Understanding When Appraisals Are Required in Canada

Buying a home or refinancing your mortgage? You might be wondering if a home appraisal is something you’ll need to worry about. The answer: not always. Appraisal requirements vary depending on how much you’re putting down, the type of mortgage, and the lender’s policies.

Let’s break down when appraisals are required in Canada and when they aren’t.

Insured Mortgages (5% to 19.99% Down): Usually No Appraisal Needed

If you’re buying a home with less than 20% down, your mortgage is what’s called insured. This means it’s backed by one of the three main Canadian mortgage insurers, CMHC, Sagen, or Canada Guaranty. Because these insurers are backing the loan, they typically decide if they’re comfortable with the value of the home.

In most cases, no appraisal is required. However, the insurer might still request one if they want to double-check the property’s value. If that happens:

• You won’t pay for the appraisal, the insurer covers the cost.

• You’ll usually be notified, especially if there’s a potential delay.

• It often happens quietly in the background without much input from you.

Conventional Mortgages (20% Down or More): Expect an Appraisal

Once you’re putting down 20% or more, your mortgage is not insured. This means the lender takes on the risk, and they often want an appraisal to confirm the home is worth the price you’re paying.

Here’s what to expect:

• The lender or your mortgage broker will order the appraisal on your behalf.

• You, the buyer, typically cover the cost.

• Fees can range from $350 to over $1,500, depending on:
  • Location
  • Property size and complexity
  • Urgency of the request

Note: Even though you’re paying for it, the appraisal report belongs to the lender, not you. You might get a summary or the valuation number, but the full report usually isn’t shared.

What Is an AVM(Automated Valuation Model)?

In cases where you’re putting down 20% to 35%, the lender might use something called an AVM, an Automated Valuation Model. This software estimates the home’s value using recent comparable sales data and other metrics.

AVMs are:

• Fast
• Inexpensive
• Less detailed than full appraisals

They’re often used to speed up the process and reduce costs, but not all lenders accept AVMs for all situations.

What Happens During an Appraisal?

Appraisals vary depending on whether it’s a purchase or a refinance.

• For purchases: The appraiser usually contacts the seller’s real estate agent to arrange access.
• For refinances: The appraiser will coordinate directly with the homeowner to book a visit.

In both cases, they’ll inspect the home, take photos and measurements, and review local market data before submitting a report to the lender.

Refinancing? You’ll Likely Need an Appraisal

Refinancing has its own rules. Lenders must confirm that you have at least 20% equity remaining in your home post-refinance.

To verify this, they’ll usually require an appraisal, unless:

• Your loan-to-value ratio is very low
  They can confidently assess the value using an AVM

Even then, many lenders will want a full appraisal to double-check.

When Is an Appraisal NotRequired?

You might avoid a full appraisal if:

• You’re putting down 35% or more
• The lender is confident in the property’s value
• Your refinance has a very low loan-to-value ratio
• The home is in a highly stable and well-documented market

But again, it’s always up to the lender’s risk tolerance.

Key Takeaways

Ready to Discuss Your Mortgage Options?

Have questions about appraisals or your home financing situation? Let’s talk through your options so you can move forward with confidence, no surprises.

Call me at 416-882-4172

Email Mortgages@dannycardoso.ca

Why a Cooling Market Could Be the Best Time to Buy a Home in Canada

When I met with a couple recently, they told me they were sitting on the sidelines waiting for “the right time” to buy. They had assumed they missed their chance when prices surged a few years ago. The truth? The window isn’t closed. In fact, with today’s shifting market, new opportunities are opening up for buyers.

Across Canada, the housing market is entering a cooler, more balanced phase. That’s not bad news — it can actually be a good thing for anyone looking to purchase a home.

The Canadian housing market is adjusting

Over the last few years, Canadians have seen some of the fastest price growth in history. Now, that growth is slowing down. National forecasts are predicting a slight decline in average home prices this year — around 2% in many regions.

What does that mean for you? In many cities, buyers are regaining negotiating power. Homes are staying on the market longer, price reductions are becoming more common, and sellers are more open to offering incentives like covering closing costs or offering flexible possession dates.

This shift isn’t a “crash.” It’s a reset — and it creates room for thoughtful buyers to step in.

Opportunities for buyers in a cooling market

1. More negotiating power
   In competitive years, buyers often had to bid above asking. Today, you’re more likely to secure a home at or even below list price.

2. Wider selection
   With homes staying on the market longer, you don’t have to rush decisions. You can compare more properties and find the one that truly fits your needs.

3. Flexibility from sellers
   Whether it’s getting repairs done before closing, asking for certain upgrades, or choosing your move-in date, sellers are more open to working with buyers.

4. Long-term value potential
   Cooler conditions now can set the stage for steady, sustainable growth in the future — a healthier investment environment.
   

   

   A story of timing and patience

   Take for example a young buyer who sold their condo in a busy urban market earlier this year. Instead of waiting indefinitely for the “perfect time,” they used today’s balanced market to make a move. With fewer bidding wars, they negotiated a purchase at 5% below asking. The home needed minor updates, but the savings left them with enough room in their budget to handle those upgrades without stress.

   That’s what a balanced market makes possible — opportunities that don’t exist when competition is at its peak.

   Tips for buyers right now

   Here are actionable strategies in this cooling environment:

   • Get pre-approved early: Sellers value certainty. Being pre-approved can make your offer stronger, even in a slower market.

   • Look beyond the headline numbers: A national average doesn’t always reflect what’s happening in your city. Work with a broker who knows your local market.

   • Target homes with longer listing times: Properties that have been on the market for weeks or months are often more negotiable.

   • Think about your timeline: If you plan to hold a property for five to ten years, short-term price fluctuations matter less.

   • Negotiate more than just price: Ask about upgrades, appliances, closing credits, or flexible terms.
     

     

     The bottom line

     Canada’s market is shifting. Instead of seeing this as a setback, think of it as a chance to buy in a calmer, more balanced environment. If you’ve been waiting, this could be your opportunity to secure the right home without the pressure of a bidding war.

     If you’d like help reviewing your options, running the numbers, and finding opportunities in your local market, I’d be happy to walk you through it.

5 Questions to Ask Your Mortgage Broker in Canada

Shopping for your first mortgage can feel like a big step, but it doesn’t have to be confusing. As someone who’s helped many young Canadians navigate their first home purchase, I’ve found that asking a few key questions up front keeps everything clear and stress-free.

1. Which Mortgage Type Fits Your Plans?

Every mortgage falls into one of three categories: fixed rate, variable rate, or a combination of the two. A fixed rate keeps your interest and payments the same for the entire term, which makes budgeting simple. A variable rate often starts lower but can rise or fall as the Bank of Canada adjusts its key rate. A combination mortgage lets you split part of your loan at a fixed rate and part at a variable rate. Think about how long you plan to stay in your home and how comfortable you are with possible rate changes.

2. What’s the Total Cost? Posted Rate versus APR

Banks and brokers often advertise their discounted rate front and center, but that’s not the whole story. The posted rate is the lender’s list or standard rate before any discount is applied. Your discounted rate is what you actually pay each month. Meanwhile the annual percentage rate, or APR, reflects the true cost over the term by including most lender fees such as application or administration charges. Comparing APRs across lenders gives you a clear picture of which offer really costs you the least in the long run.

3. Which Fees and Penalties Should You Expect?

Beyond interest there are a variety of fees that can catch you off guard if you’re not prepared. You may face application fees, appraisal and legal fees, property transfer taxes, and discharge fees when you pay off or switch mortgages. If you decide to break your mortgage early or pay more than your allowed prepayment limit the lender will charge a penalty. Ask your broker for a written fee schedule so youknow exactly what you’ll owe, both now and if you need to make changes later.

4. How Much Can You Actually Afford? Stress Test and Ratios

Lenders use a “stress test” to ensure you could handle higher interest rates in the future. They also look at two key ratios: the gross debt service ratio, which compares your housing costs to your income, and the total debt service ratio, which compares all your debts to your income. By running your numbers through these measures your broker can tell you the maximum mortgage you qualify for and suggest a payment that keeps you comfortable. This way you won’t feel stretched too thin if interest rates rise or unexpected expenses pop up.

5. How Flexible Are Your Prepayment Options?

If you come into extra cash—perhaps from a bonus, gift, or savings—you’ll want to use it to pay down your mortgage faster. Lenders usually allow an annual lump-sum payment of around 10 to 20 percent of your original mortgage amount, and they may let you increase your regular payments by a set percentage. Exceeding these limits can trigger a penalty based on the lender’s posted rate. Ask for all prepayment details so you can plan a five- or ten-year strategy to reduce your interest costs and own your home sooner.

Next Steps

By covering these five areas with your mortgage broker or lender you’ll gain confidence, avoid hidden fees, and choose the best mortgage for your needs. Ready to get personalized advice and step into homeownership?