Appraisal Wavier Requirements for Conventional Loans | No Appraisal
Looking to see if a property is eligible for a property inspection waiver through the Automated Underwriting System? A Fannie Mae appraisal or Freddie Mac appraisal waiver eligibility is determined during the pre-approval process. It is important that a Loan Originator checks both options to prevent paying for an appraisal.
Appraisal Waiver Requirements
Property inspection waivers are determined during the pre-approval process – when a full application is taken and a loan casefile is submitted to the Automated Underwriting System. Loan casefiles must receive an eligible recommendation.
Fannie Mae Appraisal Waiver Eligibility Requirements
To be eligible for a Fannie Mae appraisal waiver, the automated underwriting system typically includes one unit properties with the following:
Principal residence loan-to-value (LTV) and combined loan-to-value (CLTV):
- 90% or lower LTV/CLTV on a limited cash out refinance.
- 90% value acceptance or lower LTV/CLTV on a purchase transaction.
- 70% or lower LTV/CLTV on a cash out transaction for a principal residence..
Second home LTV/CLTV:
- 90% or lower LTV/CLTV on a limited cash out refinance.
- 90% value acceptance or lower LTV/CLTV on a purchase transaction.
- 60% or lower LTV/CLTV on a cash out transaction for a second home.
Investment property LTV/CLTV:
- 75% or lower LTV/CLTV on a limited cash out transaction.
- 60% or lower LTV/CLTV on a cash out transaction.
Eligibility Requirements for a Freddie Mac Appraisal Waiver
To be eligible for a Freddie Mac appraisal waiver, the Automated Underwriting System often includes the following loan criteria for a one unit dwelling:
Purchase transactions for second homes and primary residence:
- Up to 90% LTV/CLTV.
No-cash out refinance for primary residences and second homes up to:
- 90% LTV/CLTV.
Cash out refinances:
- Primary residences up to 70% LTV/CLTV.
- Second homes up to 60% LTV/CLTV.
Some mortgage companies do not run both Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Prospector. By working with a mortgage company that runs both Automated Underwriting Systems will increase the chance of obtaining a property inspection waiver.
Mortgages that Do Not Require an Appraisal
The Automated Underwriting System can trigger a Fannie Mae appraisal waiver when Desktop Underwriter accepts the value submitted, which is ran by a Loan Originator or Underwriter. Freddie Mac appraisal waiver is also triggered by Loan Originators and Underwriters when running the Automated Underwriting System – Loan Prospector.
Other loan programs that do not require an appraisal:
- An FHA Streamline refinance does not require an appraisal but must meet the net tangible benefit requirements.
- VA interest rate reduction refinance (VA IRRRL) does not require an appraisal.
- A new appraisal is not required on a USDA streamline refinance.