Last reviewed: November 3, 2026
Quick answer A condo appraisal values your unit, mostly by comparing recent sales, and the lender bases your loan on the lower of the appraised value or the price. If a Chicago condo appraises low, you cover the difference in cash, renegotiate, or ask for one reconsideration of value with up to five better comparable sales. The appraisal report format is also changing; see what UAD 3.6 means for condo buyers. Fannie Mae can waive the appraisal on some condo loans through value acceptance, but not for co-ops or for prices or values of $1 million or more. Fannie Mae appraisals can be up to 12 months old at closing (with an update after 4 months); FHA appraisals are good for 180 days. Since November 2, 2026, new appraisal reports submitted to Fannie Mae and Freddie Mac must use a single redesigned report (UAD 3.6) instead of the old forms, including the condo form 1073, though lenders with a temporary exception can keep using the old format until May 19, 2027.
This is part of our Chicago condo loans guide.
Is the appraisal the same as the building review?
No. They are two separate checks, and a condo loan needs both:
- The appraisal values your individual unit for the lender. It answers: is this unit worth what you are paying?
- The project review decides whether the lender can finance any unit in the building at all, based on the association’s budget, reserves, insurance, litigation and ownership mix. See warrantable vs. non-warrantable condos and our condo questionnaire guide.
A unit can appraise at full price in a building that fails the review, and a building can pass the review while your unit appraises low. Starting both early saves time.
How does an appraiser value a Chicago condo?
The core of a condo appraisal is the sales comparison approach: the appraiser picks recently sold units that are similar to yours and adjusts for differences such as size, floor, view, parking, condition and association fees. Fannie Mae’s rules (Selling Guide B4-1.3-08) require:
- At least three closed comparable sales, generally from the last 12 months. Older sales can be used if the appraiser explains why.
- For a new or newly converted condo project: at least one settled sale from inside the subject project (a resale not involving the developer is preferred), at least one from outside it, and a third from either. If your unit is among the first to sell, the appraiser can use two pending sales in the project plus at least three settled sales from other projects.
- For a small new project of 2 to 20 units with no settled or pending sales: sales from competing projects of similar size and type, with an explanation of market acceptance.
- Builder sales verified with settlement statements.
In large Chicago high-rises, the best comparables are usually other units in the same building, which makes the building’s recent sales and any concessions especially important. For new buildings, see our new construction guide.
What happens if the condo appraises low?
For a purchase, Fannie Mae divides the loan amount by the lower of the sales price or the current appraised value (Selling Guide B2-1.2-01). For a refinance, it uses the appraised value alone. So a low appraisal raises your loan-to-value ratio, which can push you into a higher mortgage insurance or pricing tier, or over a program’s maximum.
| Detail | Appraises at price | Appraises $20,000 low |
|---|---|---|
| Purchase price | $400,000 | $400,000 |
| Appraised value | $400,000 | $380,000 |
| Value the lender uses | $400,000 | $380,000 |
| Maximum loan at 90% LTV | $360,000 | $342,000 |
| Cash needed for down payment | $40,000 | $58,000 |
Your options after a low appraisal:
- Renegotiate the price with the seller, using the appraisal as evidence.
- Pay the difference in cash, or accept a higher loan-to-value ratio if your program allows it (see condo down payments and PMI).
- Ask your lender for a reconsideration of value (below).
- Use your contract’s appraisal or financing contingency, if it has one and the deadline hasn’t passed. Ask your attorney how your contract handles this.
Can you skip the appraisal on a condo?
Sometimes. Fannie Mae calls its appraisal waiver value acceptance (Selling Guide B4-1.4-10, updated June 3, 2026). Desktop Underwriter decides whether to offer it. Key rules:
- Eligible: one-unit properties, including condos; principal residences and second homes; investment property refinances; certain purchase, limited cash-out and cash-out refinance transactions with a DU Approve/Eligible recommendation.
- Not eligible: co-op units, two- to four-unit properties, manufactured homes, proposed construction and construction-to-permanent loans, HomeStyle renovation loans, leasehold properties, and transactions with a gift of equity.
- Not eligible when the purchase price or the estimated value given to DU is $1,000,000 or more.
- If the lender orders an appraisal anyway, it can no longer use the value acceptance offer.
Value acceptance waives the appraisal only. The building still has to pass the condo project review.
How do you challenge a low condo appraisal?
Fannie Mae (Selling Guide B4-1.3-12) and FHA (Mortgagee Letter 2024-07, required for case numbers assigned on or after September 2, 2024) both require lenders to offer a borrower-initiated reconsideration of value (ROV):
| Rule | Fannie Mae | FHA |
|---|---|---|
| Requests allowed | One per appraisal | One per appraisal |
| Alternative comparable sales | Up to five, with data sources such as MLS numbers | Up to five |
| Disclosure of the process | When the appraisal is given to you | At application and when the appraisal is given to you |
| Deadline | Before closing; not allowed after the loan closes | Must be resolved before closing |
A strong condo ROV points to closed sales the appraiser missed, ideally in the same building or a directly competing one, with similar size, floor, view, parking and assessments. Explain specifically which parts of the report are unsupported. Listings and pending sales carry less weight than closed sales.
How long is a condo appraisal valid?
| Program | Validity | Source |
|---|---|---|
| Fannie Mae | Must be within 12 months before the note date. If more than 4 months old, the appraiser must update it (exterior inspection and current market data, on Form 1004D) within 4 months of the note date. If the update shows the value declined, a new appraisal is required. | Selling Guide B4-1.2-04 |
| FHA | 180 days from the effective date; an appraisal update extends it to one year from the original effective date. No 30-day extension. | HUD Mortgagee Letter 2022-11 |
Refinancing later involves its own valuation and loan-to-value rules; see our condo refinance guide.
Do you get a copy of the appraisal?
Yes. Under Regulation B (12 CFR 1002.14), for a first-lien loan on a dwelling, the lender must tell you within three business days of your application that you have the right to a copy of all written appraisals, and must give you a copy promptly upon completion or three business days before closing, whichever is earlier. You can waive the three-day timing and receive it at or before closing, but the waiver must be given at least three business days before closing. If you waived the three-day timing and the loan doesn’t close, the lender must still send the copies within 30 days of deciding it won’t close (12 CFR 1002.14).
What changed on November 2, 2026?
Fannie Mae and Freddie Mac have replaced their appraisal report forms with a single, redesigned Uniform Residential Appraisal Report built on Uniform Appraisal Dataset (UAD) 3.6. The redesigned report has been in broad production since January 26, 2026, and became mandatory for new appraisal reports submitted on or after November 2, 2026 (Freddie Mac UAD FAQ); the legacy forms, including Form 1073 for condominium units and Form 1004, are being retired.
On September 30, 2026, the two agencies announced that lenders not ready by November 2 can apply for a policy exception and keep submitting legacy (UAD 2.6) appraisals through May 19, 2027. For a Chicago condo buyer, the practical effect is small: your report may look different, but the lender’s rules on value, comparables and reconsideration stay the same.
Frequently asked questions
What happens if my condo appraises below the purchase price?
For a purchase, Fannie Mae calculates the loan-to-value ratio on the lower of the sales price or the appraised value. A low appraisal means you either bring more cash, renegotiate the price, challenge the value through a reconsideration of value, or use any appraisal contingency in your contract.
Can I skip the appraisal on a Chicago condo?
Sometimes. Fannie Mae’s Desktop Underwriter can offer value acceptance (an appraisal waiver) on one-unit properties, including condos. Co-op units, two- to four-unit properties and transactions with a price or estimated value of $1,000,000 or more are not eligible, and the lender can’t use the offer if it has already obtained an appraisal.
How long is a condo appraisal good for?
For Fannie Mae, the appraisal must be dated within 12 months before the note; if it is more than 4 months old, the appraiser must complete an update. For FHA, an appraisal is valid for 180 days from its effective date, and an update extends it to one year.
Can I challenge a low appraisal?
Yes. Fannie Mae and FHA both require lenders to offer a borrower-initiated reconsideration of value. You get one request per appraisal, can submit up to five alternative comparable sales, and it must be resolved before closing.
Do I get a copy of the appraisal?
Yes. Under federal Regulation B, the lender must give you a copy of every appraisal promptly when it is completed or three business days before closing, whichever is earlier, unless you waive the timing and take it at or before closing.
Sources
- Fannie Mae Selling Guide B4-1.3-08, Comparable Sales: selling-guide.fanniemae.com
- Fannie Mae Selling Guide B2-1.2-01, Loan-to-Value (LTV) Ratios (06/01/2022): selling-guide.fanniemae.com
- Fannie Mae Selling Guide B4-1.4-10, Value Acceptance (06/03/2026): selling-guide.fanniemae.com
- Fannie Mae Selling Guide B4-1.3-12, Appraisal Quality Matters (Sept. 3, 2025; reconsideration of value): selling-guide.fanniemae.com
- Fannie Mae Selling Guide B4-1.2-04, Appraisal Age and Use Requirements: selling-guide.fanniemae.com
- HUD Mortgagee Letter 2024-07, Appraisal Review and Reconsideration of Value Updates: www.hud.gov
- HUD Mortgagee Letter 2022-11, Revised Appraisal Validity Periods: www.hud.gov
- 12 CFR 1002.14, Rules on providing appraisals and other valuations: www.law.cornell.edu
- Fannie Mae, Uniform Appraisal Dataset (UAD 3.6 timeline and policy exception): singlefamily.fanniemae.com
- National Association of Realtors, Effective Delay Announced for Appraisal Reporting Transition (Sept. 30, 2026): www.nar.realtor
- Freddie Mac, UAD and Forms Redesign FAQs (UAD 3.6 mandatory for new appraisal reports submitted to UCDP on or after November 2, 2026; updated Sept. 30, 2026): sf.freddiemac.com
Chicago Condo Loans is an independent educational resource, not a lender or broker. This page is for education only and is not lending, legal or financial advice.