How Long Is an Appraisal Good for on a Conventional Loan?

A home appraisal is a professional, unbiased assessment of a property’s market value. Lenders require this valuation as a standard part of the conventional loan process to ensure the loan amount is appropriately secured by the property’s worth. This step protects the lender from lending more than the home is truly worth and helps confirm the property is adequate collateral for the mortgage.

Standard Appraisal Validity Period

For conventional loans, an appraisal is generally considered valid for 90 to 120 days. This period begins from the effective date the appraisal report is issued. Fannie Mae and Freddie Mac, major players in the secondary mortgage market, often set guidelines that influence these periods. These government-sponsored enterprises (GSEs) generally consider appraisals valid for up to 12 months, but they often require an appraisal update after 120 days or four months. This ensures that the property’s value remains current relative to the loan’s closing date.

Factors Affecting Appraisal Validity

Several circumstances can influence or even shorten an appraisal’s validity, potentially necessitating an update sooner than the standard period. Significant changes in local real estate market conditions, often referred to as market volatility, can render an older appraisal unreliable. Rapid price increases or decreases mean that a home’s value might change substantially within a few months, requiring a more recent assessment to reflect current trends. Lenders may request a new appraisal if they perceive the market has changed considerably since the initial valuation.

Changes to the property’s physical condition also impact appraisal validity. Major damage, such as a fire or flood, or significant renovations that alter the home’s size, features, or overall quality, would require a re-evaluation of its market value. Furthermore, lender-specific overlays, which are internal policies stricter than general industry standards, can affect how long an individual lender accepts an appraisal. While 90 to 120 days is common, some lenders might have more conservative internal requirements.

What Happens When an Appraisal Expires

If a conventional loan does not close before the appraisal’s validity period ends, the practical implication is that the loan process cannot proceed. The appraisal is a foundational document for the lender to approve the mortgage, and an expired appraisal means the property’s value is no longer considered current for underwriting purposes. Consequently, the lender will require either an updated appraisal or a completely new full appraisal.

This requirement can lead to delays in the loan closing timeline, extending the period between loan application and funding. Borrowers may also incur additional costs for the updated or new appraisal, which typically range from $300 to $600 for a standard full appraisal, though complex properties can cost more. There is also a risk that a new appraisal could result in a different, potentially lower, valuation. A lower appraised value might impact the loan terms, requiring the borrower to bring more money to closing or renegotiate the purchase price.

Steps for an Updated Appraisal

If an appraisal needs an update due to expiration or changed circumstances, the lender typically initiates the process. This involves ordering either an “appraisal update” or a new full appraisal. An appraisal update is often a less extensive and less expensive process than a full new appraisal. It typically involves the appraiser reviewing updated market data and possibly conducting an exterior inspection to confirm that the property’s value has not declined since the original report.

A full new appraisal may be necessary if a significant amount of time has passed, often more than 12 months, or if there have been substantial changes to the property. Ideally, the original appraiser completes the update, as they are already familiar with the property. However, lenders may permit a substitute appraiser to perform the update. While an update is generally quicker than a brand-new appraisal, borrowers should still anticipate some timeline for the report’s completion and factor in the associated costs.