First Responders Down Payment Assistance Loan Program (FRDALP)
Effective July 5, 2016
FRDALP loan amount $375,000; Application Fee $580 (non -refundable) Application Fee
The First Responders Downpayment Assistance Loan Program (FRDALP) is available through MOHCD Approved Participating Lenders Only
First Responders Downpayment Assistance Loan Program (FRDALP) PROGRAM OVERVIEW
The First Responders Downpayment Assistance Loan Program (FRDALP) provides downpayment assistance loans to active uniformed, sworn members of the San Francisco Police Department (SFPD), San Francisco Fire Department (SFFD) and San Francisco Sheriff’s Department (SFSD) to purchase their first home in the City and County of San Francisco. Loan funds have been made available through the Housing Trust Fund. The FRDALP is a silent second loan that requires no payments for 30 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.
Maximum Loan Amount
Owner Occupancy Requirements
FRDALP Application Process
FRDALP Program Manual and Forms
Review and Processing
Homebuyer Education Counseling Agencies
To be eligible for a FRDALP loan, a borrower must be an active uniformed, sworn member of the San Francisco Police Department, San Francisco Fire Department, or the San Francisco Sheriff’s Department. Borrower must be able to obtain and submit a written verification of employment from their department or authorize DHR to provide equivalent verification directly to MOHCD.
Each household is limited to one loan, regardless of the number of First Responders in that household.
First-time homebuyer: Borrower must not have owned any interest in a principal residence in San Francisco during the last three years. Borrower also must not own an interest in any other principal residence at close of escrow.
Meet income limits: Household income is limited to 200% of the Area Median Income.
- 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.
Minimum Downpayment: Borrower must have at least 5% downpayment contribution towards the purchase price. A minimum of 2.5% must come from the borrower's own funds. The remaining 2.5% can be from gift funds or grant.
Post Purchase Reserve Funds: Borrowers using FRDALP must have a minimum of three months total monthly housing expenses post purchase. Some borrowers may qualify for first-mortgage financing with fewer than three months reserves. Recognizing that the financial circumstances of each homebuyer are unique and that there may be other factors besides 3 months reserves that reflect the borrowers ability and willingness to repay mortgage loans, the MOHCD may consider 2 months reserves if two or more of the following indicators are present:
a) Proven ability to devote a larger amount of income to housing expenses. The borrower successfully demonstrated an ability to make rent payments for twelve consecutive months that are equal to or greater than the proposed monthly payments for the house being purchased;
b) Substantial retirement or non-liquid assets;
c) FICO credit score greater than 700;
d) Demonstrated potential for increasing earnings;
e) PITI and HOA due does not increase more than five percent over current rent
First Mortgage: Borrower must be able to obtain a first mortgage loan approval and loan commitment from a MOHCD Participating Lender. First mortgage must be 30 years fixed rate, fully amortizing mortgage.
Debt-to-Income Ratio: Borrower must have a higher than 33% front-end debt-ratio (housing cost which includes: principal, interest, taxes, insurances and homeowners association dues) and not to exceed 43% back-end debt-ratio (housing cost plus all other unsecured debt) over a borrower's gross monthly income. If you don't understand this DTI ratio, your lender will explain it to you.
Asset/Reserve Limitation: The combined household liquid assets after purchase of the property cannot exceed $60,000 for FRDALP. Liquid Assets includes all source of monies from savings, checking accounts , gift fund, cash received from settlement or inheritance and investments and properties 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 on title must complete the first-time homebuyer education course through one of MOHCD’s 5 approved housing counseling agencies. A certificate of completion of homebuyer education must be included with the application package. For a schedule of the homebuyer course, borrower may call or visit the housing counseling agencies website: www.sfmohcd.org or post on www.homeownershipsf.org. Certifications must have been issued within the last 12 months from the date of the DALP application submission.
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 will be used as the owner’s principal residence).
The Purchase of Tenant-Occupied Property: Under eviction protection covered by the SF Rent Ordinance, tenants may only be evicted by the landlord for one of the 16 just cause reasons under the Ordinance Section 37.9(a). FRDALP borrower cannot purchase a housing unit in which any unlawful rental eviction has occurred.
Property Flipping: FRDALP loan cannot be used to purchase properties resold within 90 days and with more than 20% above the purchase price.
Inspection Report Requirement for FRDALP: A General Home Inspection, performed by a state-licensed and independent third party home inspector, is required for all properties purchased with FRDALP. The inspection should include electrical, wiring, plumbing, roofing, insulation and structural features. In addition, MOHCD requires a Pest Control Inspection report for wood destroying pests and organisms to be conducted by a reputable license holder issued by the Department of Consumer Affairs and the Structural Pest Control Board. Both inspection reports shall be no more than 90 days old at the time of FRDALP submission, acceptable to the borrower and submitted to MOHCD along with the FRDALP application. All reported deficiencies that pose immediate health and safety hazard or code violation must be corrected as a condition prior to funding of a FRDALP Loan. The City and County of San Francisco will not be held liable for any misrepresentation, false claims or information contained in the inspection reports.
The City and County of San Francisco maintains the right to deny the loan, due to the condition of the property. If the first mortgage lender is requiring repairs to the property, you must include a copy of the clearance report prior to close of escrow. All units must be complete with respect to health and safety construction or repairs and ready to occupy. Escrow holdbacks for constructions and repairs are not allowed.
For newly constructed properties (single family and condominium units) an inspection report is recommended but not required.
All borrowers must submit a signed and notarized General Release and Waiver of Liability form along with the DALP application
Appraisal Report: MOHCD requires a fair market appraisal as part of the lending and closing process. A copy of the appraisal report must be attached to the FRDALP application. The appraisal report should be no more than 90 days old at the time of submission of the DALP loan application.
Pest Control Inspection Report: MOHCD Requires a pest control inspection report for wood destroying pests and organisms to be conducted by a reputable license holder, issued by the Department of Consumer Affairs and the Structural Pest Control Board.
MAXIMUM LOAN AMOUNT
Maximum FRDALP Loan Amount is up to $375,000 of the purchase price. Qualifying loan amounts are based upon income levels not to exceed 200% median income and debt to income ratio. The maximum loan per household depends on the household’s income in relationship to the Area Median Income (AMI).
Maximum Combined Loan-to-Value Requirements: cannot exceed 95% of the purchase price, which includes the first mortgage; the City’s Downpayment Assistance Loan and any other borrowed subordinate financing. The minimum first mortgage loan LTV cannot be less than 50% of the purchase price.
The loan must be used for downpayment only (no closing costs).
Loan is deferred for 30 years, due on sale, rent or title transfer. Borrower must remain an active member of the SFPD, SFFD, or SFSD for a minimum of five years from the date the home is purchased. Should borrower's status change prior to five years, the full amount of the loan, plus share of appreciation is immediately due.
There is no prepayment penalty to repay this loan prior to the due date.
Repayment amount will include the principal loan amount plus share of appreciation of 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 31% of the purchase price, the share appreciation is 31%. If the borrower receives the FRDALP loan in the amount of $375,000 with the purchase price of $1,200,000, the share appreciation would be 31%.
Refinance/Subordination: The FRDALP loan can be subordinated to the refinancing of the existing first mortgage for a lower interest rate and/or better loan term. Borrowers are allowed to take up to 3% of the new first mortgage amount as cash out to cover the customary closing costs of the refinance. Under no circumstances can the refinance amount be greater than the original loan amount. If the refinance meets the City subordination requirements, the FRDALP loan will subordinate to the new first mortgage.
OWNER OCCUPANCY REQUIREMENTS
Owner must occupy the property as principal residence within 60 days after close of escrow. Property must be owner-occupied at all times throughout the term of the loan. Compliance monitoring will be performed and documented proof of occupancy required at intervals determined by the Mayor's Office of Housing and Community Development.
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.
FRDALP APPLICATION PROCESS - Loan applications received by MOHCD containing purchase contracts with less than 15 business days remaining to close will be returned to homebuyer for contract extension.
The borrower must complete the first-time homebuyer education course through one of MOHCD’s approved housing counseling agencies. A certificate of completion of homebuyer education (within last 12 months) must be included with the application package along with:
Letter of Verification as an active member in good standing from SFPD, SFFD, SFSD
Non-refundable cashier’s check made out to the City & County of San Francisco for DALP or MCC application fee only, if combining MCC program with FRDALP. See website for current fees. (Please deliver the check along with Transmittal Form to MOHCD office).
LOAN-1 Loan Application
Income Tax Affidavit
First Time Homebuyer Affidavit
HomeownershipSF Consent Form
Borrower(s) three most current & consecutive pay stubs
Unemployed Affidavit (if applicable)
Self-Employed Affidavit (if applicable)
Profit and Loss Statement (signed & dated, if applicable)
Copy of Borrower’s Identification Card
Borrower(s) Federal Income Tax Returns for the past three years with all applicable schedules and W-2s (signed and dated)
Past 3 years Income Tax Transcripts
Signed IRS Form 4506-T
Borrower(s) three most current & consecutive months of Bank Statements
Gift Letter and evidence of donor availability of funds (if applicable)
General Release and Waiver of Liability
- Lender will submit the FRDALP application package to the City and provide the following information along with the application:
LOAN-2 Lender’s Certification
Verification of Employment (VOE)
Copy of Borrower’s Credit Report
Ratified Purchase Agreement (including all counter offers and addendums)
Fair Market Appraisal
First Residential Mortgage Loan Application- Form 1003 (signed and dated)
Underwriting Transmittal Summary- Form 1008
General Home Inspection Report
Pest Control Inspection Report
Preliminary Title Report
- MOHCD will email a letter of approval or denial to the borrower and lender within 15 working days of receipt a complete package from the lender. FRDALP Loan as specified in the commitment letter will be placed on reserve for a period of 45 days from date of the commitment. Loan applications received by MOHCD containing purchase contracts with less than 15 business days remaining to close will be returned to homebuyer for contract extension.
- FRDALP Program Manual Oct 2016
- Combined DALP Application Oct 2016
- FRDALP City Deed (pdf)
- FRDALP City Note (pdf)
MOHCD Reviews loan package via DAHLIA to ensure completeness of forms and substantiating documentation.
- MOHCD will email an approval or denial letter to the lender within 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 MOHCD receives the signed commitment letter back from the borrowers, MOHCD will email escrow instructions and closing documents to the title company.
- 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 and Community Development immediately or the loan will be void.
- Funding will be wired to the escrow account on the 4th working day, after we have received and reviewed all closing documents. We require 4 working days for wire transfer funds.
- Attention All Title Companies: The Mayor’s Office of Housing and Community Development 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.