The Quick Read: It depends on the loan program and the type of repair. Fix anything that affects safety, soundness or structure, because those defects can stop a conventional refinance. Cosmetic wear usually doesn’t have to be fixed. Skip big remodels done only to raise the value, since an appraiser may not credit them dollar for dollar. FHA Streamline and VA streamline refinance loans generally skip the appraisal, so the question mostly disappears.
What Does the Appraiser Actually Check?
The appraiser rates the home’s condition and estimates its value. That is not a home inspection. Appraisers report what they can see. They are not hunting for hidden defects.
Refinance savings and break-even estimate
The starting figures are an example value with a balance in proportion and a placeholder for costs. Replace them with yours, and enter the current rate from your statement.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $245,000 current balance, a current rate you enter and a remaining term seeded at twenty-five years, closing costs seeded at $5,000 as an editable placeholder (not a fee quote) and rolled into the new loan, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The new rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a refinance quote; a refinance is priced by the lender at lock, and the current rate, the remaining term and the closing costs are figures you enter. The current payment is estimated from the balance, the current rate and the remaining term; the break-even divides the closing costs by the monthly saving and ignores the interest effect of a longer term. On the VA IRRRL the funding fee is added to the loan unless the veteran is exempt. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages; Lendmire is a broker, never the lender.
Conventional appraisals rate condition on a scale from C1 to C6 and quality from Q1 to Q6. C1 is a brand-new home. C6 is a home with serious problems. Two outcomes matter to you:
- As is: the value reflects the home in its current condition. Worn carpet or tired paint may lower the value opinion, but they don't block the loan.
- Subject to repairs: the appraiser reports a problem that must be fixed first. The lender then needs proof of completion before the loan can be delivered.
The first outcome costs you some value at worst. The second can stop the loan until the work is done.
Which Repairs Are Required and Which Are Optional?
Required repairs involve safety, soundness or structural integrity. Fannie Mae's Selling Guide says a loan on a C6-rated property is not eligible for sale to Fannie Mae. C6 means defects severe enough to affect safety, soundness or structure. They must be repaired to at least a C5 condition before the loan is sold.
Here is a simple three-bucket way to sort your list.
| Bucket | Examples | What to do |
|---|---|---|
| Must fix | Active roof leak, exposed framing, standing water, significant plumbing leak | Fix before the appraisal |
| Fix if cheap | Loose handrail, missing smoke detector, peeling paint, a broken fixture | Fix if it's inexpensive |
| Skip | Kitchen remodel, new flooring throughout, landscaping redesign | Skip for the appraisal |
The "must fix" bucket is about eligibility. The other two are about impression and value. Keep those two questions apart.
Does It Matter Whether the Loan Is Fannie Mae or Freddie Mac?
Yes, because the two agencies draw the line in different places. Across the wholesale programs I place files with, most conventional loans follow one of these two rulebooks, and the difference shows up on borderline houses.
Fannie Mae blocks C6 only. Freddie Mac is stricter. Its guide says a property with deficiencies consistent with an "as is" C5 or C6 rating is not acceptable collateral until every underlying issue is cured. Freddie Mac's examples include:
- Active roof leaks
- Incomplete remodels, such as missing or badly damaged cabinets, countertops or plumbing fixtures
- Exposed wall framing
- Standing water or significant plumbing leaks
So the same house can face different demands depending on which agency ends up owning the loan. Don't guess. Ask your loan officer which rulebook applies before you spend anything.
An unfinished project deserves its own warning. Half-done remodels land in the worst bucket. A bathroom with no fixtures is a condition problem, not a style problem. Finish it or leave the project for after closing.
When Does the Question Not Matter at All?
If you hold an FHA or VA loan, you may not face an appraisal.
The FHA Streamline is available when the loan you're refinancing is already FHA-insured. Across the programs I arrange, it generally means no appraisal and a limited credit review, with a net tangible benefit required. HUD's Streamline page confirms the FHA-to-FHA requirement and points lenders to Handbook 4000.1. FHA rate-and-term refinances with an appraisal can reach 97.75% LTV (loan-to-value, the loan as a percentage of the home's value).
The VA streamline refinance works similarly for existing VA loans. VA Pamphlet 26-7 says a VA streamline refinance generally needs no appraisal, credit information or underwriting. Two caveats:
- A lender can still order an appraisal to meet its own requirements. A customary and reasonable appraisal expense can be charged to you and included in the loan.
- Credit underwriting kicks in if the loan being refinanced is 30 or more days past due, or if the monthly payment will rise 20 percent or more.
Typical IRRRL terms include a 0.5% funding fee unless you're exempt, and seasoning of the later of 210 days and 6 payments. A VA cash-out refinance is different. The pamphlet says it requires a full appraisal, credit information and underwriting. Programs vary by lender, and every figure here is subject to lender guidelines and full file review.
Skipping the appraisal removes both the appraisal cost and the repair exposure. If you qualify for a streamline, that is a real advantage. You can compare these and other refinance programs on the same home to see which fits.
How Does Your Refinance Goal Change the Answer?
Your goal decides how much the value number matters.
| Goal | How much value matters | Repair approach |
|---|---|---|
| Rate-and-term | LTV and mortgage insurance | Fix eligibility issues; skip upgrades |
| Cash-out | Cash available depends on value | Fix defects; value gains count more |
| Drop mortgage insurance | Value must support 80% LTV or lower | Documented, visible fixes can matter |
Rate-and-term. A conventional rate-and-term refinance can reach 95% LTV on a one-unit primary residence. Mortgage insurance applies above 80%. A lower appraised value raises your LTV, which can change pricing tiers and insurance. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Cash-out. Conventional cash-out is capped at 80% LTV on a one-unit primary residence. A lower value shrinks the cash you can take. Value gets more weight here, though a major remodel still rarely pays back in full. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Removing mortgage insurance. Insurance can be cancelled at 80% of the original value, subject to payment history, no subordinate liens and no decline in value. The servicer must terminate it automatically at 78% under the Homeowners Protection Act. A refinance appraisal can also be a path out of insurance, so a documented, visible fix can matter more there.
What Happens If You Don't Fix a Required Item?
The lender holds the loan until the item is cured. Here is the usual sequence:
1. The appraiser inspects and rates the home.
2. The report is completed "subject to" repairs.
3. You complete the work.
4. Proof is submitted. It is usually a completion report (Form 1004D) or an inspection report plus invoices.
5. The lender clears the condition and the loan moves toward delivery.
Each step adds time, and repair delays can complicate the loan timeline. Plan the work with your loan officer so it doesn't. Without an appraisal, Fannie Mae's FAQ notes, the lender can't use Form 1004D, but any repair needed for eligibility must still be finished before the loan is sold.
Repair First or Refinance First?
Repair first when the defect could block the loan. Refinance first when the work is big and you'd rather fold it into the loan.
Some programs finance repairs as part of the loan. Fannie Mae's HomeStyle and Freddie Mac's CHOICERenovation are examples. Freddie Mac's FAQ says CHOICERenovation can make C5 or C6 properties eligible if the renovation cures every issue, with the appraisal done "subject to" completion. That suits bigger work.
Be careful with a HELOC. A home equity line used for remodeling generally pushes the new loan toward cash-out treatment. On a limited cash-out refinance, only a subordinate lien used to buy the property can be paid off and included. Cash back is limited too: Fannie Mae caps it at the greater of 1% of the new loan's unpaid principal balance or $2,000.
One more option for disaster damage: Fannie Mae has special limited cash-out flexibilities for repairs after a disaster.
Three Scenarios
The cosmetic house. The paint is faded, the carpet is worn and the landscaping is tired. Nothing affects safety or structure. The appraisal comes back "as is." Spend little. A deep clean and tidy yard cost less than a repaint and shape the first impression.
The leaking roof. A water stain on the ceiling and a soft spot in the roof deck. This is a soundness issue. Expect a "subject to" appraisal, and with Freddie Mac an active leak is a listed example. Fix it first, keep the invoices and ask about proof of completion.
The dated kitchen. Cabinets are 1990s but sound, and everything works. No eligibility problem. Skip the remodel. If you want a new kitchen, a renovation program may fit better than paying cash before an appraisal that may not reward the full spend.
Cheap Ways to Help the Appraisal
None of these guarantees a higher number. They help the appraiser see the home clearly.
- Make sure systems and fixtures work: lights, faucets, doors and appliances that convey.
- Fix small, visible items such as loose handrails, cracked outlet covers and leaking faucets.
- Clean and declutter. This shapes impression, not square footage.
- Keep a list of upgrades with dates and receipts, and give it to the appraiser.
- Note permitted work. Unpermitted work can complicate things, so ask your lender how it's treated.
Mistakes to Avoid
- Spending on a remodel before asking the lender what's required.
- Ignoring a safety or structural defect and hoping it won't be noticed.
- Starting a project you can't finish before the appraisal.
- Assuming fixes will raise the value dollar for dollar. No primary source supports that.
- Treating the appraiser like an inspector and expecting hidden defects to be caught.
What If the Appraisal Comes Back Low or With Conditions?
You have options, and the first is a copy of the report. Under the ECOA valuations rule, the lender must tell you shortly after application that you'll get a copy of any appraisal. The copy arrives free and promptly after the appraisal is completed, though exact timing varies by file and lender. You can waive the timing but not the copy. The lender can charge a reasonable fee for the appraisal itself.
Then follow these steps:
1. Read the report for factual errors: wrong square footage, bedroom count or missing upgrades.
2. If you find an error or a missing comparable sale, ask your lender for a reconsideration of value. The request goes through the lender, not to the appraiser. Interagency guidance notes that deficiencies can be identified through consumer-provided information.
3. If conditions were attached, fix them and submit proof.
4. If the value is simply lower than hoped, rerun the numbers. A lower value may shift the LTV tier or mean waiting.
Questions to Ask Your Lender Before You Spend
- Which condition rating blocks this loan, and who owns it?
- Is the appraisal likely to be "as is" or "subject to"?
- What proof of completion do you accept?
- Will an appraisal be required at all on this program?
- How do repairs interact with my closing timeline?
Key Terms Defined
As is: An appraisal value based on the home's current condition.
Subject to repairs: An appraisal value that assumes listed repairs are finished first.
Condition rating (C1–C6): The appraiser's score for the home's physical condition. C6 is the worst.
Form 1004D: The completion report that proves required repairs were finished.
LTV: The loan amount as a percentage of the home's value.
Reconsideration of value: A request, made through the lender, to review an appraisal you think is wrong.
Frequently Asked Questions
Do I have to fix everything the appraiser notices?
No. Fannie Mae permits "as is" appraisals when conditions don't affect safety, soundness or structural integrity. Wear and deferred maintenance can lower the value opinion without blocking the loan. Only items tied to eligibility must be cured first.
Can I refinance with a known roof problem?
Sometimes, depending on severity and program. An active leak is a listed Freddie Mac deficiency. Minor wear may pass. A major soundness issue usually means repair first, or a renovation program that finances the fix. Your lender decides after reviewing the appraisal.
Does painting raise my appraisal?
Not reliably. Fresh paint covers a visible flaw and improves impression, but it rarely adds value dollar for dollar. Peeling paint can be a minor deduction, so a touch-up is worth considering if it's cheap.
Can I use the new loan to pay for repairs?
Possibly. Renovation programs such as Fannie Mae's HomeStyle and Freddie Mac's CHOICERenovation finance repairs within the loan. A limited cash-out refinance allows only incidental cash back, and a HELOC used for remodeling can push a loan toward cash-out treatment. Terms are subject to lender guidelines.
Do I need repairs on an FHA Streamline or VA IRRRL?
Generally not, since neither usually requires an appraisal. A VA lender may still order one under its own rules, and the cost can be charged to you. A VA cash-out refinance does require a full appraisal.
If you are weighing a refinance and want the break-even run on your own numbers, Lendmire can help you compare the programs on the same home. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. For a related decision, see Lendmire's piece Should You Refinance Before Selling Your Primary Home?. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B4-1.3-06: Property Condition and Quality of Construction
3. HUD Single Family Streamline
4. VA Pamphlet 26-7, Chapter 6
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Can You Do a Cash-Out Refinance With No Seasoning Period? · Can You Close a Cash-Out Refinance Without Bringing Cash? · How a Lender Uses the Appraisal to Size a Cash-Out Refinance
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.