New Down Payment Loans May Make More SF Homeowners
Is it cheaper to buy a house in San Francisco than it is to rent? In some cases, yes. Mayor Ed Lee has proposed $15 million in new contributions from the city's main spending account be added to the Down Payment Assistance Loan Program over the next five years. This program, effective as of March 1, doubles the maximum down payment pay out from $100,000 to $200,000, making the goal of first-time home or condo owning in the city within reach.
Lee doesn’t skirt the issue, this spending spree is a direct result of low to middle-class income families being squeezed out of the city by its raging tech boom. And $200,000 is a big step in the right direction when the median price tag on a house is $925,000.
But before you hand in your 30-day notice, here are some facts you should know.
The program aids low to middle-class first-time buyers of market-rate homes, meaning houses that cost in the neighborhood of $600,000 to $700,000. Houses in this range are probably fixers, and/or houses on the outskirts of town in Portola or Bayview. The city also runs similar programs for people buying below-market rate homes too.
Based on income and family size, all applicants must complete a first-time homeowners’ workshop and pitch in 5% of the sales price to the down payment. Housing costs cannot exceed 40% of their income and when said homeowner sells or refinances, the loan has to be paid off along with a percentage of the property's appreciation, depending on how much of the purchase price the city covered.
So, if you've always dreamed of being a San Francisco homeowner, you can keep doing so, although you might have to adjust your dream home to be a condo or an outdated single family home in Bayview.
Illustration by Eli Myers for The Bold Italic