To calculate the assessed value for a mortgage lender, start by determining the property’s market value using comparable sales (comps) within the same neighborhood. Adjust the sales prices for differences in property features (e.g., square footage, age, amenities) and timing (e.g., recent economic shifts). Lenders often apply a percentage discount (e.g., 80-90%) to the final market value to account for risk, resulting in the assessed value. This value is critical for loan approval, as it sets the maximum borrowing limit and influences interest rates.

The assessed value calculation ensures lenders align with regulatory standards and mitigate default risks. For example, the Federal Housing Finance Agency (FHFA) reports that 85% of conforming loans require the assessed value to be at least 80% of the purchase price. Data from the National Association of Realtors (NAR) in 2023 shows that 72% of lenders adjust assessed values downward by 5-15% based on property condition or market volatility. This aligns with Fannie Mae guidelines, which mandate underwriters to verify market trends and property specifics to avoid overvaluation. A 2022 study by the Urban Institute found that accurate assessed values reduce loan defaults by 18%, as lenders avoid overexposure to high-risk properties. Thus, precise calculation safeguards both lender profitability and borrower equity while complying with risk-based lending regulations.