I'm looking at pulling cash out of my condo, maybe $40k, and my loan officer mentioned something about a waiver being possible depending on LTV. I'm at roughly 58% LTV right now so I figured I'd qualify, but I don't actually know what determines whether the waiver gets offered or if I have to pay for a full appraisal anyway.
Fannie and Freddie run the property data through their models and either kick out a waiver offer or they do not. The lender does not really control it, they just pass along whatever the GSE decides. Cash-out refis get scrutinized harder than rate-and-term, so waivers are less common even at conservative LTVs, and condos add another wrinkle because the project itself has to be approved on top of the unit. Clean 55% LTV cash-out requests on condos get denied a waiver purely because the complex had high investor concentration or pending litigation. The thing I would want to know before assuming you are in the clear: has your HOA had any special assessments or legal action in the last 24 months, and has its insurance stayed continuous, because either one can blow up the project approval even if your personal numbers look perfect.
On a cash-out refi the waiver bar is harder to clear than on a rate-term. Fannie caps cash-out PIW at 70% LTV for single-family but condos get extra scrutiny because the project itself has to be in their database with enough comparable sales. If your condo complex is small or had any HOA issues flagged, the AUS might just kick it out regardless of your 58%.
Worth asking your LO to run it through DU first before you pay anything, takes about ten minutes and you'll know immediately.
Condos specifically are one of the property types where the waiver engine gets twitchy, and borrowers in the low to mid 50s LTV still get sent to a full appraisal on cash-out with some regularity because something in the project data flagged. HOA approval status, litigation history on the building, even a thin comparable sale pool in the complex can knock it out. Your loan officer can run DU or LP before you order anything, and that tells you in minutes whether a waiver is even possible on this file. If it comes back requiring a full appraisal, budget closer to $550 to $700 for a condo in most markets because the appraiser has to pull project documents on top of the standard comp work, and turnaround runs longer than on a single family.
58% LTV sounds comfortable but condo projects have their own approval layer that can sink the waiver before your individual numbers even matter. The project itself has to be on an approved list, and if your HOA has a high delinquency rate or there is pending litigation on the building, the automated system will kick it out regardless of your equity position. I had a friend go through something similar in Phoenix last year, clean borrower, solid LTV, waiver denied because the condo association had a special assessment dispute flagged. The thing I would want to know before assuming I was getting the waiver: has your specific condo complex had any financed sales in the last 12 months that went through conventional underwriting, because that data is part of what feeds the model.
At 58% you're in decent shape on the ratio side, but the waiver still isn't guaranteed because the GSEs are also looking at whether that specific condo project has enough comparable sales data in their system. I had a client tell me about a unit in a smaller 12-unit building that got denied a waiver even at 52% LTV just because the project didn't have enough transaction history for the model to feel confident. So the building matters as much as your number.
Your LO is right that the waiver is possible but condo projects get extra scrutiny that a single-family at the same LTV wouldn't see. The automated systems are also looking at whether your specific unit and project have enough prior sale or refinance data to underwrite off, and a lot of condo buildings just don't have the transaction volume to generate that confidence. I pulled cash out of a condo I hold in Phoenix last spring, sat at around 55% LTV, and still got kicked to a full appraisal because the project had too many investor-owned units, crossed some threshold Fannie doesn't love. Came in at $625 for the appraisal, which honestly wasn't the end of the world, but I didn't see it coming.
