How long is a home appraisal good for?

You found your dream home and are close to closing. Then the unexpected happens: Your lender tells you that the appraisal of the home is out of date.

An appraisal captures a point-in-time valuation of a home, but what happens when that point-in-time has passed? And just how long is an appraisal good for? The answer may depend on what type of loan you’re financing with.

Don’t let this logistical nightmare become your reality. Read on to learn how long your appraisal is valid.

Why do buyers need an appraisal?

An appraisal might seem like one more obstacle keeping you from walking through the door of your dream home, but it’s a necessary part of the home buying process.

For buyers financing their home with a mortgage, lenders require an appraisal. This step confirms that the house’s value meets or exceeds the selling price. In most cases, lenders will only issue mortgage loans equal to or less than the collateral of the house.

If you’re buying a house with cash, you’re not required to get an appraisal — but it’s still a good idea. An appraiser is a highly trained professional who can confirm that the home is worth the price you’re paying. This step could even save you some serious cash if you have an appraisal contingency and the appraisal comes in lower than the selling price.

Why would an appraisal no longer be valid?

Appraisals reflect market and property conditions at a moment in time. If either changes, a home appraisal may no longer be valid.

Expiration

Real estate is an ever-changing landscape. While appraisals don’t strictly have an expiration date, they do have an effective date. Appraisers use this date to serve as the baseline of their valuation. But as time passes, that baseline becomes less relevant.

The temporality of an appraisal  comes down to how appraisers make their valuation. Appraisers use comparable sales, or “comps” — homes in the area that have sold within the last six months — to calculate a property’s value. As new homes sell or stay on the market, the baseline of comparables changes, thus affecting the accuracy of the appraisal.

Lenders won’t accept appraisals after too much time has passed since the effective date. That amount of time can vary, but it typically falls within 90-120 days.

Market changes

Sometimes major events, like a natural disaster or spike in mortgage rates, will shift market conditions. When events like these occur, lenders may revoke an appraisal outright or refuse to accept it until it is updated by an appraisal professional.

Property changes

An appraisal doesn’t just reflect the condition of the market, it also reflects the condition of the property. If a home undergoes major changes, like fire damage or significant renovations, an appraisal update, value recertification, or an entirely new appraisal may be required by the lender.

How long is an appraisal good for? 

There’s no single answer to how long a home appraisal is valid for. If there haven’t been any major market or property changes, the answer will depend on the type of home loan you are applying for.

Conventional loans

The government does not back conventional loans, and because a program’s rules don’t regulate them, they tend to be more flexible. Appraisals for these loans are valid for 120 days, or up to a year for new construction homes.

Veterans Affairs (VA) loans

VA loans are available to veterans and active duty members of the US armed services who meet certain eligibility criteria. Appraisals for VA loans are valid for six months from the effective date of the appraisal. 

Federal Housing Administration (FHA) loan

The Federal Housing Administration, an arm of the Department of Housing and Urban Development (HUD), backs FHA loans to offer lower down payments and flexible credit requirements to home buyers who may not qualify for a conventional mortgage. Appraisals for FHA loans not only protect the buyer and lender from purchasing a home for more than it’s worth but also ensure that the home meets the FHA eligibility requirements.

These appraisals are typically valid for 120 days, but can be extended for up to 240 days.

USDA loan

The US Department of Agriculture backs USDA loans to bring competitive mortgage prices to rural markets. They are available to low- to moderate-income families purchasing a home in an eligible site.

Appraisals for USDA loans are valid for 150 days, and they can be extended only once for up to 240 days from the effective date of the original appraisal report.

Fannie Mae (FNMA) and Freddie Mac (FHLMC) loans

Fannie Mae and Freddie Mac are government-sponsored enterprises (GSE) that buy and guarantee mortgages. Although neither Fannie Mae nor Freddie Mac issue loans directly, they help keep mortgages affordable by creating liquidity for banks and lenders.

Fannie Mae and Freddie Mac accept appraisals for 12 months from the effective date, but an appraiser must update it after four months.

What do you do if your appraisal runs out?

If your appraisal is no longer valid, you may not have to start from scratch. Review the conditions of your loan to see if you’re eligible for an alternative. 

Appraisal extension

If your appraisal is reaching the end of its accepted date, you may be able to get an extension. This option simply lengthens the window that your appraisal is valid without changing any of the original conditions. Speak to your lender to see if you qualify for this solution.

Appraisal update

Even if you’re not eligible for an extension, you may be able to get an update. This option requires that an appraiser review the market conditions to ensure that the original appraisal is still accurate. If the appraiser deems the conditions of your first appraisal satisfactory, this option could save you the hassle of getting a new appraisal.

Recertification of value (ROV)

Sometimes a homeowner is required to make repairs before they can sell their home. An appraiser will condition those repairs into an appraisal report and must confirm that the repairs were made before the appraisal is final. The recertification of value ensures the homeowner made the required fixes and that the property is worth the original value of the appraisal.

Other options

If none of these conditions are met, your lender may require a new appraisal. While no one wants to pay twice for the same service, there may be a cheaper alternative. Desktop appraisals offer the same valuation and are typically faster and cheaper than their traditional alternatives. 

The clock is ticking on how long your appraisal is good for

So, how long is a home appraisal valid? While there’s no easy answer to this question, the simple fact is that home appraisals are only relevant for a short period of time. Talk to your real estate agent or mortgage lender about what you can do to make sure you get the most out of your current one.