We Don't Need No Steenking Appraisals

Fannie Mae has just announced that beginning 1/1/2025 appraisal waivers (property inspection waivers or PIWs) will be allowed for home purchase loans with as little as a 10% down payment. 20% down is the current minimum to trigger a PIW. Keep in mind, the automated underwriter makes the decision regardless of down payment.

Benefit to the borrower:

Reduced closing costs since the appraisal can be omitted in many situations. This will be at the borrower's discretion though. Some borrowers will often insist on having an appraisal to make certain they aren’t overpaying for a property. Should the option for a waiver arise, it’s good to be able to offer a PIW when one is available.

Which products will this apply to, and which will not:

This is for Fannie Mae conventional only right now. I suspect Freddie will follow shortly. This does not apply to FHA, VA, or any non-QM loans such as bank statement or debt service coverage ratio loans (DSCR).

This also will not apply to purchases of $1 million or more—regardless of down payment. Example: a $1 million dollar purchase price with a $9 hundred thousand down payment will require an appraisal. This can be a bit shocking, but that is the way it has been since Fannie and Freddie started issuing waivers.

Conclusion:

This can be good for the borrowers and our industry. The new rules can reduce costs to the consumer and can help speed up the process since the appraisal is often the most time consuming task in the loan process.

This may save you time and money and those are two very good things.

Source: Fannie Mae Announces Changes to Appraisal Alternatives Requirements | Fannie Mae