# How do financial institutions assess property values?

> Financial institutions (FRFIs) adopt a risk-based approach to assessing property values.

Category: Purchasing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/purchasing/how-do-financial-institutions-assess-property-values

## Answer
Financial institutions (FRFIs) adopt a risk-based approach to assessing property values. This is crucial for maintaining sound collateral management and reducing risks linked to residential mortgage lending. These institutions scrutinize factors like location, market trends, and potential vulnerabilities to price corrections. In markets experiencing rapid price growth, FRFIs should use more conservative valuation methods.

## Institutional highlights
- When figuring out your home's value, lenders look at location, property type, how you'll use it, market trends, and the overall housing market.
- If home prices are rising quickly, lenders might use a slightly lower value for your home to be extra careful when calculating your mortgage.
- Lenders can adjust a property's value to be more accurate when figuring out how much they'll lend you.
- To determine your home's value, lenders may use on-site inspections, professional appraisals, or online tools.
- Your lender should carefully review how they determine your home's value to make sure it's accurate.

## Related guide
- https://ratellow.com/guides/closing-costs-canada

## Sources
- Contents — https://www.sagen.ca/ups/underwriting-documentation/#documentation
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits
- Property value used for the LTV ratio — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Page 2 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=2