# How do lenders determine property value and LTV?

> Lenders use the Loan-to-Value (LTV) ratio to gauge risk.

Category: Financing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/financing/how-do-lenders-determine-property-value-and-ltv

## Answer
Lenders use the Loan-to-Value (LTV) ratio to gauge risk. FRFIs must meticulously assess and adjust property value, factoring in potential price corrections. Rapid price increases demand even more conservative valuation approaches.

## Institutional highlights
- Lenders look at location, property type, and current market trends to assess a property's value.
- If prices are rising quickly in your area, lenders will be extra careful when determining the value of the home you want to buy.
- Lenders can adjust the value of a property to make sure the loan-to-value (LTV) ratio is accurate, affecting your down payment needs.
- Your lender may have limits on how high the loan-to-value ratio can be, depending on the perceived risk of the property.
- When calculating your loan-to-value ratio, the property value can't be higher than what you actually paid for it if you're using a mortgage to finance the purchase.

## Related guide
- https://ratellow.com/guides/first-time-buyer-rebates

## Sources
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- Page 2 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=2
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0