 to 14 days in your timeframe and the $300 to $600 in your closing-cost estimate.
The appropriate course is the appropriate course. The quickest way to make incorrect assumptions about cost and timing is to adopt your neighbor's expectations about how their refinance went. You own your file. It belongs to your neighbor. Because each borrower's response varies and checking is the only way to find out, AmeriSave does the appraisal-waiver check at the beginning of each refinance.
Ask it if you are unsure if your file is eligible for a waiver. Before you sign anything, ask clarification on any unclear parts of the procedure. That's how you end up closing without any surprises.
Yes, in a few particular situations. The FHA's no-appraisal refinance option, the VA Interest Rate Reduction Refinance Loan known as the IRRRL, and the USDA Streamlined Assist refinance are federal programs created to enable qualified borrowers to refinance without ordering a new appraisal. For files that satisfy the algorithm's eligibility requirements, Fannie Mae's Value Acceptance program, formerly known as the Property Inspection Waiver, and Freddie Mac's Automated Collateral Evaluation, or ACE, can also waive the appraisal requirement on conventional refinances. The limits are normally capped at 90% loan-to-value on limited cash-out refinances and 70% on cash-out refinances. The waiver does not apply to jumbo loans, cash-out refinances above those loan-to-value restrictions, or properties with insufficient system valuation data.
A single-family home refinance appraisal typically costs between $300 and $600, which the borrower must pay at the time the appraisal is ordered. A value of $700 to $1,000 is typical for a property requiring additional appraiser work. Complex properties, multi-unit homes, high-cost-area houses, and properties with distinctive features frequently cost more. The VA publishes a fee structure for VA appraisals, which varies by state. One of the line items most directly impacted by whether the file is eligible for an appraisal waiver is the appraisal charge on a refinance, which is a one-time expense included in the overall closing expenses. This expense is subtracted from the closing-cost estimate prior to final disclosure for borrowers refinancing through AmeriSave who are eligible for a Freddie Mac ACE waiver or Fannie Mae Value Acceptance.
The VA IRRRL often does not call for a new assessment. Through the program, veterans, active-duty military personnel, and surviving spouses with an existing VA-guaranteed loan can refinance to a reduced interest rate without having to pay for a termite or pest inspection, request a new property value, or get new income documentation in most situations. The funding charge on a VA IRRRL is set at 0.5% of the loan amount, which is less than the funding fee on a VA purchase or VA cash-out refinance, which can range from 2.15% to 3.3%. There are two requirements for seasoning: the borrower must have made at least six monthly payments on the current VA loan, and at least 210 days must have passed since the loan's first monthly payment due date. At the beginning of each veteran refinance call, AmeriSave's VA team verifies IRRRL eligibility.
Yes, a lot of the time. An FHA refinance that lowers the interest rate without requiring cash out, also known as an FHA rate-reduction refinance, does not necessitate a new assessment. The program permits qualified borrowers to refinance without a new appraisal, frequently without new income documentation, and without a new property inspection if they have an existing FHA-insured mortgage, have made at least six loan payments, and have waited at least 210 days since the previous FHA closing. For fixed-to-fixed refinances, the refinance must produce what HUD refers to as a Net Tangible Benefit, which is usually a quantifiable decrease in the total interest rate and mortgage insurance premium. Cash out is not permitted on the no-appraisal path. A standard FHA cash-out refinance, which is limited to 80% loan-to-value and necessitates a complete appraisal, is required for borrowers wishing to withdraw equity from an FHA-financed home.
Sometimes, but there are strict guidelines. Fannie Mae's Value Acceptance program limits the appraisal-waiver lane for traditional cash-out refinances at 70% loan-to-value for one-unit primary residences. Cash-out refinances are handled by Freddie Mac using ACE+PDR rather than pure ACE. Onsite property data collection takes the place of the conventional appraisal, and the loan-to-value on one-unit main homes is capped at 70%. Even if every other component of the file would ordinarily be eligible, a complete evaluation is necessary above those criteria. FHA cash-out refinances are limited to 80% loan-to-value and necessitate a thorough appraisal in each instance.1. VA cash-out refinances may be up to 100% loan-to-value, however most lenders cap at 90%. In either case, a thorough appraisal is necessary. There is absolutely no cash-out refinance program available for USDA loans.
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