Do You Need an Appraisal for a HELOC?

A home equity line of credit (HELOC) is an effective way to tap into your home’s equity without having to refinance your current mortgage. Plus, opening a HELOC can be faster – and cheaper – than going through the full cash-out refinance process.

This is due, in part, to the relaxed appraisal requirements for most HELOCs. While nearly all home loans require some sort of appraisal, HELOC lenders utilize a variety of valuation methods that don’t necessarily involve a full in-person visit from an appraiser.

The Short Answer on HELOCs and Appraisals

The short answer is yes; in most cases, you will need to have an appraisal completed on your home to qualify for a HELOC. However, it likely won’t be the same type of comprehensive appraisal required when purchasing a home or doing a traditional refinance.

According to the 2025 Home Equity Lending Survey conducted by the Mortgage Bankers Association, only 24% of HELOCs and home equity loans required borrowers to obtain a standard full appraisal.

Types of Appraisals Used for HELOCs

If less than a quarter of HELOCs and home equity loans require a full appraisal, how are mortgage companies determining property values for the majority of borrowers? Typically, this is accomplished through other types of appraisals that don’t require a detailed interior and exterior inspection of the home.

Let’s walk through the five most common appraisal methods used for HELOCs.

Full Appraisals

In some cases, you may still need a full appraisal to open a home equity line of credit. This involves a professional appraiser completing a detailed in-person property visit, examining and measuring both the interior and exterior, and conducting research into the recent sales prices of similar nearby homes.

While the scenarios requiring a full appraisal will vary by lender, you’re more likely to need to obtain one if:

• You have credit issues/a low credit score
• You’re applying for a HELOC with a high loan-to-value ratio
• Homes in your area have recently seen significant price depreciation
• Other factors make your application come across as “high risk”

A full appraisal isn’t always a bad thing, though. While they can cost more and take longer than other appraisal methods, they’re generally the most accurate and can be beneficial to property owners who have made recent improvements to their home.

Drive-By Appraisals

Drive-by appraisals, sometimes referred to as exterior-only appraisals, are completed by a professional appraiser but do not require an interior inspection of the home. Instead, the appraiser examines just the outside of the property, taking photographs and observing the condition of features such as the roof and siding.

Following their site visit, the appraiser will then conduct market research – based on publicly available data on the home – and use this information to find comparable properties and determine an estimation of value.

A drive-by appraisal is typically faster and cheaper than a full appraisal, but since it relies on public data regarding the property’s interior, the valuation may not accurately reflect any renovations or improvements that you’ve made.

Desktop Appraisals

A desktop appraisal relies solely on publicly available information on the subject property, which the professional appraiser then uses to conduct their market research and determine value. Desktop appraisals do not require any type of site visit, which is both faster and more cost-effective for borrowers.

Compared to full and drive-by appraisals, you’ll often find desktop appraisals used for lower-risk transactions and relatively newer homes in neighborhoods with plenty of comparable sales data.

Hybrid Appraisals

Hybrid appraisals involve a collaboration between two different parties, with one – often a real estate professional or home inspector – handling the site visit and a professional appraiser conducting the research and establishing an estimation of value. 

Hybrid appraisals generally involve an exterior-only examination of the home. Still, they may include an interior inspection in some cases, depending on the requirements of the lender.

Automated Valuation Model (AVM)

In recent years, HELOC lenders have increasingly turned to automated valuation models (AVMs) to determine home values. According to the Mortgage Bankers Association, 47% of HELOC and home equity loans were completed with AVM appraisals in 2024.

An AVM is an entirely digital appraisal that uses publicly available data and an advanced algorithm to determine a property’s value. There’s no human element involved, and the entire process can be completed in a matter of minutes. If you’ve ever visited a website that shows the estimated worth of your home, you’ve seen the results of an automated valuation model.

While considered to be less accurate than a professionally-completed appraisal, AVMs are quick, cheap, and well-suited for loans like HELOCs where a comprehensive evaluation isn’t always necessary.

How Appraisals Affect Your HELOC Borrowing Power

Lenders use the appraisal – whether it’s done by a professional with a full in-person visit or by an automated valuation model – to determine your HELOC borrowing power.

In most cases, HELOC lenders will let you establish a line of credit for up to 80% to 85% of your home’s total value. This is in combination with the amount you owe on your first mortgage, so you’ll usually see HELOC limits referred to by their combined loan-to-value (CLTV) ratio.

With some mortgage companies, you may be able to open a HELOC for up to 90%, 95%, or even 100% of the amount your home is appraised for. However, expect these higher CLTV loans to come with higher interest rates, more stringent qualification requirements, and a more comprehensive appraisal process.

How Much Is an Appraisal for a HELOC?

Appraisals are requested by the lender through an appraisal management company, with the cost being the responsibility of the borrower. You’ll typically be required to pay the appraisal fee upfront. However, some mortgage companies may include it as part of your closing expenses.

Appraisal costs for a HELOC will vary based on the type of appraisal used, with AVMs being the cheapest and full appraisals being the most expensive.

Here’s a chart breaking down the typical expenses associated with different kinds of HELOC appraisals, but keep in mind, costs can vary by location and the appraisal provider that the lender uses.

Type of Appraisal	Estimated Cost
Full Appraisal	$300 to $500
Drive-By Appraisal	$150 to $250
Desktop Appraisal	$75 to $200
Hybrid Appraisal	$150 to $300
Automated Valuation Model	$20 to $30

Do All HELOCs Require an Appraisal?

Nearly all lenders will require an appraisal when you’re accessing your home’s equity. Sometimes, this can include a full in-person visit, but more often the value will be estimated by an automated valuation model.

However, there may be some scenarios where a lender might not require an appraisal at all. This could be when:

• The borrower has an excellent credit score and a solid financial profile
• The CLTV of the HELOC is extremely low
• The lender has access to a recent appraisal report for the property

Most of the time, though, you’ll be required to have some sort of estimate of value completed. Ask your lender if they allow for automated valuations if you’re concerned about HELOC closing costs.

Maximizing the Appraisal Process

The results of your appraisal will have a direct impact on the amount of the line of credit available to you. It can also improve the terms of your loan, as a higher valuation can equate to a lower CLTV and lower interest rate.

While there’s little you can do to affect the results of an AVM or desktop appraisal, there are some proactive steps you can take that could potentially help improve the estimated value when your appraisal involves an in-person visit:

• Cleaning up the home’s exterior and improving its curb appeal
• Clearing any clutter and ensuring all rooms are accessible
• Opening blinds and turning on lights so that spaces are well-lit
• Documenting your home’s square footage to verify appraiser measurements
• Making minor repairs and catching up on any deferred maintenance

HELOC Alternatives That May Not Require an Appraisal

While a HELOC can be a quick and easy way to tap into your home’s built-up equity, it might not be your only option for accessing the cash you need. Here are a few other HELOC alternatives that may not require an appraisal at all.

Personal Loans

Personal loans are a type of unsecured debt issued by lenders based solely on your creditworthiness. Unlike a HELOC, personal loans are not tied to your property, meaning that if you were to default on your payments, the lender could not directly move to foreclose on your home.

The biggest upside of personal loans? They can often be funded within a matter of days, and since they’re not associated with your property, you won’t be required to obtain an appraisal.

The downside, though, is that since they’re unsecured, you’ll likely incur higher interest rates than you would with a HELOC. The repayment period is typically shorter as well, with personal loans often having terms ranging from two to seven years. 

FHA Title 1 Home Improvement Loans

An FHA Title 1 loan is a home improvement loan insured by the Federal Housing Administration and issued through FHA-approved lenders. Unlike a HELOC, which allows you to use the funds however you choose, FHA Title 1 loans are designed for borrowers planning to make home improvements and repairs.

FHA Title 1 loans have a maximum limit of $25,000 for single-family homes, and loans for up to $7,500 can be issued unsecured without requiring a lien on your property.

Contractor Financing

If you’re seeking funds to make improvements to your home and plan to hire a professional, ask about their contractor financing options. Contractor financing is typically issued by a partnered third-party provider rather than the contractor itself.

Terms can vary based on the lender and the scope of the work. Still, contractor financing can be a simple way to finance projects if you’re having a hard time qualifying for a personal loan or HELOC, and need to borrow more than an FHA Title 1 loan allows.

Will You Need an Appraisal for Your HELOC?

If you’re applying for a home equity line of credit, you can expect to need some type of home appraisal. However, the type of appraisal varies by lender and borrower profile.

Ready to get started with the HELOC process and discover how large a line of credit you qualify for? Apply with Refi.com today.