# Property Valuation: A Risk-Based Approach

> FRFIs must employ a risk-based approach to property valuation, integrating on-site inspections, independent third-party appraisals, and automated valuation models.

Category: Strategy
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/strategy/property-valuation-a-risk-based-approach

## Answer
FRFIs must employ a risk-based approach to property valuation, integrating on-site inspections, independent third-party appraisals, and automated valuation models. Conservative valuation criteria, independent of the loan process, are crucial, particularly in rapidly appreciating markets. Property values used for LTV calculations must be adjusted to account for potential price corrections or marketability vulnerabilities. Any undrawn committed amount of the mortgage loan should be included.

## Related guide
- https://ratellow.com/guides/mortgage-insurance-life-disability

## Sources
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1
- 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
- OSFI exempts uninsured mortgage straight switches from the prescribed MQR and implements portfolio LTI limits — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/osfi-exempts-uninsured-mortgage-straight-switches-prescribed-mqr-implements-portfolio-lti-limits