Understanding Home Appraisals: What Every Buyer and Homeowner Needs to Know

Navigating the mortgage process in Canada can feel overwhelming—especially when you're unsure if a home appraisal is necessary. As a seasoned Toronto mortgage broker, I often get asked: Do I need a home appraisal to buy or refinance my property?

The answer? It depends.

Appraisal requirements vary based on your down payment, the type of mortgage you choose, and lender-specific policies. In this guide, we’ll unpack everything you need to know—so you’re never caught off guard.

Insured Mortgages (5%–19.99% Down Payment): Appraisals Are Rarely Needed

If your down payment is less than 20%, your mortgage is typically insured by one of Canada’s major mortgage insurers—CMHC, Sagen, or Canada Guaranty. These insurers assess the property value through internal systems, so a full appraisal is often unnecessary.

However, there are exceptions:

• The insurer may order an appraisal to verify the value.

• You won't pay for it—the insurer covers the cost.

• The process usually happens behind the scenes with minimal disruption.

👉 Tip from your Toronto mortgage broker: Even if an appraisal is ordered, it's typically seamless and doesn’t delay your approval.

Conventional Mortgages (20%+ Down Payment): Prepare for a Formal Appraisal

Once your down payment hits 20% or more, you're no longer required to carry mortgage insurance. While that’s good news financially, it means the lender takes on more risk—and often insists on a formal home appraisal.

What to Expect:

• The appraisal is ordered by your lender or Toronto mortgage broker.

• You pay the fee, typically ranging from $350 to $1,500+.

• Factors influencing the cost include:

  • Property location

  • Size and complexity

  • Timeline urgency

⚠️ Important Note: Even though you’re footing the bill, the appraisal report belongs to the lender. You may only see the summary, not the full document.

AVMs (Automated Valuation Models): A Digital Shortcut

For down payments between 20% and 35%, some lenders might opt for an AVM (Automated Valuation Model) instead of a full appraisal.

Advantages:

• Quick results

• Lower cost

• Ideal for urban homes with abundant sales data

However, not all lenders accept AVMs for every transaction. AVMs are typically used when the home is in a stable market and the purchase appears low-risk.

What Happens During a Professional Appraisal?

Whether you're buying or refinancing, the appraisal process includes:

• Scheduling a visit with the seller’s agent (for purchases) or homeowner (for refinancing)

• A physical inspection of the property

• Measurements, photos, and comparisons to similar local sales

• A report delivered directly to the lender

Refinancing Your Home? An Appraisal Is Likely Required

When refinancing, lenders want to ensure you maintain at least 20% equity in your home after the refinance. That means verifying the home’s value through:

• A full appraisal (most common)

• An AVM (only if the loan-to-value ratio is low and risk is minimal)

As your go-to Toronto mortgage broker, I recommend being prepared for an appraisal unless your situation clearly qualifies for an exemption.

When You Might Avoid an Appraisal

There are specific scenarios where a lender may waive the appraisal requirement:

• Down payment is 35% or more

• Property is in a well-documented, low-risk market

• Loan-to-value ratio is very low

• Lender is highly confident in the property’s value

Still, waivers aren’t guaranteed—it always comes down to lender policy and risk appetite.

Quick Reference Table: When Is an Appraisal Required in Canada?

Top FAQs About Home Appraisals in Canada

1. Who chooses the appraiser?

The lender or mortgage broker orders the appraisal. You can’t choose your own.

2. Can I reuse an old appraisal?

Typically no—lenders require a new, up-to-date appraisal for each transaction.

3. Will the appraiser enter the home?

Yes. Appraisers inspect the interior, take photos, and measure the space.

4. Can I see the appraisal report?

Only the lender receives the full report. You may get a summary or valuation.

5. How long does it take to get results?

Turnaround is 2–5 business days, depending on urgency and location.

6. What if the appraisal comes in low?

You may need to increase your down payment or renegotiate the purchase price.

Talk to a Toronto Mortgage Broker You Can Trust

Confused about appraisals or refinancing requirements? As an experienced Toronto mortgage broker, I’m here to simplify the mortgage process and help you understand what’s required—before you’re caught off guard.

📞 Call me at 647-694-7033
📧 Email [email protected]

Let’s discuss your options and secure the best mortgage solution tailored to your needs.