# How is property value assessed for loan-to-value (LTV) calculations during construction?

> FRFIs must carefully assess and adjust property value for LTV calculations in new construction, considering factors like location, property type, market price, trends, and sustainability risks [osfi-b20-baseline, Property value used for the LTV ratio].

Category: Purchasing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/purchasing/how-is-property-value-assessed-for-loan-to-value-ltv-calculations-during-construction

## Answer
FRFIs must carefully assess and adjust property value for LTV calculations in new construction, considering factors like location, property type, market price, trends, and sustainability risks [osfi-b20-baseline, Property value used for the LTV ratio]. Conservative valuation is crucial in rapidly appreciating markets.

## Institutional highlights
- Your lender will consider factors that could affect your property's value or how easy it is to sell when calculating your loan amount.
- If your local housing market is rising quickly, your lender might use a more cautious approach to estimate your property's value for your mortgage.
- When you're buying a property, the lender won't usually lend you more than the actual purchase price.
- Lenders can adjust property values or set loan limits to account for potential risks in property values.
- Your lender has guidelines for assessing property values and will carefully review appraisals and valuation methods.

## Related guide
- https://ratellow.com/guides/new-construction-draws

## Sources
- 4.1.13 Land acquisition, development and construction exposures — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-2026-chapter-4-credit-risk-standardized-approach#4.1.13
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- 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
- Page 3 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=3