What transactions are not eligible for an appraisal waiver?

Ineligible Transactions

The following transactions are not eligible for an appraisal waiver:

• construction and construction-to-permanent loans;
• two- to four-unit properties;
• HomeStyle Renovation and HomeStyle Energy loans;
• leasehold properties;
• community land trusts or other properties with resale restrictions, which include loan casefiles using the Affordable LTV feature;
• co-op units and manufactured homes (including MH Advantage properties);
• DU loan casefiles that receive an Ineligible recommendation;
• transactions using gifts of equity;
• transactions where either the purchase price or estimated value provided to DU is $1,000,000 or more; and
• Texas Section 50(a)(6) loans.

Note: DU may offer an appraisal waiver on a recently constructed property (i.e., new construction) when there is an existing “as is” prior appraisal for the subject property. For example, an appraisal of the subject property may have been performed for a different lender or borrower, but that loan did not close. The lender may execute the appraisal waiver offer when the loan meets all other eligibility criteria for the transaction.

Furthermore, the lender may not exercise an appraisal waiver offer and must order an appraisal if one or more of the following applies:

• DU was unable to identify ineligible criteria in the list above (for example, Texas 50(a)(6) loans);
• the lender is required by law to obtain an appraisal (see A3-2-01, Compliance With Laws);
• the lender is using rental income from the subject property to qualify the borrower; or
• the lender believes that an appraisal is warranted based on additional information the lender has about the property or subsequent events.

Note: The lender may not exercise an appraisal waiver offer if an appraisal is obtained for the transaction.

See B5-7-02, High LTV Refinance Underwriting, Documentation, and Collateral Requirements for the New Loan for additional information about high LTV refinance appraisal waivers.

For additional information, see B4-1.4-10, Appraisal waivers