Part II: How To Buy a Home in SF (and Beyond)
I recently wrote about a program that helps San Francisco residents purchase affordable housing. My readers (all 10 of them) responded. Many of you are interested in becoming homeowners but, for one reason or another, may not be qualified for the Below Market Rate (BMR) assistance program I wrote about. If you make too much money *lucky bastard* or live somewhere outside of SF, there are still options that may help you buy your first home. Let's discuss...
I/We Make too Much to Qualify for a BMR
In most cases the cap to qualify for a BMR is 100% Area Median Income (AMI). Currently that’s $75,400/yr for a single person household and $86,150/yr for a two person household (yes, these numbers have gone up since my last article! It appears the city has posted new information). Some of you have the “problem” of exceeding these caps. Couples in particular (any pair of people wanting to buy together, whether married or unmarried) find it very hard to meet the income qualifications. Ask me about the woman who quit her job so that she and her husband could qualify for a BMR. If you’re overqualified, try a combination of the following options:
Solution 1: Look for Properties That Allow Higher Income Levels
While the majority of the BMR properties are reserved for people at or below 100% AMI, many properties allow higher income limits. Around half of the properties currently listed go up to 120% AMI, which is currently $90,500 for one person and $103,400 for two. If you’d like to be notified every time a new property is listed so you can see what the income limits are, subscribe to the city’s email list. In the meantime you should still consider going through the requirements for BMR purchasers so you’ll be ready when the right property is listed.
You and your Ginger Princess might qualify for assistance after all!
Solution 2: Try the City’s Open Market Loan!
Are you significantly above the income cap? The Downpayment Assistance Loan Program (DALP) is an incredible option! DALP is available for those who earn up to 175% AMI, which is $131,950 for a single person and $150,750 for two people.
In short, DALP is a loan of up to $375k that can be added to your mortgage loan in order to help you purchase otherwise unaffordable properties on the open market in SF. DALP is interest free and does not have to be paid back for 30 years.
In order to take advantage of this loan option you’ll have to go through the same certification process as BMR buyers (workshops, counseling session, loan approval) which I outlined in my last article.
Solution 3: Wait. Try Again.
Last week a friend of mine told me that she makes about $1k/yr over the AMI limit. Fortunately her problem is likely just temporary. Every year the income caps increase based on how incomes have changed *risen* in SF. The AMI information is supposed to adjust every year in March, but sometimes the city lags (don’t hate them, they’re under-resourced). Checking the AMI chart each quarter will help you stay in the know.
Help! I live outside of the wealth bubble!
I Don't live in SF
San Francisco isn’t the only city that helps subsidize homeownership. If you’re considering buying your first home, I strongly encourage you to do a simple web search of your city name, plus the phrase “First Time Homebuyer.” Stick to the results you find from a city website or reputable nonprofit.
The programs in your area will likely differ quite a bit from the BMR option in SF. As long as you take your time and read the information carefully, you should be able to figure out whether or not your local options suit you. Here’s what I found in a quick search of cities where Moneybites readers live:
The MAP program offers loans from $50k - $75k to Oakland residents for the purchase of properties priced at up to $650,000. MAP is for single buyers earning up to $81,900/yr, or two buyers earning up to a combined $93,600 (these figures also increase annually). The loan has a 3% interest rate and repayment is not due for 30 years.
There are a host of options available for residents of the Denver Metro area and for Coloradans in general. The Denver Housing Authority (DHA) provides required courses and counseling sessions to help you access loans/grant money available through the CFHA. If you’d like to have a DHA counselor talk you through the options call the Denver Housing Authority at 720-956-3801. I called the number *this is hard-hitting journalism* and learned that most people earning up to $81,000, with FICO scores of 620 or higher, can qualify for assistance. You’ll likely be required make a 3% down payment (that’s 3% of your home’s total sales price -so for a $400k home your down payment would be $12k).
Finding clear info about options in the city of New York is a littl challenging. The department of Housing Preservation & Development (HDP) has several web pages that aren’t presently working. It appears as if the city only offers, “up to $15,000 toward down payment or closing costs”, with an income cap of $50,750 for a single person. Thanks a lot city of NY. The state appears to offer more reasonable options, available for 1 to 2 person households earning up to $108,720. There may be better options for you based on your neighborhood of residence.
Still can’t find a fit?
Fret not. You may be able to go to your banking institution for help. Some banks/credit unions offer their own special loans for first time homebuyers. You may even be able to pair a bank/credit union loan with funds available to you through your city in order to make homeownership a possibility.
overwhelmed by all of the different options?
That’s normal! It took me hours upon hours of training to understand how the BMR program works, and I’m still learning. Please reach out to me with questions, or if you’d like someone to walk you through your options. I love hearing from you!
Got general questions or feedback? Leave a comment below to let me know how Moneybites can give you the information you need!
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