If the borrower is buying a home or refinancing a mortgage, there are some government mortgage refinance programs that don’t require appraisals, property inspection waivers are applicable only on conventional mortgages.
With a property inspection waiver, the loan process will speed up and also save the borrower the cost for a full home appraisal report which typically costs around $300 or $400.
The type of appraisal waiver the borrower gets depends on whether the borrower is applying for a loan backed by Fannie Mae or Freddie Mac.
Fannie Mae property inspection waiver mortgage option is available on loans approved through the Desktop Underwriting (DU) automated underwriting system.
The automated collateral evaluation (ACE) appraisal waiver of Freddie Mac is offered through the Loan Product Advisor automated underwriting system.
When qualifying for an appraisal waiver the loan-to-value (LTV) ratio is the most important factor it is a measure of how much of the home’s value is the borrower borrowing.
For getting qualified for PIW, a borrower will either need to make a large down payment of at least 20% on a home purchase or they should have at least 10% equity in their home on a limited cash-out refinance.
A borrower needs even more equity for an appraisal waiver if they want to get more money than what they currently owe with a cash-out refinance.