Why The Property Matters

Anita Groves • September 24, 2019

When looking to qualify for a mortgage, typically a lender will want to review four main areas of your mortgage application. Income, credit, downpayment/equity and the property itself. Assuming you have a great job, excellent credit, and sufficient money in the bank to qualify for a mortgage, if the property you’re looking to purchase isn’t in good condition, it’s going to be hard to arrange mortgage financing.

Property matters because the property you are looking to purchase is the collateral the lender holds in case you default on your mortgage.

You can expect that any lender will make every effort to ensure that any property they finance is without defect. Lenders want to see that a property is what is called “prime and marketable”. In the rare case that you happen to default on your mortgage, they want to know that if they have to repossess, they can liquidate (sell off) the property quickly and recoup their money.

So to establish value, an appraisal is always required on every purchase. Now, if your mortgage is insured through an insurer like CMHC or Genworth, they will have used an automated system to appraise the property (you might not even have known an appraisal was done). For conventional mortgage applications, a physical appraisal; where an actual appraiser goes to the property, is required. Typically your broker will order this, and you will be responsible for the cost. the appraiser is not only assessing the property’s value, but rather looking at the bones of the property itself. This is where problems can arise.

Why is this important to know? Well, because a lot of people believe that because they have a great job, excellent credit, and money in the bank, they should be able to buy anything they like. Without understanding that the property matters, some people have gone as far as to put in an offer to purchase without a condition of financing. And have lost their deposit, because the lender wasn’t satisfied with the state of the property and didn’t give them a mortgage.

You don’t want to be in this position. So remember, when looking at the overall mortgage application, the property should be considered, because the property matters!

 

If you have any questions; about a particular property or anything else, please don’t hesitate to contact me anytime, I’d love to work with you!

 

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How Property Type and Condition Influence Mortgage Financing

By Kevin Roye • August 26, 2026
Why the Property Matters When You’re Qualifying for a Mortgage When qualifying for a mortgage, lenders typically look at four core areas: Income Credit Down payment or equity The property itself Most buyers focus heavily on income, credit, and savings—and for good reason. But even if those boxes are checked, the property can still determine whether a mortgage is approved. Why Lenders Care About the Property From a lender’s perspective, the property is the collateral for the mortgage. In the unlikely event of default, they need to know the home can be sold quickly and at fair market value to recover their funds. Because of this, lenders are careful about the condition, value, and marketability of any property they finance. Homes that are in poor repair, unconventional, or overpriced can raise red flags—even when the borrower is well qualified. Appraisals Are Always Part of the Process Every mortgage requires an appraisal to confirm value. Insured mortgages (through CMHC, Sagen, or Canada Guaranty) often use an automated valuation model completed online. Conventional mortgages typically require a full, on-site appraisal by a certified appraiser. This appraisal is not optional and happens after an offer is accepted—not at the pre-approval stage. Why Pre-Approvals Aren’t a Guarantee A pre-approval is a great first step, but it only assesses you, not the property. Once you’ve made an offer, the lender must approve the specific home you’re buying. Understanding this upfront helps avoid surprises and confusion later in the process. The Risk of Buying Without a Financing Condition In competitive markets, buyers sometimes remove financing conditions to strengthen their offer. However, this comes with risk. If the appraisal comes back low—or the lender is concerned about the property’s condition—you could be denied financing after the offer is firm. In that scenario, your deposit may be at risk. Buying a Home That Needs Work If you’re considering a property that isn’t in perfect condition, there are solutions. A purchase plus improvements program allows you to buy a home and include renovation costs in your mortgage. The process is structured and requires planning, but it can be an excellent way to turn a fixer-upper into a great long-term investment. Final Thoughts Mortgage approval isn’t based solely on your finances—the property matters just as much. Knowing this ahead of time helps you make smarter offers, reduce risk, and plan more effectively. If you’re buying a property that needs work or want clarity on how a lender may view a specific home, feel free to reach out. I’d be happy to walk you through your options and help you plan with confidence.