An appraisal waiver is a lending option that allows buyers to skip a traditional home appraisal.

Buyers and homeowners benefit by saving time and money while avoiding the hassle of an in-person appraisal. In my guide, you will learn the following information:

  • The eligibility requirements and application process for an appraisal waiver.
  • The pros and cons of choosing an appraisal waiver.
  • Tips for improving your chances of getting an appraisal waiver.

In my thirty-eight years of selling real estate, I have encountered numerous times when either my clients or another agent’s buyers have waived their appraisal contingency. This is not uncommon, especially in extreme seller’s markets. Waiving a real estate appraisal puts you in better position to land a house you’re bidding on.

Let’s examine everything you should know about waiving an appraisal.

Waiving an Appraisal

What Does Waiving an Appraisal Mean?

What is an Appraisal Waiver?

An appraisal waiver allows lenders to approve a mortgage without conducting a traditional home appraisal. Instead, they rely on automated valuation models (AVMs) and other data.

A home appraisal is essential to determine the property’s market value in a typical mortgage process. Lenders use this value to ensure the loan amount doesn’t exceed the home’s worth.

An appraisal waiver bypasses this step, leveraging advanced technology and data analytics to estimate the home’s value.

Appraisal waivers are primarily offered by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. These entities use sophisticated algorithms to analyze vast property data, including recent sales, property characteristics, and market trends.

Eligibility Requirements

Eligibility for an appraisal waiver depends on several factors:

  • Loan Type: Appraisal waivers are available for conventional loans, typically backed by Fannie Mae or Freddie Mac. Conventional loans are non-government loans. Compared to FHA or VA loans, they offer more flexibility regarding loan amounts and eligibility criteria. Fannie Mae’s “Desktop Underwriter” (DU) and Freddie Mac’s “Loan Product Advisor” (LPA) are automated underwriting systems that determine waiver eligibility.
  • Credit Score: Borrowers must have a good credit score, usually above 700. A higher credit score indicates financial responsibility and reduces the lender’s risk. Borrowers with excellent credit histories are more likely to receive an appraisal waiver. The credit score necessary to buy a house is much lower, but it always makes sense to improve your score.
  • Loan-to-Value Ratio (LTV): Lenders prefer a low LTV ratio, typically 80% or lower. The LTV ratio is the loan amount divided by the home’s appraised value. A lower LTV means the borrower has more equity in the house, reducing the lender’s risk. For instance, an LTV of 80% means the borrower made a 20% down payment.
  • Property Type: Single-family homes and primary residences are more likely to qualify. Lenders prefer less risky property types and are less likely to experience significant value fluctuations compared to investment properties or multi-family units.

Application Process

The process for obtaining an appraisal waiver involves the following:

  1. Application Submission: Submit your mortgage application through an approved lender. Choose a lender who participates in the appraisal waiver program. Complete the standard mortgage application, providing all necessary financial and property information.
  2. Automated Underwriting: The lender evaluates your application using a computerized system. The lender inputs your application details into an automated underwriting system like Fannie Mae’s DU or Freddie Mac’s LPA. These systems assess your financial profile, property data, and other relevant information.
  3. Waiver Decision: The system determines if an appraisal waiver can be granted based on the data provided. It grants an appraisal waiver if the system finds sufficient data and the risk profile acceptable. The lender then informs you of the decision, and you can proceed without a traditional appraisal.

Pros and Cons of Appraisal Waivers

Pros and Cons of Waiving an Appraisal

The Pros and Cons of Waiving an Appraisal


  • Cost Savings: Save $300 to $500 on appraisal fees. Traditional home appraisals can be expensive, with fees ranging from $300 to $500, depending on the property’s location and complexity. An appraisal waiver eliminates this cost.
  • Time Efficiency: Close your loan faster without waiting for an appraisal. Appraisals can take several days to weeks to complete. Waiving this step speeds up the loan approval process, allowing quicker closings.
  • Less Hassle: Avoid scheduling and preparing for an in-person appraisal. Coordinating an appraisal involves scheduling conflicts, property access issues, and preparation efforts. An appraisal waiver removes these inconveniences, making the process smoother.


  • Risk of Overvaluation: Automated models might overestimate property value.AVMs rely on historical data and algorithms, which may not accurately reflect current market conditions or unique property features. This can lead to overvaluation, increasing the loan risk. It is like trusting a Zillow home value – you shouldn’t.
  • Limited Availability: Not all properties or borrowers qualify. Appraisal waivers have strict eligibility criteria, excluding many borrowers and properties. Those with lower credit scores, higher LTV ratios, or non-qualifying property types may not be eligible.
  • Lender Dependence: Not all lenders offer appraisal waivers. Only lenders approved by Fannie Mae or Freddie Mac can offer appraisal waivers. Borrowers must ensure their chosen lender participates in the program.

Real-Life Examples and Case Studies

Example 1: A Smooth Home Purchase

With a credit score of 750 and a 20% down payment, my client Jane bought a single-family home. She applied for a conventional loan through an approved lender and received an appraisal waiver. This allowed Jane to close her loan in 20 days, saving $400 on appraisal costs.

Example 2: A Risky Investment

John, who is investing in a rental property, got an appraisal waiver. The AVM overestimated the property’s value, leading to a higher loan than its worth. When property values dropped, John faced financial difficulties, illustrating the risk of overreliance on automated valuations.

Tips to Improve Your Chances of Getting an Appraisal Waiver

  1. Maintain a Good Credit Score: Aim for an above-700 credit score by paying bills on time and reducing debt. Your credit score reflects your financial responsibility. Consistently paying bills on time, reducing outstanding debt, and avoiding new credit applications can improve your score.
  2. Understand LTV Ratios: Make a substantial down payment to keep your LTV ratio low. A lower LTV ratio indicates a lower risk for the lender. Saving for a larger down payment reduces your LTV ratio, making you a more attractive candidate for an appraisal waiver.
  3. Choose the Right Property: Single-family homes and primary residences are more likely to qualify. Lenders prefer less risky properties, and primary residences and single-family homes typically meet this criteria better than investment properties or multi-unit dwellings.
  4. Work with Approved Lenders: Choose lenders who offer appraisal waivers and understand the process. Not all lenders participate in the appraisal waiver program. Select a lender familiar with the process and who can efficiently guide you through the application.

Home Buyers Can Also Waive An Appraisal in Negotiations

Waiving an appraisal can also occur in hot seller’s markets. A buyer can agree to waive their home appraisal to make an offer more attractive.

It removes the risk of a home not appraising. Sellers can feel more confident about the transaction proceeding, primarily when the house sells significantly over the asking price. Appraisal gaps are far more prevalent in these circumstances.

When a buyer agrees to waive the appraisal, they would be responsible for potentially increasing their down payment to satisfy the lender. Mortgage lenders want to ensure they have ample equity when providing loans.

Jerry Hendriks of The RE/MAX Hendriks Team Realty knows the ins and outs of a bidding war and has this to add:

“Opting out of an appraisal contingency could be a savvy tactic in a competitive bidding scenario. From the perspective of a real estate agent, this signals to the seller that the buyer is committed and ready to act swiftly, potentially setting their offer apart from others. In bustling markets where properties attract multiple bids, eliminating the appraisal contingency minimizes the chances of the deal collapsing due to valuation issues, offering greater assurance to the seller.

This approach may be particularly enticing for sellers seeking a smooth and expedited transaction. Nevertheless, before proceeding with this choice, buyers must be well informed about potential risks and have a solid grasp of the property’s market worth.”


Appraisal waivers can simplify and expedite the mortgage process. They can also be helpful for buyers who are trying to win a bidding war to land their dream home. Waiving an appraisal should always be considered carefully.