Overview
When a mortgage is insured through CMHC or another insurer, the appraisal goes through an additional layer of review. This review focuses on risk, supportability and compliance with strict underwriting standards. Insured mortgages often involve higher loan to value ratios, which means the insurer depends heavily on the appraised value to protect against loss.
This guide explains how insured mortgage appraisals work, what insurers expect and how clients can prepare.
CMHC and other insurers apply stricter appraisal standards than lenders.
If the appraisal does not meet insurance requirements, the mortgage can be delayed, modified or declined even if the lender approved it.
Common issues that trigger insurer concern include:
• Weak comparables
• Unsupported adjustments
• Overstated condition ratings
• Unclear photos
• Unverified upgrades
• Legal use issues
• Risky property types
Understanding these expectations helps clients avoid unnecessary setbacks.
What CMHC and Insurers Expect in an Appraisal
Insurers analyze the report with a heightened focus on risk.
- Loan to Value Risk Assessment
For high ratio mortgages, the insurer bears the majority of the risk.
The value must be fully supported.
- Purchase Price vs Appraised Value
If the appraisal is lower than the purchase price, insurers typically rely on the lower of the two.
- Market Stability
Insurers evaluate whether the value makes sense in today’s market, not based on future assumptions.
- Borrower Profile and Property Risk
The appraisal is one of several risk factors.
A marginal appraisal can be declined if combined with other risk concerns.
How Clients Can Prepare for an Insured Mortgage Appraisal
- Ensure full access to the home
Make all areas accessible and well lit.
- Provide documentation for upgrades
Insurers value clear verification.
- Present the home clearly
Condition ratings depend heavily on visible condition.
- Clarify any issues ahead of inspection
Unpermitted work should be addressed or disclosed early.
- Ensure accuracy of property details
Square footage, bedroom count and basement information must match reality.
Can CMHC override the lender?
Yes. If CMHC declines the appraisal, the lender cannot proceed with insurance.
Do insured mortgages require stricter appraisal guidelines?
Yes. Insured mortgages involve more detailed underwriting and risk controls.
Can clients request a reconsideration?
Yes, but only with new evidence such as more relevant comparables.
Does CMHC require a full inspection?
Most insured mortgages require a complete interior and exterior appraisal.
If you are applying for an insured mortgage and want to understand how the appraisal will influence approval, our team is here to guide you through the process.
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