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 Not Required?

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

Down Payment Appraisal Needed? Who Pays? Notes

5% – 19.99% Rarely Insurer (if needed) Insured mortgage

20% – 34.99% Usually Buyer/homeowner Lender orders appraisal

35%+ Sometimes waived Buyer/homeowner Depends on risk level
(if needed)

Refinance Almost always Homeowner Must confirm 20% equity

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.

Leanne Funston
Mortgage Broker
250-320-5514
[email protected]
www.leannefunston.ca