Appraisal Requirements by Mortgage Loan Type

Why Loan Type Determines Appraisal Standards

Every mortgage program has its own appraisal rules. The agency or investor backing the loan sets the property standards, dictates who can perform the appraisal, and defines how long the report stays valid. An FHA loan and a conventional loan may finance the same house, but the appraiser will evaluate that house against very different checklists.

These differences exist because each program carries its own risk tolerance. Government-backed loans (FHA, VA, USDA) protect both the borrower and the agency by requiring appraisers to flag health and safety issues that could reduce the home's livability. Conventional loans backed by Fannie Mae or Freddie Mac focus more on market value accuracy and allow greater flexibility, including options to skip the appraisal entirely in some cases. Jumbo loans, which exceed conforming limits, follow lender-specific overlays that are often the most restrictive of all.

Understanding the requirements for your specific loan type helps you anticipate what the appraiser will look for, avoid surprises that could delay closing, and budget for the right level of inspection.

FHA Loan Appraisal Requirements

The Federal Housing Administration insures loans for borrowers with lower down payments and credit scores. Because FHA assumes more risk, it imposes strict property condition standards that go beyond a typical market-value assessment.

FHA appraisers must verify that the home meets the agency's Minimum Property Requirements (MPRs) and Minimum Property Standards (MPS). These rules focus on health, safety, and structural soundness. Common items the appraiser checks include:

• Peeling or chipping paint. In homes built before 1978, any peeling paint must be scraped, primed, and repainted before closing because of lead paint concerns.
• Handrails and stairways. All stairways with more than three risers must have a handrail.
• Water heater. The water heater must have a temperature and pressure relief valve with a discharge pipe routed to the floor or outside.
• Roof condition. The roof must have at least two years of remaining useful life with no active leaks.
• Functioning utilities. All mechanical systems (HVAC, plumbing, electrical) must be operational at the time of inspection.

Only appraisers on the FHA Appraiser Roster can perform these inspections. Lenders cannot use just any licensed appraiser for an FHA loan. The appraisal report is valid for 120 days from the effective date, with one 30-day extension available if needed.

If the home fails to meet FHA standards, the seller must make repairs before the loan can close, or the buyer can walk away. This repair requirement is one of the most common sources of friction in FHA transactions.

VA Loan Appraisal Requirements

The Department of Veterans Affairs guarantees loans for eligible veterans, active-duty service members, and surviving spouses. VA appraisals serve a dual purpose: they establish market value and confirm the property meets VA Minimum Property Requirements (MPRs).

VA MPRs overlap with FHA standards in many areas but include additional requirements:

• Adequate crawl space. Crawl spaces must have proper ventilation and be free of excess moisture and debris.
• Safe drinking water. Properties with private wells must have water testing, and the results must meet local health standards.
• No wood-to-ground contact. Structural wood components cannot be in direct contact with the soil (termite risk).
• Pest inspections. In many states, the VA requires a termite inspection as part of the appraisal process.

Only VA-approved appraisers (assigned through the VA portal) can perform these appraisals. The VA sets its own fee schedule by region, so appraisal fees are fixed rather than negotiated between the appraiser and the lender.

If a veteran disagrees with the appraised value, the VA offers the Tidewater Initiative. Under Tidewater, the appraiser must notify the lender before finalizing a value that comes in below the purchase price, giving the veteran's team 48 hours to submit additional comparable sales or other data that could support a higher value.

USDA Loan Appraisal Requirements

The USDA Rural Development loan program helps buyers in eligible rural and suburban areas purchase homes with no down payment. USDA appraisal standards are similar to FHA requirements, with a focus on structural soundness, safe water and sewage systems, and adequate heating.

The key distinction is the property location requirement. The home must be in a USDA-eligible area, which the appraiser does not determine. Borrowers verify eligibility through the USDA property eligibility map before the appraisal is ordered.

Because USDA-eligible properties tend to be in less densely developed areas, finding comparable sales can be more challenging. Appraisers may need to expand their search radius or use older sales, which can complicate the valuation. Rural properties with acreage, outbuildings, or mixed-use features often require appraisers with specific experience in that property type.

Conventional Loan Appraisal Requirements

Conventional loans are not backed by a government agency. Instead, they follow guidelines set by Fannie Mae and Freddie Mac (the government-sponsored enterprises, or GSEs), along with any additional overlays from the individual lender.

Conventional appraisals focus primarily on market value rather than property condition. The appraiser still notes obvious deficiencies, but there is no equivalent to the FHA or VA health-and-safety checklist. The main concern is whether the home is worth what the borrower is paying.

One of the biggest advantages of conventional loans is the potential to skip the appraisal entirely. Fannie Mae's Property Inspection Waiver (PIW) and Freddie Mac's Automated Collateral Evaluation (ACE) can waive the appraisal requirement when the GSE's automated underwriting system has high confidence in the property value. These waivers are more common on refinances with strong loan-to-value ratios.

When an appraisal is required, conventional loans also offer more flexibility in appraisal type. Desktop appraisals, hybrid appraisals, and drive-by appraisals may all be acceptable depending on the risk profile. This flexibility generally translates to lower costs and faster turnaround compared to government-backed loans.

Jumbo Loan Appraisal Requirements

Jumbo loans exceed the conforming loan limits set by the Federal Housing Finance Agency. Because these loans are held on the lender's books (not sold to Fannie Mae or Freddie Mac), the lender sets its own appraisal requirements.

In practice, jumbo appraisals tend to be the most stringent:

• Two appraisals. Many jumbo lenders require two independent appraisals, especially for loans above certain thresholds (often $1.5 million or $2 million).
• Certified General appraisers. Some lenders require a Certified General appraiser rather than Certified Residential, even for single-family homes, because of the higher value and complexity.
• Difficult comparable sales. High-value and luxury properties have fewer comparable sales, which makes the appraisal harder to support. Appraisers may need to pull comparables from a wider geographic area or adjust for features like waterfront access, custom finishes, or extensive acreage.
• Higher fees. Jumbo appraisals typically cost $500 to $1,000 or more, and the fee increases further if two appraisals are required.

Because requirements vary by lender, borrowers shopping jumbo loans should ask about appraisal policies upfront. The cost and timeline can vary significantly from one lender to the next.

Refinance Appraisal Requirements

Refinancing replaces your existing mortgage with a new one, and the new lender typically needs a current appraisal to confirm the home's value. However, the requirements depend on the type of refinance and the loan program:

• Rate-and-term refinance. This straightforward refinance changes the interest rate, loan term, or both. Appraisal requirements follow the same rules as the new loan program (conventional, FHA, VA, etc.).
• Cash-out refinance. Because the borrower is taking equity out of the home, lenders view this as higher risk. Cash-out refinances almost always require a full interior appraisal, and appraisal waivers are rarely available.
• Streamline programs. FHA Streamline, VA Interest Rate Reduction Refinance Loan (IRRRL), and USDA Streamline Assist programs allow qualifying borrowers to refinance without a new appraisal. These programs are limited to rate-and-term changes with no cash out, and the borrower must be current on their existing loan.
• Conventional waivers. Fannie Mae and Freddie Mac may issue appraisal waivers on conventional refinances when their automated systems determine the value with high confidence. Waivers are more common on rate-and-term refinances with lower loan-to-value ratios.

HELOC Appraisal Requirements

Home equity lines of credit (HELOCs) give homeowners a revolving credit line secured by their home's equity. Unlike purchase and refinance transactions, HELOCs are governed almost entirely by the individual lender's policies rather than agency guidelines.

Many HELOC lenders use alternatives to a full appraisal to keep costs down:

• Automated Valuation Models (AVMs). The lender runs a computer-generated estimate using public records, tax data, and recent sales. No appraiser is involved, and the borrower pays nothing for this step.
• Desktop or drive-by appraisals. The appraiser reviews public data and may drive past the property to confirm its existence and exterior condition, but does not go inside.
• Full appraisals. For larger HELOCs or properties in areas with volatile values, the lender may require a traditional full appraisal.

The appraisal method a HELOC lender chooses depends on the credit line amount, the borrower's creditworthiness, and the lender's internal risk models. Borrowers requesting larger lines of credit against properties with limited sales data should expect a more thorough valuation process.

How to Prepare for a Mortgage Appraisal

Regardless of loan type, a few preparation steps can help the appraisal go smoothly:

• Make the home accessible. Ensure the appraiser can access every room, the attic, the basement or crawl space, and the garage. Locked areas delay the process.
• Document improvements. Provide a list of upgrades with approximate costs and dates. A new roof, updated kitchen, or finished basement can support a higher valuation if the appraiser knows about them.
• Fix obvious issues. For FHA and VA loans especially, address peeling paint, broken windows, missing handrails, and non-functional systems before the inspection. These items will likely be flagged as required repairs.
• Research comparable sales. Knowing what similar homes in your area have sold for recently gives you a realistic expectation of the appraised value.

For details on what appraisals typically cost across different property types, see our guide on home appraisal costs and fees.

Find an Appraiser for Your Loan Type

Not every appraiser is approved for every loan program. FHA and VA loans require appraisers from specific rosters, while conventional and jumbo appraisals can be performed by any qualified, licensed appraiser in the state. If you are ordering an appraisal outside of a mortgage transaction (for a pre-listing valuation, estate planning, or other purpose), you can choose your own appraiser.

You can search for licensed appraisers on AppraiserPoint to find professionals in your area, verify their credentials, and confirm their license status before reaching out.