Can I Refinance Without an Appraisal?

Appraisals are required for most refinance loans; but not all.

In this article, we’ll explore how the type of refinance impacts the appraisal requirement, cover the no-appraisal refinance options, and discuss the likelihood of bypassing the appraisal requirement. 

Do You Have to Get an Appraisal for a Refinance?

In most cases, yes, an appraisal is required when refinancing your mortgage. Lenders rely on appraisals to determine the current market value of your home, which is crucial in deciding how much they’re willing to lend. This protects both you and the lender by ensuring the loan amount doesn’t exceed the home’s actual worth. You can likely anticipate a required appraisal for:

• Rate-and-term refinances
• Cash-out refinances
• Renovation refinances

Refinances are essentially a new mortgage and must follow similar rules regarding the loan-to-value (LTV) ratio. For example, imagine a homeowner who initially put down a small down payment and decides to refinance a year later with minimal equity built up. If the home’s value has depreciated during that time, the remaining balance that the borrower is trying to refinance may actually be more than the home is worth. The appraisal helps lenders avoid situations like this, protecting them from significant financial risk.

That said, not all refinancing scenarios require an appraisal. Some lenders offer appraisal waivers for qualified homeowners, typically for those with strong credit, significant equity, or refinancing through specific programs like government-backed streamline refinances.

No-Appraisal Refinance Options

Refinance options that don’t require an appraisal do exist:

• Government-backed streamline refinances
• Conventional refinances with an Automated Valuation Method option

More on these below:

FHA Streamline Refinance

FHA Streamline refinances are available for FHA loan holders and generally have no appraisal requirements. Oftentimes, they don’t require income verification or a detailed credit check, either, though this may vary by lender.

To qualify for this refinance program, you must meet the following requirements:

• Your loan is an FHA loan.
• At least 210 days have passed since your initial mortgage date. 
• You have made six months of mortgage payments. 
• You have not made more than one late payment in the past year and have made none in the last six months. 

It’s important to note that FHA Streamlines do not allow you to take cash out. Learn about an FHA cash-out refinance for that option.

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VA Streamline Refinance

The VA Streamline refinance is another no-appraisal refinance option. This refinance type is commonly called an Interest Rate Reduction Refinance Loan. It’s exclusive to VA loan holders and, like the FHA Streamline, generally doesn’t require income verification or a detailed credit check.

Here are the requirements for this refinance option: 

• Your loan is a VA loan.
• You are refinancing to change your interest rate or loan term. 
• You are current on your mortgage and meet your lender’s payment history requirements.
• At least 270 days have passed since the initial mortgage date. 

VA Streamlines don’t allow you to take cash out. Check out a VA cash-out refinance for that option.

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USDA Streamlined Refinance

The USDA Streamline refinance is available to current USDA loan holders. When looking to refinance your rate or term, you can often bypass the appraisal requirement.

Like many of the other loan programs, there are strict eligibility requirements that must be met, including: 

• Your loan is a USDA loan.
• You have made at least six months of on-time payments. 
• You have had your USDA loan for at least 12 months. 
• You are refinancing your rate or term. 
  

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USDA Streamline-Assist Refinance 

The USDA Streamlined-Assist refinance program is similar to the USDA Streamlined program, with a few notable differences. For one, this program eliminates the minimum debt-to-income (DTI) requirements and does not require a high credit score.

In addition, closing costs are lower with this program. Here are the requirements for the USDA Streamline-Assist refinance program: 

• The same individuals are on the loan as before. 
• The refinance will result in at least $50 cost savings per month. 
• You have had your USDA loan for at least 12 months. 
• You have made 12 months of on-time payments. 

USDA Streamline-Assist refinances remove some of the stringent credit score and DTI requirements. Nevertheless, they are only applicable if you expect to gain at least $50 in monthly cost savings with the refinance. 

The USDA loan program does not offer a cash-out option. You’d have to refinance into another loan program for a cash-out option.

Automated Valuation Method (AVM)

Some lenders may accept an automated valuation method (AVM) in lieu of an appraisal for non-streamline refinances. AVM eligibility is typically determined through automated underwriting systems, such as Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Product Advisor, which analyze your property and credit profile. AVMs use a computer algorithm to determine a home’s value, using information like the property size, the number of rooms, features, and other data that impact a home’s value.

AVMs are typically used within appraisal waiver programs offered by Fannie Mae and Freddie Mac, but they are not widely accepted as a replacement for traditional appraisals.

Pros and Cons of an Appraisal vs. No Appraisal

Pros

• Saves Time and Money: Skipping an appraisal eliminates the cost (typically $500-$1,000) and speeds up the refinancing process.
• Simplifies the Process: No need to schedule an appraiser or prepare your home for evaluation.
• Convenient for Eligible Borrowers: Government-backed streamline programs and appraisal waivers make refinancing accessible for homeowners with strong credit or significant equity.

Cons

• Missed Opportunity to Leverage Equity: If your home’s value has appreciated significantly, skipping the appraisal may prevent you from discovering how much equity you’ve gained.
• Limited Refinancing Options: No-appraisal refinances typically exclude cash-out options, restricting your ability to access your home’s equity for other financial goals.
• Potential for Overvaluation Risks: Automated valuation methods (AVMs) may overestimate or underestimate your home’s value, which could impact your loan terms.
• Eligibility Restrictions: Not all borrowers qualify for no-appraisal options, as they often require strong credit, equity, or specific loan types (e.g., FHA, VA, USDA).

The Bottom Line

Refinancing without an appraisal is possible. First, you need to know which department your loan is through.

Then, you need to determine if you meet the eligibility criteria. For more information about your refinancing eligibility, contact a qualified lender.