When an appraisal isn't needed

Fannie Mae’s appraisal waiver program—officially called Value Acceptance—can allow certain homebuyers and homeowners to complete a mortgage without a traditional appraisal.

When available, it can save money, reduce delays, and make the loan process easier. But not every property or transaction qualifies.

What to know

1. An Appraisal Waiver Comes From Fannie Mae’s Automated Underwriting System

Fannie Mae calls an appraisal waiver Value Acceptance.

Fannie Mae’s Desktop Underwriter (DU) reviews the loan application along with available property and collateral information. When the loan and property meet Fannie Mae’s requirements, DU may offer Value Acceptance.

If the lender is able to use the offer, a traditional appraisal is not required.

Fannie Mae is not actually appraising the home. Instead, it uses available property information, prior appraisal data when applicable, and its automated analytics to determine whether it will accept the value submitted by the lender without requiring a new appraisal.

2. You Cannot Simply Request or Choose an Appraisal Waiver

An appraisal waiver is not something a borrower or loan officer can simply select to avoid the cost or inconvenience of an appraisal.

The loan must be submitted through Fannie Mae’s Desktop Underwriter, and DU must offer Value Acceptance.

Even when a borrower, property, and transaction appear to meet the basic requirements, there is no guarantee that a waiver will be offered.

3. Certain Purchases and Refinances May Qualify

Value Acceptance may be available for qualifying one-unit properties, including single-family homes and condominiums.

Depending on Fannie Mae’s current guidelines and DU findings, eligible transactions may include:

• Purchases of primary residences and second homes
• Limited cash-out refinances
• Certain cash-out refinances
• Certain investment-property refinances

Loan-to-value limits and other restrictions vary according to occupancy and transaction type.

For a purchase transaction, the value submitted for Value Acceptance is generally the sales contract price.

4. Many Property Types and Transactions Are Not Eligible

Having excellent credit or substantial equity does not automatically mean you can receive an appraisal waiver.

Transactions and properties generally not eligible for standard Value Acceptance include:

• 2- to 4-unit properties
• Manufactured homes
• Cooperative units
• Proposed construction, with limited exceptions
• Construction-to-permanent loans
• Certain HomeStyle renovation transactions
• Leasehold properties
• Community land trusts and certain resale-restricted properties
• Gift-of-equity transactions
• Manually underwritten loans
• Loans receiving ineligible DU findings

Another important limitation is property value. Value Acceptance is generally unavailable when the purchase price or estimated property value submitted to DU is $1 million or more.

5. Value Acceptance + Property Data Is Different From a Traditional Appraisal

Some borrowers may receive Value Acceptance + Property Data instead of standard Value Acceptance.

With this option, a qualified property data collector gathers information about the interior and exterior of the home. This gives Fannie Mae current information about the property and its condition.

It is not the same as a traditional appraisal because an appraiser is not developing an independent opinion of the property’s market value.

If all requirements are satisfied, a traditional appraisal is still not required.

6. A Lender Can Still Require an Appraisal Even When a Waiver Is Offered

Receiving a Value Acceptance offer does not necessarily guarantee that the transaction will close without an appraisal.

An appraisal may still be required if the lender discovers information affecting property eligibility, applicable law requires one, mortgage insurance requirements call for one, or other information makes an appraisal necessary.

Rental income can also be important. If rental income from the subject property is being used to qualify the borrower, the lender generally cannot exercise the Value Acceptance offer.

Always wait for your lender to confirm that an appraisal is not required.

7. An Appraisal Waiver Can Save Money, Time, and Hassle

Avoiding a traditional appraisal can provide several advantages.

You may save hundreds of dollars in appraisal fees. You may also avoid delays associated with scheduling the inspection, waiting for the appraisal report, and having the lender review it.

For a refinance, you may not need to arrange for an appraiser to enter your home.

On a purchase, Value Acceptance also removes the risk of a new appraisal coming in below the contract price because a traditional appraisal is not being performed.

8. A Waiver Can Change or Disappear During the Loan Process

An initial appraisal waiver should not be considered permanent until the loan is finalized.

Changes to the transaction may require the lender to resubmit the loan through Desktop Underwriter.

Changes involving the purchase price, estimated value, loan amount, loan-to-value ratio, occupancy, transaction type, property information, or borrower qualification could affect the DU findings.

A loan that initially qualifies for Value Acceptance could therefore require an appraisal later.

9. An Appraisal Waiver Does Not Eliminate Property Eligibility Requirements

No appraisal does not mean no property standards.

The home must still meet Fannie Mae’s property and collateral eligibility requirements.

Known property problems, unusual characteristics, insurance issues, recent disasters, or other information affecting the property's acceptability can still create problems even when an appraisal waiver has been offered.

10. Do Not Order Your Own Appraisal After Receiving a Waiver Without Talking to Your Lender First

If you receive an appraisal waiver, don't independently order an appraisal because you want another opinion of the property's value.

Once an appraisal is obtained for the transaction, the lender generally cannot simply disregard it and return to the original Value Acceptance offer.

Talk with your loan officer before ordering or agreeing to any appraisal.

The Bottom Line

Fannie Mae Value Acceptance can be a significant benefit when it is available. It may eliminate the cost of a traditional appraisal, reduce delays, simplify the mortgage process, and remove some of the uncertainty surrounding appraisal value.

But appraisal waivers are not available for every borrower, property, or transaction.

The most important point is that the waiver comes from Fannie Mae’s Desktop Underwriter. It isn't something the borrower or loan officer can simply choose.

If you're buying or refinancing, ask your loan officer whether your transaction qualifies for Value Acceptance and whether a traditional appraisal or another property valuation option will be required.