The DALP Program is available through MOH Approved Participating Lenders Only
Click here for the Participating Lender List
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Effective July 1st, 2013:
DALP loan amount up to $100,000 or 15% of the purchase price, whichever is less
DALP Application Fee $530 (non -refundable) Application Fee; $640 if applying MCC together with DALP
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PROGRAM OVERVIEW
The Down Payment Assistance Loan Program (DALP) is a down payment assistance loan to low-moderate income first time homebuyers in San Francisco purchasing any single family home in City and County of San Francisco, except for a BMR unit (Below Market Rate or Inclusionary). The DALP is a silent second loan that requires no payments for 40 years. The principal amount plus a share of the appreciation (profit) shall become due and payable at the end of the term, or repaid upon sale, transfer or rental of the property, whichever comes first. DALP has been approved by CalHFA to use their first mortgages. The DALP loan will subordinate to first mortgage, DALP lien will always be on the second position of the property. The Mayor’s Office of Housing will review and update these guidelines annually to reflect changes in the market and better meet the community’s needs.
Borrower Eligibility
Property Eligibility
Maximum Loan Amount
DALP Loan Terms
Repayment of Loan
Owner Occupancy Requirements
Loan Documents
Application Process
DALP Program Manual
DALP Application Forms
Review and Processing
Participating Lenders Workshops and Training
Homebuyer Education Counseling Agencies
BORROWER ELIGIBILITY
First-time homebuyers: All members of household of the Borrower must have never owned interest in a dwelling unit, any commercial real estate or land.
Meet Income Limits: All members of household of Borrower's income cannot exceed 120% of the area median for the San Francisco Metropolitan Statistical Area, as established by the U.S. Department of Housing and Urban Development, adjusted by household size.
- 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.
The following shows the maximum income limits as of January 1, 2013:
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Household Size
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1
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2
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3
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4
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5
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80% Area Median Income
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$56,700
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$64,750
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$72,900
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$80,950
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$87,450
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90% Area Median Income
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$63,750
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$72,850
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$82,000
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$91,100
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$98,350
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100% Area Median Income
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$70,850
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$80,950
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$91,100
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$101,200
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$109,300
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110% Area Median Income
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$77,950
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$89,050
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$100,200
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$111,300
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$120,250
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120% Area Median Income
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$85,000
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$97,150
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$109,300
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$121,450
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$131,150
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Eligible Household Member: To be considered a member of household, a person must either be (1) on the title and loan of the property or (2) claimed as a dependent on the tax returns of household member who will appear on the title and loan for the DALP loan.
Minimum Down payment: Borrower must contribute minimum of five percent (5%) of the purchase price toward the downpayment of the property. At least three percent (3%) must come from Borrower's own funds from verifiable sources; the balance may be in the form of a grant or gift. All borrowers must have sufficient funds to meet the required downpayment, closing cost, necessary reserves and sufficient income to meet the monthly mortgage payments, property tax, homeowner insurance and homeowner association dues. (The 5% does not include closing costs).
Asset/Reserve Limitation: The combined household liquid assets after purchase of the property cannot exceed $25,000. Liquid Assets includes all source of monies from savings, checking accounts and investments held by any member of the Borrower’s household including minors and any fund that is available for liquidation to purchase the 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: All adult household members will be required to 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. For schedule of the homebuyer courses, borrower may call or visit the housing counseling agencies website: http://sf-moh.org/index.aspx?page=289 or post on www.homeownershipsf.org. Certifications must have been issued within the last 6 months from the date of the application submission for downpayment assistance loan.
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PROPERTY ELIGIBILITY
Property Requirements: All properties purchased with downpayment assistance loan funds must be Single-Family Residences located in the City and County of San Francisco. The residences may be a single-family house, Condominium, Town Home, Loft or Live Work Unit (as long as the property has appropriate residential space and will be used as the owner’s principal residence). DALP Borrower cannot purchase a residential unit in which a No Fault Eviction occurred during the preceding 10 years from the date of Borrower's DALP application. For purposes of the preceding sentence, a No Fault Eviction shall mean an eviction under San Francisco Administrative Code section 37.9(a)(8) through (13) and (15).
Purchase Price Limits: Current purchase price limits 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.
Inspection Report Requirement for DALP: All properties purchased with DALP downpayment assistance loan program must be inspected by a certified, independent third party home inspector at the borrower’s expense. The inspection report must be acceptable to the borrower and submitted to MOH along with the DALP application. All reported deficiencies that pose immediate health and safety hazard must be corrected as a condition prior to any funding of a DALP Loan.
For newly constructed properties (single family or condominium units) an inspection report is not required.
Appraisal Report: MOH Requires a fair market appraisal as part of the lending and closing process, a copy of the appraisal report must be attached to the DALP application (appraisal report should be no more than 90 days old at the time of submission of the DALP loan application.
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FINANCING REQUIREMENTS
Primary Financing: Borrowers who apply for a downpayment assistance loan must be able to qualify for a maximum first mortgage from a Participating Lender prior to submitting an application for a downpayment assistance loan. Borrowers must have sufficient funds to meet the required down payment, closing costs, and necessary reserves and sufficient income to meet the monthly mortgage payments. The DALP loan must take second lien behind the first mortgages.
First Mortgage Requirements:The first mortgage loan must use 30 year fixed rate mortgage, the mortgage payment must be fully amortizing. Loan Types not allowed: stated income, ARM-Adjustable rate mortgage, interest-only, negative amortizing and balloon payment loans.
Co-Signing: Co-signing for a DALP loan by a non-household member is not allowed.
Seller Credits: Seller credits are allowed for non-recurring loan closing costs only, all credit funds must be used in escrow, and no cash back to the borrowers at the close of escrow.
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MAXIMUM LOAN AMOUNT
Maximum DALP Loan Amount is up to $100,000 or 20% of the purchase price whichever is less. Qualifying loan amounts are based upon a graduated scale depending on income levels, adjusted by household size, not to exceed 120% median income and debt to income ratio.At no time shall the DALP loans exceed 20% of the total Purchase Price. The maximum loan available per household depends on the household’s income in relationship to the Area Median Income (AMI). DALP is downpayment assistance loan, this loan cannot be used to pay for non-recurring loan closing costs, the borrower will be responsible for any escrow fee or closing costs associated with the completion of the transaction.
The Maximum Loan Amount available per household depends on the household’s income in relationship to the Area Median Income (AMI):
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Household Income
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80% AMI and under
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81%-90% AMI
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91%-100% AMI
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101%-110% AMI
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111%-120% AMI
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Loan Limits
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Up to
$100,000
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Up to
$90,000
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Up to
$80,000
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Up to
$70,000
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Up to
$60,000
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DALP Loan Reservation: DALP Loan as specified in the commitment letter will be placed on reserve for a period of 45 days from date of the commitment.
Combined Maximum Loan-to-Value Requirement (CLTV) cannot exceed 95% of the purchase price, which includes the first mortgage; the City’s Downpayment Assistance Loan and any other borrowed subordinate financing. No seller credit and cash back at close of escrow.
Debt to Income Ratio: Borrowers monthly housing debt, including property taxes, property insurance, and if applicable mortgage insurance and homeowner’s association dues cannot be less than 28% (front-end-ratio) of the household’s gross income. The ratio of monthly housing costs, plus all other household monthly debt (including credit cards, car payments, etc.) cannot exceed 45% (back-end-ratio) of the household’s gross income. The back-end-radio cannot exceed more than 5% of the front-end ratio (for example, the front-end ratio is 28%, the back-end-ratio cannot exceed 33%).
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DALP LOAN TERMS
The City loan will be deferred for 40 years at zero percent interest and has no monthly payments. The principal balance amount plus a share of the appreciation should become due at the end of term or when the borrower sells, rents or transfers title on the property. The appreciation is calculated by subtracting the original sales price from the current sales price or the current appraised market value. The share of appreciation is computed as a ratio of the City loan amount to the purchase price, that is, if the loan amount equals 20% of the purchase price, the share appreciation is 20%. If the borrower receives the DALP loan in the amount of $100,000 with the purchase price of $500,000, the share appreciation would be 20%:
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$100,000 DALP Loan Amount
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=
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20% of share Appreciation
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$500,000 Purchase Price
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Prepayment Penalty: There is no prepayment penalty to pay off the loan prior to the due date; however, the repayment amount must pay in full.
Assumable/Transferable: The City loans are not assumable or transferable. The loans must be paid in full upon sale or title transfer of the property.
Payoff Requests: MOH needs the following information for a payoff request:
1) A written Payoff Request from borrower or a signed consent from borrower(s), if an individual other than the original borrower(s) is making the payoff request.
2) A current fair market appraisal report (appraisal report should be no more than 90 days old at the time of request for payoff).
Upon receipt the above requested information, a payoff statement will generate within 5 – 7 business days.
Refinance/Subordination: The City loan can be subordinated to the refinancing of the existing first mortgage for lower interest rate and better loan term with no cash equity out of the property. If the refinance meets the City subordination requirements, the City loan will subordinate to the new first mortgage. Click here for the subordination Policy and subordination check list (pdf).
Subordination Requests: Borrowers must work with one of our participating lending officers to refinance their DALP Loans. For mortgage brokers, the funding lender needs to be approved as well. We will reject a subordination request for none participating lending officers. For Subordination Document Checklist, here is the link: http://sf-moh.org/index.aspx?page=294
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REPAYMENT
The Downpayment Assistance Loan is deferred for forty (40) years from the date of the initial purchase or until the sale or rent of the property without the prior approval of the City (in accordance with specified temporary rental guidelines). As of the closing date of the sale or rental occurs, the loan is due and payable. The repayment amount due by Borrower is (i) the principal amount of the loan plus (ii) the proportional share of the appreciation of the property.
The amount of appreciation is determined by subtracting the original purchase price to the borrower at the time of purchase from the sales price or fair market value at the time of sale or rental or refinance. The Fair Market Value shall be the sales price or the appraised value of the property at the time of repayment, whichever is higher. If the property has not increased in Fair Market Value, the Borrower shall be obligated to repay the principal amount of the loan only.
Sample Calculation of Repayment
For example: When you sell or refinance the property in the future for a new purchase price or fair market value (when refinance) of $550,000, the City repayment obligation will be:
| Loan Principal |
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$100,000 |
| Appreciation Share |
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|
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a. New Purchase Price/Fair Market Value:
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$550,000 |
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b. Original Purchase Price:
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$500,000 |
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| Appreciation (a - b) |
$ 50,000 |
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| 20% of Share Appreciation ($50,000 x 20%) |
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$10,000 |
| TOTAL REPAYMENT DUE TO CITY |
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$110,000 |
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OWNER OCCUPANCY REQUIREMENTS
A borrower must occupy the purchased property as its primary residence within 60 days after close of escrow. Properties that have received DALP funding must remain owner occupied throughout the term of the loan. Compliance monitoring may be performed and documented proof of occupancy required at intervals determined by the Mayor's Office of Housing.
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LOAN DOCUMENTS
The City will provide the required loan documents to the title company for borrower's signatures.
City Deed of Trust: The City Deed secures the loan against the title of the property. The City loan will subordinate to first mortgage, the City loan will always be on the second lien of the property.
City Note: The City Note contains an acceleration clause, which will call the entire loan due and payable upon the sale; rental and title transfer of the property. The City Note also outlines terms of repayments.
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DALP APPLICATION PROCESS
- The 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.
- Borrower must go to one of the participating lenders to get pre-approval or pre-qualification.
- Find out the maximum first mortgage for which you can qualify, combined with your own downpayment and the DALP loan amount you can qualify, that is the maximum purchase price you can afford. The lender should be able to help you make a good estimate of how much property you will be eligible to buy with those combined resources.
- Find a property, enter a purchase agreement.
- Once you have a ratified purchase agreement, go back to the lender whom you are working with and submit to them the following documents:
- DALP application (DALP-1)
- Complete set of past 3 years Federal income tax returns (included all schedules, signed and dated) and W-2 forms.
- 3 current and consecutive pay stubs with year-to-date (YTD)
- For self-employed borrowers, provide a current profit and loss statement (signed and dated) and sign and notarize a Self-Employed Affidavit
- Unemployed borrower or co-borrower must sign and notarize an Unemployed Affidavit
- Income Tax Affidavit (DALP-3) (if applicable)
- First Time Homebuyer Affidavit (DALP-4)
- Homebuyer Education Certificate
- Last 3 months bank statement for checking, savings & other pertinent investment accounts
- Ratified Purchase Agreement
- Inspection or contractor report of the property
- Gift letter (if applicable)
- IRS form 4506-T
- General Release and Waiver of Liability
- $522 (non -refundable) Application Fee; $627 if applying MCC together with DALP (must be a Cashier’s Check payable to the City and County of San Francisco)
- Lender will submit the DALP application package to the City and provide the following information along with the application:
- Copy of Final Mortgage Loan Application (Form 1003), signed and dated by borrower
- Underwriting Summary (Form1008)
- Approval or commitment letter from the Lender
- A copy of the borrower’s credit report (including credit score)
- A copy of final Good Faith Estimate (GFE) or Estimated Settlement Statement (HUD-1)
- Fair Market Appraisal
- Preliminary title report
- MOH will email a letter of approval or denial to the borrower and lender within 10-15 working days of receipt a complete package from the lender. DALP Loan as specified in the commitment letter will be placed on reserve for a period of 45 days from date of the commitment.
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DALP PROGRAM MANUAL & FORMS
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REVIEW AND PROCESSING
MOH receives a complete and bound application in a legal size manila folder with two fasteners (application follows instructions suggested on Transmittal Form)
- MOH will email an approval or denial letter to the lender within 10-15 working days of receipt of a complete package. Incomplete packages will be returned without review.
- Email notice includes draft loan documents and a request for buyer(s) to sign & date a commitment letter, which must be returned to the City within 5 working days.
- After MOH receives the signed commitment letter back from the borrowers:
- 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 void.
- Funding will be wired to the escrow account after we have received and reviewed all closing documents by 11 a.m. the fund will be wired in the 3rd working days. If we receive the closing documents after 11 a.m. the fund will be wired on the 4th working day. We require 3 working days for wire transfer.
- Attention All Title Companies: The Mayor’s Office of Housing requires that all beneficiaries, vendors or Title Companies register for ACH pay mode for Electronic Funds Transfer. This is standard for all of our funding transactions. For information and enroll to the ACH pay mode system, please visit the San Francisco Controller’s Office website.
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WORKSHOPS & LENDER TRAININGS
Mortgage Loan Officers (MLO) or mortgage brokers who would like to become participating lenders for MOH's homeownership programs, including DALP, MCC, PIC and TND must complete the required training and pay the required fee. Each individual MLO or mortgage broker must complete the training every year. All participating loan agents must provide their NMLS ID# to MOH and sign the Lender Participation Agreement.
BMR Lender Training is not currently available. Lenders who wish to participate with the BMR must agree and understand that the City will place a second lien against the BMR property, which is the difference between the fair market value and the BMR sales price, referred to as BMR lien. The City will require Title Insurance for the BMR lien. The lender also understands that the restrictions in an Inclusionary Housing BMR unit will survive foreclosure. To inquire about BMR lender participation, please contact our office at (415) 701-5500 and ask for the BMR program staff.
Lender Training for DALP & MCC is now online. To register and take the training, please visit:
Online Lender Training for DALP & MCC
Click for List of DALP/MCC Participating Lenders
Click for List of Homebuyer Education Counseling Agencies
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