Can I Use an Appraisal From Another Lender?

A home appraisal provides an unbiased estimate of a property’s market value. This valuation protects both the lender and borrower by ensuring the loan amount aligns with the property’s worth. A common question is whether an appraisal obtained for one lender can be used for another. The answer depends on specific circumstances and regulatory guidelines.

The General Rule of Appraisal Portability

Generally, a new appraisal is required when securing a mortgage or refinancing, even if a recent appraisal exists from a different lender. An appraisal is ordered for a specific lender and loan purpose, making it unique to that engagement. The lender relies on this valuation to confirm the property’s value supports the loan amount. This practice is rooted in the regulatory framework governing real estate lending.

Why Lenders Typically Require New Appraisals

Lenders require new appraisals due to several factors, including risk management and strict regulatory compliance. Financial institutions need to be confident in the valuation supporting their loans, and this confidence is achieved by ordering appraisals through their own approved channels. Regulations, such as those stemming from the Dodd-Frank Act and interagency appraisal guidelines, mandate appraiser independence and outline how lenders must manage the appraisal process to prevent conflicts of interest and ensure accurate valuations.

An appraisal’s scope and purpose are specific to the transaction for which it was ordered. A previous appraisal may not align with the new lender’s requirements, current market conditions, or the specific loan product. Lenders maintain their own panels of approved appraisers and internal review processes to ensure compliance with their policies and regulatory standards. They are responsible for the appraisal’s quality and compliance.

Scenarios for Appraisal Reassignment or Reuse

While a new appraisal is typically required, an existing appraisal might be accepted by another lender in limited situations. The most common is an appraisal reassignment. This occurs when the original lender formally assigns the appraisal to a different lender, often if a borrower switches lenders during the loan process. This is a formal inter-lender process, not a direct borrower transfer.

For reassignment, the appraisal must be for the same borrower, property, and transaction type. There is also a strict timeframe, often 90 to 120 days from the original appraisal’s effective date, for the new lender to accept it. Even then, the new lender must agree to accept the reassigned appraisal and ensure it meets their internal standards and regulatory requirements.

Government-backed loans, such as FHA and VA, have specific provisions for appraisal transferability. FHA appraisals are tied to a case number and can sometimes be transferred between FHA-approved lenders for the same borrower and property. This requires specific procedures and the new lender’s acceptance. The original lender must transfer the appraisal at the borrower’s request within five business days if reimbursed for costs. VA appraisals are tied to the original veteran and can be transferred to another lender for that same veteran, but not to a new veteran buyer.

What to Expect When Transferring or Reusing an Appraisal

When attempting to reuse an appraisal, communicate effectively with your new lender. Inform them immediately that a recent appraisal exists, but do not assume it will be automatically accepted. The new lender will review the existing appraisal report.

Even if reassignment is possible, the new lender might require updates to the appraisal. This could include a new effective date or an interior inspection if the original was exterior-only, especially if market conditions have changed or the appraisal is nearing expiration. Borrowers should provide necessary documentation, such as the original appraisal report and a formal reassignment request from the initial lender. While potentially saving the cost of a new appraisal, there might still be administrative fees or charges for updates or reviews. The final decision rests solely with the new lender, based on their policies and risk assessment.