A comprehensive guide to appraisal process guide from NMHL mortgage experts.
NMHL Editorial Team2026-02-188 min read
<p>An appraisal is a professional, unbiased estimate of a property's market value performed by a state‑licensed appraiser. Lenders rely on this figure to protect themselves from loan‑to‑value (LTV) risk. For borrowers, the appraisal confirms that the price you’ve agreed to pay reflects current market conditions.</p>
<p>Key data points:</p>
<ul>
<li>Typical LTV limits: 80% for conventional loans, 95% for FHA loans, and 97% for VA loans.</li>
<li>Minimum credit score for most conventional loans: 620; for FHA, 580 with 3.5% down.</li>
<li>Average appraisal turnaround time: 1–3 business days.</li>
</ul>
<p>By understanding these thresholds, you can anticipate how the appraisal will affect your loan program choice.</p>
<p>Below is a typical timeline for a conventional purchase with NMHL:</p>
<ol>
<li><strong>Day 0</strong> – Offer accepted; escrow opened.</li>
<li><strong>Day 1–2</strong> – NMHL orders appraisal through its approved vendor network.</li>
<li><strong>Day 3–5</strong> – Appraiser schedules on‑site inspection (30–45 minutes).</li>
<li><strong>Day 6–8</strong> – Appraiser compiles data, runs adjustments, and submits the report.</li>
<li><strong>Day 9</strong> – NMHL underwriter reviews the report; borrower receives the outcome.</li>
</ol>
<p>Delays can happen if the property is in a remote area, if the appraiser needs additional access (e.g., locked attic), or during high‑volume seasons (spring buying surge). Communicating early with your NMHL loan officer can mitigate these risks.</p>
<p>Appraisers use three primary approaches, selecting the one that best fits the property type:</p>
<ul>
<li><strong>Sales Comparison Approach</strong> – Most common for single‑family homes. The appraiser selects 3–5 comparable sales (comps) that are recent (within 6 months), geographically close (within 0.5 miles), and similar in size (±15%). Adjustments are made for differences such as an extra bedroom (+$7,000) or a newer roof (+$4,500).</li>
<li><strong>Cost Approach</strong> – Used for new construction or unique properties. It adds the land value to the cost to rebuild the home, minus depreciation.</li>
<li><strong>Income Approach</strong> – Applied to rental or investment properties, based on potential rental income and capitalization rates.</li>
</ul>
<p>For example, a 2,200‑sq‑ft home in a suburban market sold for $350,000 last month. The appraiser finds three comps: $340,000 (1,900 sq‑ft), $360,000 (2,300 sq‑ft), and $355,000 (2,150 sq‑ft). After adjusting for size, condition, and a recent kitchen remodel (+$8,000), the appraiser may arrive at an opinion of $352,000.</p>
<p><strong>My home inspection is the same as an appraisal.</strong> False. An inspection looks for defects; an appraisal estimates market value. Both are required for a well‑rounded purchase.</p>
<p><strong>If the appraiser says $300,000, that’s the final price.</strong> Not necessarily. The appraisal is an opinion, not a binding contract. You can request a reconsideration of value if you have new, credible comps.</p>
<p><strong>All appraisals are low in a hot market.</strong> While rapid price appreciation can outpace appraisal data, many appraisers now use automated valuation models (AVMs) to supplement comps, reducing low‑ball outcomes.</p>
<p>Understanding these myths helps you set realistic expectations and plan contingencies.</p>
<p>A low appraisal is a pivotal moment. Here are four actionable strategies:</p>
<ol>
<li><strong>Renegotiate the purchase price.</strong> If the seller agrees to a $5,000 reduction, your LTV improves, potentially lowering your interest rate.</li>
<li><strong>Increase your down payment.</strong> Cover the $10,000 shortfall to keep the loan amount within the lender’s LTV limits.</li>
<li><strong>Submit a Reconsideration of Value.</strong> Provide the appraiser with additional comps, recent permits, or a contractor’s estimate of upgrades. NMHL’s appraisal liaison can help you compile this package.</li>
<li><strong>Walk away.</strong> If your contract includes an appraisal contingency, you can exit without penalty.</li>
</ol>
<p>NMHL’s <strong>Appraisal Advocacy Service</strong> assists borrowers in preparing a strong reconsideration packet, often turning a low appraisal into a neutral or higher value.</p>
<p>NMHL offers several tools that intersect directly with the appraisal stage:</p>
<ul>
<li><strong>NMHL Pre‑Approval Engine</strong> – Generates a conditional commitment that includes an appraisal waiver for loans under $250,000 in select markets, saving time and cost.</li>
<li><strong>Veteran Advantage Program</strong> – VA loans often qualify for a streamlined appraisal, reducing the average turnaround to 48 hours.</li>
<li><strong>Self‑Employed Income Verification Suite</strong> – Provides lenders with robust documentation, allowing the underwriter to focus on the appraisal rather than income gaps.</li>
</ul>
<p>When you work with an NMHL loan officer, they’ll automatically evaluate whether you qualify for any of these programs, ensuring the appraisal step is as efficient as possible.</p>
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Frequently Asked Questions
An appraisal measures a property's market value by analyzing recent comparable sales, the condition of the home, and local market trends. The appraiser then provides a dollar‑amount opinion that the lender uses to set loan‑to‑value ratios and determine eligibility.
Most appraisals are completed within 1–3 business days after the on‑site inspection, though busy seasons or remote locations can extend the timeline to up to 7 days. NMHL tracks vendor performance to keep turnaround times on target.
Lenders typically select appraisers from an approved panel to ensure independence and compliance with regulations. However, NMHL can accommodate a borrower‑requested appraiser if the lender approves the professional’s credentials.
A low appraisal triggers several options: renegotiate the price, increase your down payment, submit a reconsideration of value with additional comps, or walk away if you have an appraisal contingency. NMHL’s appraisal specialists can guide you through each choice.
Yes, the appraisal fee—typically $300‑$600 for a single‑family home— is paid by the borrower at closing. Some NMHL loan programs, such as the <strong>NMHL Pre‑Approval Engine</strong>, may waive the fee for qualifying low‑value transactions.
The appraisal influences the loan‑to‑value ratio. A lower LTV (e.g., 75% instead of 80%) can qualify you for better rates, while a higher LTV may result in a higher interest rate or require mortgage insurance. NMHL’s rate‑lock tools factor in the appraised value to lock the most favorable rate.
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