Does New Construction Need a Full Appraisal on a Conventional Loan?

The Quick Read: Usually, yes. A newly built or proposed home financed with a conventional loan normally needs a full appraisal by a licensed appraiser, with an on-site visit and the standard report form for the property type. The narrow exception is an appraisal waiver, which generally requires an earlier “as is” appraisal of that same home on file. A brand-new build that has never been appraised rarely has one. The lender, not you, decides whether any waiver gets used.

Why a Brand-New Home Isn’t Exempt

A new home needs an appraisal because the lender needs an independent opinion of value, and the builder’s sticker price is not that. The appraisal is the lender’s check that the property is worth enough to back the loan. The builder sets a price based on costs, incentives and goals. An appraiser sets a value based on comparable sales.

Many buyers assume a new home sold by a builder is somehow pre-valued. It isn’t. Fannie Mae even has its own comparable-sales rules for new subdivisions, because builder pricing doesn’t replace the valuation requirement. (Fannie Mae appraisal requirements).

You can also see why the answer matters to you. The gap between the appraised value and the contract price drives your loan-to-value ratio (LTV), which is the loan amount divided by the home’s value. That ratio affects whether the conventional loan works and on what terms.

What Is the Exception, and Why Is It So Narrow?

The exception is called “value acceptance.” It is Fannie Mae’s term for an appraisal waiver. Fannie Mae’s automated underwriting system, Desktop Underwriter, can offer it on some files. The Fannie Mae Selling Guide says that when it doesn’t, an appraisal on the correct form is required.

For new construction, the same guide section says the system may offer value acceptance when an existing “as is” prior appraisal of the subject property is on file. Generally, that earlier appraisal has to be found in Fannie Mae’s data for the waiver to be considered.

Here is a real-world picture of when that happens. A builder finishes a house, a first buyer signs a contract, and that buyer’s loan gets a full appraisal. The buyer then falls out. A second buyer comes along, and the earlier appraisal now exists on file. That second file might be a candidate.

A home that has never been appraised has no such record. So the practical read is simple: if you are buying a brand-new build, expect a full appraisal. That conclusion is an inference from the two rules above. The guide doesn’t spell it out in one sentence.

Loans on proposed construction are treated differently from loans on existing homes, and an appraisal is the default.

Who Decides: You or the Lender?

The lender decides. A waiver is an offer made to the lender through the underwriting system, and the lender chooses whether to use it. If the lender passes, it follows the standard appraisal requirements. (Fannie Mae value acceptance).

That means you can’t demand a waiver, even if one is offered. It also means two lenders can treat the same new build differently. Some lenders go further and require a full appraisal on all new construction, with no reduced options. That is a lender policy. It isn’t an agency rule, but it still governs your file if you are working with that lender.

Across the wholesale programs Lendmire places conventional files with, a new build with no prior appraisal is handled as an appraisal file from the start. It’s the safer assumption when you are budgeting and planning your contract timeline.

Full Appraisal, Waiver or Something in Between?

The table below shows how each format generally fits a new build. It reflects agency rules in general terms, and the lender’s own policy can be stricter.

One caution on the hybrid row. Treat it as a strong signal, and let your loan officer confirm it for your file.

Some loan types are ineligible for waivers altogether. Construction-to-permanent loans, renovation products and two- to four-unit homes are commonly listed that way.

How a Home That Doesn’t Exist Yet Gets Valued

For new or proposed construction, the appraisal may be based on the plans and specifications, or on a comparable existing model home. That is how an appraiser can put a number on a house that isn’t finished. Older Fannie Mae guidance said this, and the content has since been reorganized, so your lender will confirm the current wording.

You will hear three terms from your lender or builder:

• As-is appraisal: the value of the property in its current state. For a finished home, this is the standard report.
• Subject-to-completion appraisal: the value of the home as it will be once finished according to the plans. Used when the home isn’t done at appraisal.
• Completion report: a follow-up confirming the work was finished as described.

Comparable sales are often the hard part. New subdivisions may have few resales nearby, so the appraiser leans on other new sales and the builder’s own contracts. Upgrades and options also count only to the extent the market supports them. A kitchen upgrade doesn’t add its full cost in value just because you paid for it. That’s a general principle, and your appraiser will weigh each item.

The appraiser also rates the home’s condition and quality using standard ratings, in factual terms.

Step by Step: What Happens From Contract to Closing

Here is the usual sequence on a conventional purchase of a new build.

1. Contract and application. The lender orders the appraisal through an independent process. You don’t pick the appraiser.

2. Automated finding. The lender runs your file through the underwriting system. It either offers a waiver or calls for an appraisal.

3. Appraisal. For a finished home, it’s an on-site visit. For an unfinished one, it’s based on plans, specs or a model.

4. Completion check. If the home wasn’t finished at appraisal, the lender must verify completion.

5. Copy to you. You receive the appraisal. More on your rights below.

6. Closing. The loan closes once the lender is satisfied on value and completion.

Step 4 has more options than most buyers expect. Fannie Mae’s completion rules allow the completion form to be done from an on-site inspection or with virtual inspections, digital photos or site videos, as long as the documentation includes visually verifiable exhibits. Fannie Mae also permits attestation letters in place of the form, including a borrower and builder attestation for new or proposed construction. The completion paperwork stays in the loan file for the life of the loan.

The practical catch: a completion certification can be a condition to close. If the builder runs late finishing the home, closing can be delayed too. Build that into your plans, especially if a lease end date is involved on your side. Some items, like landscaping, can be finished after closing under certain conditions. I won’t state a day count, because the current rule should be checked with your lender.

Your Rights on the Appraisal Report

You are entitled to a free copy of any appraisal or written valuation developed for a first-lien home loan application. The CFPB’s coverage factsheet says the lender must send written notice of that right after receiving the application. If no valuation was developed, none has to be created.

Delivery has its own timing. Copies must go to you promptly after the appraisal is completed, and ahead of closing. (CFPB delivery factsheet) The rule’s origin is in the Federal Register final rule, which explains the notice timing.

Read the report. It’s an opinion of value and condition, and errors do happen.

What If the Appraisal Comes In Low?

A low appraisal is the real risk with a new build, and it’s worth planning for before you sign. If the appraised value falls below the contract price, the loan is sized off the lower number. Your LTV rises, so you may have to renegotiate the price or bring more cash.

Consider a scenario with plain percentages. You contract for a new home and plan to put 5% down on a standard purchase. If the appraisal lands a few percent under the price, the lender looks at the lower value. Your 5% down is now less than 5% of the true value basis. The loan may no longer fit the 95% leverage limit, and the gap needs to be covered. Your loan officer can run the exact numbers on your file. (First-time buyers on a fixed rate may reach 97% LTV, subject to lender guidelines and full file review.)

Here is how a low appraisal usually plays out:

• Ask the builder to reduce the price. Builders sometimes do, particularly if the appraisal reflects comparable sales.
• Cover the gap in cash. It means bringing more to closing than planned.
• Ask for a review. If the appraiser missed comparable sales or details, your lender can request a reconsideration.
• Negotiate incentives. Some builders offer concessions instead of a price cut, though how those are treated varies by program.
• Walk away. Your contract’s appraisal contingency, if you have one, may protect your deposit. Read it before you sign.

And one point on mortgage insurance. If you put less than 20% down, mortgage insurance applies above 80% LTV. You can ask to cancel at 80% of the original value with good payment history, and the servicer must end it automatically at 78%. A low appraisal can change where you start on that scale. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.

Does the Appraisal Replace a Home Inspection?

No. The appraisal is an opinion of value and condition written for the lender. It doesn’t test the plumbing, check the roof or look for builder defects. Hire your own inspector, even on a brand-new house. New doesn’t mean flawless.

Builder Lenders, Credit and Other Practical Points

Builders often steer buyers toward a preferred lender. You aren’t required to use it, and comparing the Loan Estimate from a second source is reasonable. Whichever lender you use, the appraisal is ordered independently, so a builder incentive tied to its lender doesn’t change the valuation rules.

On the credit side, the wholesale conventional programs Lendmire places files with generally start at a 620 decision score, with a total debt ratio ceiling of 50% on automated findings. Those are program floors, not promises. Subject to lender guidelines and a full review of your file, a borrower above them still has to clear the property, the appraisal and the completion check.

If your new home is in a condo or planned unit development, the project has to meet separate project standards. That is a different review from the appraisal.

Your home may also be a manufactured home. Fannie Mae requires market-based valuations for those, and new manufactured homes follow the new-construction completion rules.

One more note. The content of your report may look different from older ones, but the core question of the appraiser stays the same.

Key Terms Defined

Appraisal waiver (value acceptance): an offer, made to the lender through an automated system, to skip the appraisal on an eligible loan.

LTV (loan-to-value): the loan amount divided by the home’s value.

Subject-to-completion appraisal: an appraisal of the home’s value as it will be once built to plan.

Completion report (Form 1004D): a document confirming the work was finished, which can be completed in person or virtually.

Attestation letter: a signed statement, such as one from you and the builder, confirming the home was completed.

Next Step

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. You can start with Lendmire’s conventional loan programs, and if your new build runs into a low value, Lendmire’s piece How a Low Appraisal Resizes a New Construction Jumbo Loan Down Payment shows how the same issue plays out at higher loan sizes.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae appraisal requirements

2. Fannie Mae Selling Guide, B4-1.4-10 Value Acceptance

3. Fannie Mae Value Acceptance

4. Fannie Mae Selling Guide, B4-1.2-05 Verifying Completion

5. CFPB ECOA Valuations Rule transaction coverage factsheet

6. CFPB delivery factsheet

7. Federal Register final rule