Downpayment Assistance Loan Program (DALP)
Detailed information for lenders
DALP is a downpayment loan up to $375,000, to bid on a property on San Francisco's open market. The loan must be used on the downpayment of a single unit that will become a primary residence. The owner can re-sell the unit at market prices.
The DALP is a silent second loan that requires no monthly payments for 30 years, or until the property is sold. The owner pays MOHCD back the principal amount, plus an equitable share of appreciation.
2017 DALP funds are still being dispersed. Tracking will continue until all funds are dispersed.
Loan program details
Funding Availability for 2018
|Funding source||Available Balance||Applicants|
|DALP-Housing Trust Fund (120% AMI)||$3,000,000||General Public|
|DALP-2015 Bond (175% AMI)||$10,000,000||General Public|
|FRDALP- Housing Trust Fund (200% AMI)||$1,000,000||SF First Responders|
|Educators-DALP-TND (200% AMI)||$1,200,000||SFUSD Educators|
Important dates for 2018
|July 31, 5PM||Lottery applications due|
|August 20, 10am||Lottery at SF Main Library|
|August 31||Lottery results posted|
|September 4||Applications begin to be processed|
- No fee to apply for DALP lottery, which uses a pre-approval application.
- There is a nonrefundable fee to process the paperwork of the DALP application. This will be collected when DALP funds are reserved to close on a property. See MOHCD program fees »
Lottery, using pre-approval application
There is a lottery for the DALP once a year. Note: no lottery preferences are used in the DALP lottery. Read more about how the lottery works »
- MOHCD will process and approve applications in lottery rank order, by the following audiences:
- First Responders (FRDALP)
- SFUSD Educators (Educators-DALP)
- We have a different funding source for applicants above 120% AMI.
- Both 120% AMI and 175% AMI applicants will be ranked on the same list.
- Each household can only reserve funds under one program (General, First Responders, or Educators) if selected.
- First responders or SFUSD educators can still be considered for funding under the General DALP list if they are not selected in under FRDALP or Educators-DALP. However, the applicant must meet the AMI requirements of the funding source they use.
Loan Reservation Period
Only one (1) reservation (i.e. pre-approval lottery application) is permitted per eligible household.
Duplicate pre-approval applications from one eligible household, whether with one lender or multiple lenders, will automatically result in disqualification of all applications. Borrowers are encouraged to shop around to find the best participating lender that suits their needs, but must choose only one lender in connection with DALP.
A reservation does not constitute final loan approval nor guarantee funding. A DALP loan will only be funded when the borrower fulfills the loan commitment from MOHCD, satisfies the reservation timeline described below and meets the DALP requirements.
|Period||Time span||Action required from:||Description|
|Purchase Period||60 calendar days||Buyer||The pre-approval is good for 60 calendar days. During this period, borrowers must enter into a sales contract.|
|DALP Loan Submittal Period||30 calendar days||Lender||Following the execution of a sales contract, the Lender must submit a complete DALP loan packet to MOHCD.|
|DALP Review Period||10 calendar days||MOHCD||MOHCD will review the DALP loan packet|
|Loan Commitment Period||30 calendar days||MOHCD
|Upon loan approval, MOHCD will issue a Commitment Letter that is good for 30 calendar days.|
Maximum Loan Amount
Up to $375,000 of the purchase price, as funds are available. 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. The maximum loan available per household depends on the household’s income in relationship to the Area Median Income (AMI).
- First-time homebuyers: No member of a household must have had any ownership interest in a residential unit for the last three years.
- Completed homebuyer education from Homeownershipsf.org
- Maximum Income Limits: household income must not exceed 175% of the Area Median Income (AMI).
- The combined income of all household members 18 years or older, 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,
- Maximum loan amounts are tied to the household income category.
- Minimum Downpayment: Borrower must contribute a minimum of 5% (2.5% from borrower's own funds, and remainder from gifts or grants).
- Liquid Assets: Borrower must have no more than $300,000 prior to purchase, and no more than $60,000 after purchase.
- Post-Purchase Reserves: Borrower must have a minimum of 3 months’ reserves after purchase. In addition to Liquid Assets, vested funds from retirement accounts that permit withdrawals may be also used for reserves. This reserve should include 3 months’ of:
- Property taxes
- Hazard insurance
- Homeowner’s association dues
- Occupancy: The property must be owner-occupied during the life of the loan.
- Eligible Household Member: An eligible household member must either be:
- On title and loan of the property. All spouses or domestic partners must be included in the household and must appear on the application, title, and loan for the City Second loan.
- Listed as a dependent on tax returns. All household members who are under 18 years of age must be the legal dependent of an adult household member. An unborn child will be counted as a household member with verifiable medical documentation. Elderly adult household members may be considered as dependent as long as they are listed as a dependent on the most recent tax return. All income from dependent adults and children must be included in the total household income. Spouses and Domestic Partners are not considered dependents.
- Primary Financing: Borrowers must be able to qualify for a first mortgage from an approved lender prior to submitting an application for DALP. Borrowers must have sufficient funds to meet the required downpayment, and necessary reserves as well as sufficient income to meet the impounded monthly mortgage payments.
- Lien Position: DALP loan must be in second position behind the first mortgage.
- First Mortgage Requirements: The first mortgage loan must be a 30-year fixed rate mortgage, the mortgage payment must be fully amortizing.
- Loan Types not allowed: Reverse mortgage, stated income, ARM (adjustable rate mortgage), reverse mortgage, interest-only, negative amortizing, balloon payments
- Impounds: The first mortgage lender must collect and manage impound accounts for property taxes and hazard insurance for the loan term.
- Loan-to-Value Requirements (LTV and CLTV): The minimum Loan-to-Value (LTV) is 50%, and the maximum Combined Loan-to-Value (CLTV) is 97%.
- Debt-to-Income Ratio: Borrower monthly housing debt, including property taxes, property insurance, and if applicable mortgage insurance, and homeowner’s association dues cannot be less than 33% 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 43% of the household’s gross income.
- Front-End (Housing) Ratio: No less than 33% and no more than 40%
- Back-End (Total Debt) Ratio: No more than 43%
- Co-Signing: Co-signing for a DALP loan by a non-household member is not allowed.
- Loan Signing: No power of attorney is allowed. All applicants must be physically present to sign loan documents.
- Closing Costs: DALP funds may be used to cover customary, non-recurring closing costs up to 2% of the purchase price or appraised value, whichever is less.
Post-Purchase Loan Terms
- Loan Terms: The term of the loan is 30 years. DALP is a no-interest, no-monthly-payment, deferred loan. The principal balance amount plus a share of the appreciation becomes 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.
- For example, if the borrower receives the DALP loan in the amount of $375,000 with the purchase price of $950,000, the loan amount is 39% of the purchase price. Therefore, the share of appreciation would also be 39%.
- Prepayment Penalty: There is no prepayment penalty associated with payment of these loans prior to the due date. However, prepayment must be in full; the loan cannot be partially repaid. If there is a prepayment, the amount due and owing will be determined by an appraisal, at the homeowners own cost, to determine the amount of appreciation. The prepayment must also be approved by the MOHCD Director.
- Assumable/Transferable: The City loan is not assumable or transferable. The loan must be paid in full upon sale or title transfer of the property.
- Payoff Requests: Borrowers must submit a written request for payoff. If the borrower wishes to have a third party submit a request for payoff on their behalf, they must submit a signed authorization allowing MOHCD to provide information to the third party. In addition, borrowers must submit at their own cost, a current fair market appraisal report dated within 90 days of the payoff request submission.
- Refinance/Subordination: The loan can be subordinated to the refinancing of the existing first mortgage for a lower interest rate and/or better loan term. More details about refinancing and subordination »
- Home Equity Lines of Credit and Home Equity Loans: MOHCD does not allow DALP borrowers to open Home Equity Line of Credit and Home Equity Loans. Borrowers who use such programs are in violation of their Program restrictions and will not be allowed by MOHCD to refinance their DALP loans. The DALP loan will be due and payable with share of appreciation if the Borrower is deemed out of compliance with this policy and all other applicable program policies.
- Closing appointment: The buyer must sign the Commitment Letter and Affidavit at MOHCD’s offices at 1 South Van Ness, within 5 business days of request.
DALP Manual and Documents
- DALP Program Manual June 2018.pdf
- DALP Pre-Approval Application Packet May 2018
- For applying to the annual lottery
- Combined Downpayment Loan Application
- For reserving funds after the lottery
- Sample - DALP Escrow Instructions and Closing Documents
- For lender reference
Training for Participating Lenders
Mortgage Loan Officers (MLO) or mortgage brokers who would like to become participating lenders for MOHCD's homeownership programs, including DALP, MCC 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 MOHCD and sign the Homeownership Programs Lender Agreement.