LEP Information for Lenders

NOTE: As of April 16, 2012 the San Francisco Mayor's Office of Housing and Community Development will be accepting Subordination requests. Click here for more information.

MOHCD will review the loan application, the good faith estimate and other documents to ensure compliance with Program guidelines and eligibility.

Types of Mortgages
MOHCD allows only 30-year, fixed-rate, fully ammortizing purchase money loans. Interest-only loans, adjustable rates, Home Equity Lines of Credit (HELOC) and Lines of Credit (LOC) are not permitted as part of a home purchase or refinance. The lender must be an accredited financial institution.

Loan-to-Value and Mortgage Insurance
MOHCD's Program is a restricted resale program. However, it has been structured so that the resale restrictions terminate in the event of foreclosure. In other words, the full Fair Market Value ("FMV") of the home is available for distribution if there is an uncured default. Therefore, the purchase money loan should be underwritten based on the FMV of the home rather than on the Affordable Purchase Price (often one third or less of FMV). The result when the loan is underwritten in this fashion is that the loan-to-value of the purchase money loan will often be 30-40%, and certainly far less than the 80% threshold for Private Mortgage Insurance ("PMI"). MOHCD requires that lenders providing mortgages to purchasers in the Program will underwrite in this manner and will therefore not require or charge for PMI in any form. Lenders who work with Fannie should note the March 2006 notice from Fannie indicating that programs structured like our Program (where the restrictions terminate in the event of foreclosure) allow the underwriters to use the higher of the FMV or purchase price for loan-to-value analysis. These loans must be manually underwritten. For your convenience, find the relevant Fannie Mae Announcement 06-03 (March 22, 2006) below. See in particular Sections D and I of the attached Fannie notice.

Debt to Income Ratios
MOHCD will allow up to a 45% back-end ratio.

Down Payment
MOHCD requires a minimum 5% down payment. Of the total 5%, 3% must be the borrower's own funds and 2% can be gift funds. Total down payment cannot exceed 50% of the sales price.

Credit Policy (effective May 1, 2010)
MOHCD requires a minimum 620 middle score for the household (all adult members). The score is based on a tri-merge credit report (one that combines credit reports from all three of the credit bureaus) within 90 days prior to the application date. However, if credit has not been established, we will allow no credit score.

Title/Loan Poicy
MOHCD requires that all adult household members be on title, first mortgage and Agency loan documents. However, if an individual adult household member who is not the head of household is unable to obtain a loan, we will allow the following two exceptions to this policy:

  1. Dependant: defined as a current member of the household who is claimed as a dependent on the most recent federal income tax return.
  2. Those with less than two years of credit history who meet one of the following criteria: 1) minimum 620 middle score or 2) have not established credit.

For applicants that are unable to qualify for a loan and who meet our criteria for an exception, send a request with the details and documentation. All adults will still need to be on title and on MOHCD loan documents.

In general, MOHCD will subordinate its Deed of Trust to a First Deed of Trust. MOHCD may consider further subordination on a case-by-case basis.


The following MOHCD programs are compatible with the Limited Equity Home Ownership Program:


  1. Teacher Next Door (TND)
  2. Police in the Community (PIC)
  3. Mortgage Credit Certificates (MCC) (certain restrictions apply based on project funding)

The following MOHCD programs are NOT compatible with the Limited Equity Home Ownership Program:

  1. City Second
  2. Downpayment Assistance Loan Program (DALP)

Visit the MOHCD website for more program information.


LEP is approved for use with CalHFA loan programs, and a CalHFA first mortgage should be compatible with LEP. However, in terms of secondary financing from CalHFA, lenders should only assume that CalHFA's CHDAP and School Facility Fee Grant can be used in conjunction with LEP. CalHFA will subordinate the CHDAP and the School Facility Grant to MOHCD; MOHCD will not subordinate to CalHFA's other subordinate financing at this time. Visit the CalHFA website for more information on CHDAP and CalHFA's other programs.



Subordination and Use With Other Programs
NOTE: As of April 16, 2012 the San Francisco Mayor's Office of Housing and Community Development will be accepting Subordination requests. Click here for more information.



The following documents contain critical information about MOHCD's Limited Equity Program. Start by reading the Loan Disclosure Information booklet. It can probably answer many questions you might have about the Program. Please refer to the above information and these documents before contacting MOHCD with questions.

Limited Equity Loan Disclosure Information (PDF)
Limited Equity Loan Documents (Word)
Limited Equity Program Brochure (PDF)
Fannie Mae Announcement 06-03 on LTV (PDF)