Teacher Next Door Program (TND)

Click here for the Participating Lender List

PROGRAM OVERVIEW

The Mayor's Office of Housing (MOH) administers the Teacher Next Door (TND) Program to assist teachers employed with the San Francisco Unified School District (SFUSD) with the purchase of their first home in San Francisco.  Applicants to the Teacher Next Door loan program must:

• Be purchasing their first home within the boundaries of the City and County of San Francisco
• Be currently employed as a full time teacher with the San Francisco Unified School District
• Have a combined household income of no more than 200% of the AMI for SFMSA (see below)
• Include a certification of a California teaching credential and Letter of Employment from the San Francisco Unified School District with the TND application.

Borrower Eligibility
Property Eligibility
Maximum Loan Amount
Loan Terms
Loan Documents
Owner Occupancy Requirements
Application Process
Review and Processing
Participating Lenders
Homebuyer Education Counseling Agencies

BORROWER ELIGIBILITY

To be eligible for a TND loan, a borrower must be a credentialed teacher currently employed by the San Francisco Unified School District, and have a combined household income of no more than 200% of the AMI of SFMA.

First-time homebuyer: Borrower must have never owned property in San Francisco, either as a primary residence or an investment property.

Meet Income Limits: Maximum Household income is up to 200% of AMI.
The following lists the maximum income limits as of January 1, 2013

• The combined income of all household members who will be living in the property must be included in the determination of income. The combined household's income must be projected as an annual income. It should be assumed that the current income would continue for the next 12 months, unless there is verifiable evidence to the contrary.
• Household income requirements will include all income of persons 18 years old or older who will be living in the property. Maximum loan limits are tied to the household income category.

Asset/Reserve Limitation: The combined household liquid assets after purchase the property cannot exceed $25,000. Liquid Assets includes all source of monies from savings, checking accounts, investments and properties held by any member of the Borrower's household including minors and any fund is available for liquidation to purchase property. Liquid Assets do not include funds held in pension accounts, retirement funds, 401(k) plans, or similar assets which are not available for liquidation without substantial financial penalty to the Borrower.

Homebuyer Education Requirement: Borrower will be required to complete a first-time homebuyer education course through one of MOH's 5 approved housing counseling agencies (see below). A certificate of completion of homebuyer education must be included with the application package.

First Mortgage: All City loan approvals are made in conjunction with a first loan commitment from a bank or mortgage lender. The first loan must be the maximum loan amount for which the borrower is able to qualify; the loan must be fixed interest rate, 30 year loans and fully amortizing. The mortgage payment should include principal and interest, NO interest only; stated income; option ARM, balloon or negative amortization payment options loans.

Debt-to-Income Ratio: Applicants monthly housing debt, including property taxes, property insurance, and if applicable mortgage insurance and homeowner’s association dues cannot be less than 28% of the household’s gross income. The ratio of monthly housing costs, plus all other household monthly debt (including credit cards, car payments, etc.) should not exceed 45% of the household’s gross income. However, the back end ratio cannot exceed more than 5% of the front end ratio. (For example, if the front end ratio is 28%, then the back end ratio cannot exceed 33%).

PROPERTY ELIGIBILITY

Properties purchased with TND funds must be single-family residences units in the City and County of San Francisco, which include: detached single-family house, condominiums and townhouses.

Purchase Price Limits: The maximum purchase limit is the same as CalHFA’s purchase price limit for non-targeted area existing unit for San Francisco County. This purchase price limit is revised periodically to reflect market trends and posted on the CalHFA website at:
http://www.calhfa.ca.gov/

Current purchase price limit is $673,615.

Property Size Requirements: The size of a household must be compatible with the size of the unit being purchased. A minimum of one person per bedroom is required. In other words, a single person may purchase a studio or a one-bedroom unit; a two-person household may purchase a two-bedroom unit; a three-person household may purchase a three-bedroom unit; and so on.

MAXIMUM LOAN AMOUNT

The maximum loan amount available for TND loans is $20,000.

Maximum Combined Loan-to-Value Requirements: Maximum Combined Loan-to-Value Ratio (CLTV) cannot exceed 100% of the purchase price, which include the first mortgage, the TND loan and any other borrowed subordinate financing.

LOAN TERMS

The loan may be used for either closing costs or downpayment. There is no interest, nor shared appreciation. TND loans may be layered with DALP, City Second loans, and used for the purchase of BMRs and Condo Conversion units, if the teacher also meets the income eligibility criteria for those programs. If the teacher moves out of the City and County of San Francisco or leaves the San Francisco Unified School District within 5 years of the date the loan is issued, the loan must be paid back in full. After year five, the loan is forgiven at a rate of 20% per year, and at the end of the 10th year, the loan is forgiven in its entirety. The chart below illustrates repayments for TND loans.

If the property is sold or the teacher leaves the SFUSD, then the following is due back to the City:

Refinance/Subordination: The City loan can be subordinated to refinance the existing first mortgage for a lower interest rate and better loan terms as long as no cash equity is taken out of the property. All refinances must meet MOH's subordination requirements and be approved by MOH. All borrowers must work with loan officers or lenders on our list of participating lenders for refinance. This ensures awareness of full restrictions on the property and expedites the request process.

LOAN DOCUMENTS

The City will provide the required loan documents to the title company for borrowers' signatures:

TND Deed of Trust (pdf): The City Deed secures the loan against the title of the property. The City loan will subordinate to first mortgage.

TND Note (pdf): The City Note contains an acceleration clause, which will call the entire loan due and payable upon sale; rental and title transfer of the property. The City Note also outlines terms and repayments of the loan.

OWNER OCCUPANCY REQUIREMENTS

Borrower must occupy the purchased property as its primary residence within 60 days after close of escrow. Properties that have received TND funding must remain owner-occupied throughout the term of the loan and never used as investments or rental property. Compliance monitoring may be performed and documented proof of occupancy required at intervals determined by Mayor's Office of Housing.

APPLICATION PROCESS

Borrower must complete the first-time homebuyer education course through one of MOH's 5 approved housing counseling agencies. A certificate of completion of homebuyer education must be included with the application package.

Work with your Realtor and Loan Officer/Lender to prepare the TND application package, including the following:

• Have a ratified purchase agreement before applying for the TND loan
• Submit TND application (TND-1) (download the TND application from our website) to lender at the same time you apply for your first mortgage along with the following documents:
  1. A certification of a California teaching credential and Letter of Employment from the San Francisco Unified School District
  2. Complete set of past 3 years Federal income tax returns (included all schedules, signed and dated) and W-2 forms
  3. Three current and consecutive pay stubs with year-to-date (YTD)
  4. Income Tax Affidavit (TND-3) - if applicable
  5. First Time Homebuyer Affidavit (TND-4)
  6. Homebuyer Education Certificate
  7. Last 3 months bank statement for checking, savings & other pertinent investment accounts
  8. Gift letter (if applicable)
  9. IRS form 4506-T

Lender will submit the TND application package to City and provide the following information along with the application:

1. Primary Financing Loan Application (Form 1003 signed and dated by the borrower)
2. Loan Analysis (Form1008)
3. Approval or commitment letter from Lender
4. A copy of the borrower's credit report
5. Fair Market Appraisal
6. Preliminary title report

A letter of approval or denial will email to the borrower and lender within 10 working days of receipt a complete package from the lender.

For additional information, please contact Mayor's Office of Housing at 415-701-5500.

TND Application Forms (revised 1/13)

REVIEW AND PROCESSING

• MOH receives complete and bound application package in a legal size manila folder with two fasteners. (application package follows instructions from Transmittal Form).
• MOH will email approval or denial letter to the lender within 10 working days of receipt of a complete package. Incomplete packages will be returned without review for approval.
• Email notice includes draft loan documents and a request for buyer(s) to sign & date commitment letter, which must be returned to the City within 7 working days.
• After MOH receives the signed commitment letter back from the buyer:
  • MOH will email escrow instructions and closing documents to the title company.
  • 7 working days funding period will begin.
  • Funding as specified in the commitment letter will be placed on reserve for a period of 45 days from date of the commitment. If for any reason, escrow cannot close within the commitment period, please notify the Mayor's Office of Housing immediately or the loan will be expired.
  • Funding will be wired to the escrow account after we have received and reviewed all closing documents. We require 3 working days for wire transfer.

LIST OF PARTICIPATING LENDERS (click)

LIST OF HOMEBUYER EDUCATION COUNSELING AGENCIES (click)