Calgary Real Estate Tips for Buyers & Investors (2025)

Understanding CMHC MLI Select Terms: DSCR, LTV, NOI, Cap Rate, and More Navigating the world of multi-unit residential financing can be daunting, especially when dealing with the CMHC MLI Select program. To make informed decisions and maximize your investment returns, it's crucial to understand the key terms and concepts that lenders and mortgage insurers use to evaluate your application. In this article, we'll break down the most important metrics, including debt service coverage ratio (DSCR), loan-to-value ratio (LTV), net operating income (NOI), and capitalization rate. 1. Debt Service Coverage Ratio (DSCR) DSCR is a measure of a property's ability to generate enough income to cover its mortgage payments and operating expenses. It is calculated by dividing the property's annual net operating income by its annual debt service (mortgage payments). For the MLI Select program, CMHC requires a minimum DSCR of 1.10, meaning the property must generate at least 10% more income than its expenses. Formula: DSCR = Annual Net Operating Income / Annual Debt Service Example: Annual Net Operating Income: $150,000 Annual Debt Service: $120,000 DSCR = $150,000 / $120,000 = 1.25 2. Loan-to-Value Ratio (LTV) LTV is the ratio of the mortgage loan amount to the property's value. It represents the percentage of the property's value that is financed by the mortgage. For MLI Select, CMHC allows up to 95% LTV for qualified borrowers, meaning you can finance up to 95% of the property's value with a mortgage and put as little as 5% down. Formula: LTV = Mortgage Loan Amount / Property Value Example: Mortgage Loan Amount: $950,000 Property Value: $1,000,000 LTV = $950,000 / $1,000,000 = 0.95 or 95% 3. Net Operating Income (NOI) NOI is a property's annual income after operating expenses but before debt service and taxes. It is a key metric for evaluating a property's financial performance and cash flow potential. To calculate NOI, subtract all operating expenses (such as property taxes, insurance, utilities, repairs, and management fees) from the property's gross income. Formula: NOI = Gross Income - Operating Expenses Example: Gross Income: $200,000 Operating Expenses: $50,000 NOI = $200,000 - $50,000 = $150,000 4. Capitalization Rate (Cap Rate) Cap rate is a measure of a property's investment return, expressed as a percentage of its purchase price or market value. It is calculated by dividing the property's annual net operating income by its purchase price or market value. Cap rates are used to compare properties and evaluate their relative investment potential. Formula: Cap Rate = Annual Net Operating Income / Purchase Price or Market Value Example: Annual Net Operating Income: $150,000 Purchase Price: $2,000,000 Cap Rate = $150,000 / $2,000,000 = 0.075 or 7.5% Other Important Terms Mortgage Stress Test: A test that evaluates a borrower's ability to make mortgage payments at a higher qualifying interest rate, typically the greater of the contract rate plus 2% or 5.25%. Amortization Period: The length of time over which a mortgage is paid off, usually 25-35 years for residential properties. Mortgage Insurance Premium: A fee paid to CMHC for insuring the mortgage, calculated as a percentage of the loan amount and included in the mortgage payments. Frequently Asked Questions (FAQ) 1. What is a good DSCR for a rental property? A DSCR of 1.25 or higher is generally considered good, as it indicates the property generates sufficient income to cover its expenses with a comfortable margin. 2. How does LTV affect my mortgage interest rate? A lower LTV typically results in a lower interest rate, as it represents less risk to the lender. Conversely, a higher LTV may lead to higher interest rates or additional mortgage insurance requirements. 3. What expenses are included in calculating NOI? Operating expenses include property taxes, insurance, utilities, repairs, maintenance, and management fees. However, mortgage payments and income taxes are not included in NOI calculations. 4. How do I find the cap rate for a property? You can calculate the cap rate by dividing the property's annual net operating income (NOI) by its purchase price or market value. Alternatively, you can research comparable properties in the area to estimate the cap rate. Glossary of Terms Debt Service Coverage Ratio (DSCR): A measure of a property's ability to cover its debt obligations with its income. Loan-to-Value Ratio (LTV): The ratio of the mortgage loan amount to the property's value. Net Operating Income (NOI): A property's annual income after operating expenses but before debt service and taxes. Capitalization Rate (Cap Rate): A measure of a property's investment return, expressed as a percentage of its purchase price or market value. Mortgage Stress Test: A test to evaluate a borrower's ability to make mortgage payments at a higher interest rate. Amortization Period: The length of time over which a mortgage is paid off. Mortgage Insurance Premium: A fee paid to CMHC for insuring the mortgage. Future Enhancements To make this article even more comprehensive, we plan to include the following elements in future updates: Visual Aids: Charts, graphs, or infographics to help visualize the concepts and make the information more engaging. Real-World Case Studies: Practical examples demonstrating how these metrics are applied in multi-unit residential investments. Contextual Internal Links: Links to related content on our website, such as detailed guides on the CMHC MLI Select program, mortgage application tips, and investment property strategies. By understanding these key terms and concepts, you'll be better equipped to analyze investment opportunities, structure your financing, and make informed decisions when applying for the CMHC MLI Select program. Always consult with a mortgage professional and financial advisor to ensure your investment strategy aligns with your goals and risk tolerance. To learn how to buy multi-million dollar properties with just 5% down, read our article: How to Buy Multi-Million Dollar Properties with 5% Down. For a deeper dive into the CMHC MLI Select program, check out our detailed guide: CMHC MLI Select Program: Everything You Need to Know. Complete a buyer intake form today: CMHC MLI Select Buyer Intake Form

TFSA vs. FHSA: Which is Better for First-Time Homebuyers? When it comes to saving for your first home in Canada, two powerful tools stand out: the Tax-Free Savings Account (TFSA) and the First Home Savings Account (FHSA). Both offer significant tax benefits and can accelerate your journey to homeownership, but they serve different purposes. This guide will help you decide which one—or both—is the right fit for you. Understanding the Basics: TFSA and FHSA Tax-Free Savings Account (TFSA) Introduced in: 2009 Purpose: Flexible savings for any goal—home, retirement, or travel. Contribution Limit: $6,500/year (2023), no lifetime cap. Unused room carries forward. Key Benefit: Withdrawals are tax-free and can be used for any purpose. Best For: Short-term and versatile savings goals beyond homeownership. First Home Savings Account (FHSA) Introduced in: 2023 Purpose: Dedicated to saving for your first home. Contribution Limit: $8,000/year, up to a $40,000 lifetime cap. Unused room carries forward. Key Benefit: Tax-deductible contributions and tax-free withdrawals for qualifying home purchases. Best For: Dedicated homebuyers seeking maximum tax savings. How TFSA and FHSA Differ Feature TFSA FHSA Tax Deduction No Yes Withdrawal Flexibility Any time, any purpose Tax-free only for first home purchases Contribution Limits Annual: $6,500; No lifetime cap Annual: $8,000; Lifetime: $40,000 Replenishing Limits Yes, after withdrawal No, lifetime cap applies Eligibility Any Canadian resident 18+ Canadian residents 18-71; First-time homebuyers When to Use a TFSA Flexible Savings: Ideal if you’re saving for multiple goals like a home, vacation, or emergency fund. Unlimited Reinvestment: Contribution room replenishes, so you can withdraw and save again without losing benefits. No Pressure to Buy: If you’re unsure about purchasing a home soon, the TFSA offers long-term flexibility. When to Use an FHSA Dedicated Home Savings: Perfect for those committed to buying their first home. Tax Savings: Contributions reduce taxable income, making it ideal for higher-income earners. Enhanced Purchasing Power: Combine FHSA savings with the Home Buyers’ Plan (HBP) to access up to $75,000 tax-free. Should You Combine Both? Yes! Using both accounts strategically can maximize your savings potential: Use the FHSA for tax-deductible contributions and tax-free withdrawals. Use the TFSA for additional savings flexibility or to cover closing costs and moving expenses. Example: Contribute $8,000 annually to your FHSA and $6,500 to your TFSA. In 5 years, you’d have $40,000 (FHSA) + $32,500 (TFSA), providing a total of $72,500 toward your first home. Strategic Tips for First-Time Homebuyers Start Early: Open an FHSA as soon as you’re eligible to maximize contribution room. Invest Wisely: Both accounts allow investments in GICs, stocks, or ETFs. Choose options that match your risk tolerance. Know the Deadlines: The FHSA must be used within 15 years or before age 71. Plan Withdrawals: Withdraw FHSA funds for your down payment and TFSA funds for other home-buying expenses. Future Articles to Explore How to Combine FHSA, TFSA, and HBP for Maximum Savings Best Investment Strategies for FHSA and TFSA Accounts Top Tax Benefits of Using FHSA for First-Time Buyers How to Use TFSA Withdrawals to Cover Home Closing Costs FHSA Case Studies: Real-Life Examples of First-Time Buyers Take Action Today Saving for your first home can feel overwhelming, but with the right tools and strategies, it’s entirely achievable. Whether you choose a TFSA, an FHSA, or both, the key is to start now and stay consistent. Let’s Get Started Together: Email: hasan.sharif@exprealty.com Phone: 403-808-9705 Unlock the power of TFSA and FHSA accounts to achieve your dream of homeownership. Contact us for personalized advice!

Mortgage Rules Update: Effective December 15 – Insured Cap Raised to $1.5 Million & 30-Year Amortizations Now Available Effective December 15, recent mortgage reforms are changing the landscape for Canadian homebuyers. Whether you’re just stepping into the market or looking to upgrade, these policy updates mean greater purchasing power, more flexibility, and easier entry into competitive housing markets like Calgary and Saskatoon. Higher Insured Mortgage Cap: Now Up to $1.5 Million What’s Changed?The insured mortgage cap has increased from $1 million to $1.5 million. Buyers placing less than 20% down now have access to larger loan amounts, better aligning with today’s home prices. Why It Matters: Boosted Buying Power: Secure financing for higher-value homes with less upfront cash. Competitive Markets: Cities like Calgary and Saskatoon are benefiting from this shift, enabling buyers to stay competitive and find homes that better suit their needs. 30-Year Amortizations for First-Time Buyers & New Builds What’s Changed?If you’re a first-time buyer or looking into a new build (including condos), you can now choose a 30-year amortization. Why It Matters: Lower Monthly Payments: Stretching out the mortgage term reduces monthly costs, easing budget pressures. Greater Flexibility: Afford more home without overextending, making it simpler to enter the market or upgrade sooner. What These Changes Mean for You Afford More with Less Upfront:A higher insured cap and extended amortization mean you can potentially secure a larger or more desirable property while keeping your initial down payment and monthly costs manageable. Reduced Financial Strain:Longer payment terms free up monthly cash flow, offering a financial safety net and room to invest in improvements, enjoy lifestyle perks, or build savings. Enter the Market Sooner:Eager to buy but still building your down payment fund? These reforms make it easier to jump in now rather than waiting until you’ve saved more. Market-Specific Advantages:For buyers in markets like Calgary, Saskatoon, and other growing regions, these changes align perfectly with increasing housing supply—making it prime time to secure a home that matches both your budget and aspirations. Ready to Leverage the New Mortgage Landscape? Our team is here to help you navigate these reforms and tailor a strategy that maximizes your buying power. With market insights, financial guidance, and personalized recommendations, we’ll ensure you get the most out of these new opportunities. Let’s ConnectIG: @nasahctusEmail: hasan.sharif@exprealty.com Schedule a Free Consultation to discover how these changes can elevate your homeownership journey. Want More Details?Check out the official government announcement here.

Fixed vs. Variable Mortgage Rates: What's Best for You?As a first-time home buyer in Saskatoon or an experienced homeowner looking for houses for sale in Saskatoon, understanding mortgage rates is crucial to making an informed decision. One of the most important choices you'll face when securing a mortgage is whether to opt for a fixed or variable rate. Let's dive into the differences and help you determine which option might be best for your situation.Fixed-Rate Mortgages: Stability in an Uncertain WorldA fixed-rate mortgage is like a warm, cozy blanket on a cold Saskatoon winter night. It offers consistency and predictability, with your interest rate remaining the same throughout the entire term of your mortgage. This means your monthly payments stay constant, making budgeting a breeze.Pros of Fixed-Rate Mortgages:1. Predictable payments2. Protection against rising interest rates3. Peace of mind for risk-averse buyersCons of Fixed-Rate Mortgages:1. Generally higher initial rates than variable options2. Potential to miss out on savings if rates decrease3. Higher penalties for breaking the mortgage term earlyVariable-Rate Mortgages: Riding the Economic WaveA variable-rate mortgage, on the other hand, is like surfing the economic waves of the Saskatoon real estate market. Your interest rate fluctuates based on the prime rate set by your lender, which is influenced by the Bank of Canada's overnight rate. This means your mortgage payments can change over time.Pros of Variable-Rate Mortgages:1. Often start with lower rates than fixed options2. Potential for savings if interest rates decrease3. Usually lower penalties for breaking the mortgage term earlyCons of Variable-Rate Mortgages:1. Less predictable monthly payments2. Risk of higher payments if interest rates rise3. Can cause stress for those who prefer stabilityMaking the Right Choice for Your Saskatoon HomeWhen deciding between fixed and variable rates for your home in Saskatoon, consider these factors:1. Your risk tolerance: Are you comfortable with potential fluctuations in your mortgage payments?2. Economic outlook: Research predictions for interest rates over your mortgage term.3. Your financial situation: Can you handle potential increases in payments if rates rise?4. Length of stay: Are you planning to live in your Saskatoon home long-term or might you sell in a few years?5. The current rate spread: Compare the difference between fixed and variable rates offered by lenders.Remember, there's no one-size-fits-all solution when it comes to mortgage rates. What works for one Saskatoon homeowner might not be ideal for another. Some buyers even opt for a hybrid approach, splitting their mortgage between fixed and variable rates to balance stability and potential savings.Whether you're searching for cheap houses on the east side of Saskatoon or luxury homes in the heart of the city, understanding your mortgage options is key to making a sound investment. Take the time to crunch the numbers, consider your personal circumstances, and don't hesitate to seek professional advice.Ready to take the next step in your home buying journey in Saskatoon? Explore our website for more in-depth information on the home buying process, or reach out for a personalized consultation to discuss your specific needs and find the perfect Saskatoon house for sale that matches your dreams and budget.