Teacher Next Door Program (TND)
The Teacher Next Door (TND) Program is available through MOHCD Approved Participating Lenders Only
Teacher Next Door (TND) Funds are available to SFUSD Educators on a first come, first served basis.
Effective July 5, 2017, TND loan amount on a market rate unit will be increased to $40,000.
TND Fund Balance
TEACHER NEXT DOOR (TND) PROGRAM OVERVIEW
The Mayor's Office of Housing and Community Development (MOHCD) administers the Teacher Next Door (TND) Program to assist educators employed with the San Francisco Unified School District (SFUSD) with the purchase of their first home in San Francisco. TND funds can be used for down payment and closing costs to purchase a below market rate (BMR) or a market rate unit in conjunction with any other subordinate financing as long as the borrower meets all used program qualifications. The term of the TND is 10 years. There is no interest, nor shared appreciation. After the 5th year, the loan is forgiven at rate of 20% per year, and at the end of the 10th year, the loan is forgiven in its entirety.
- TND Borrowers: TND Borrowers must be educators currently employed with the San Francisco Unified School District (SFUSD). SFUSD Educators are all United Educators of San Francisco (UESF) members, including teachers, paraprofessionals, and other certificated staff (e.g., counselors, deans, nurses, speech pathologists, psychologists, behavioral analysts, social workers, Special Education (SPED) Content Specialists and librarians), and also including those who work in the SFUSD Early Education department. At the time of application, the Borrower must provide a written verification of employment from the SFUSD.
- First-time homebuyers: No member of a household must have had any ownership interest in a residential unit in San Francisco for the last three years.
- Income Limits: Household's income must not exceed 200% of the area median income (AMI). See Current Year Maximum Income Limits as of April 14, 2017 (PDF)
- Occupancy: The property must be owner-occupied within 60 days of closing, and during the life of the loan.
- 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 $60,000 after purchase. There is no limit on liquid assets before purchase.
- Reserves: Borrower must have a minimum of 3 months reserves (principal, interest, property taxes, hazard insurance and homeowner’s association dues) in reserves after purchase. In addition to Liquid Assets, vested funds from retirement accounts that permit withdrawals may be also used for reserves.
- Homebuyer Education Requirement: Borrower will be required to complete Verification of First-time Homebuyer Education requirements through one of MOHCD-approved housing counseling agencies. A verification of completion of homebuyer education must be included with the application package.
- Property Requirements: The property must be Single-Unit Residences located in San Francisco. The residences may be a single-family house, Condominium, Townhouse/Town Home, Loft or Live Work Unit (as long as the property will be used as the owner’s principal residence). Rental of any portion of the property is NOT allowed.
- Property Size Requirements: There is no requirement for the size of the household to be compatible with the size of the unit being purchased under the TND program.
- 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). TND borrower cannot purchase a housing unit in which any unlawful rental eviction has occurred.
- Property Flipping: TND cannot be used to purchase properties resold within 90 days and priced more than 20% above the initial purchase price.
- Lien Position: TND loan must be in junior lien position behind the first mortgage, BMR lien and/or DALP.
- First Mortgage Loan Term: The first mortgage loan must be a 15-year fixed, or 30-year fixed rate mortgage, the mortgage payment must be fully amortizing.
- Impounds: The first mortgage lender must collect and manage impound accounts for property taxes and hazard insurance for the loan term.
- LTV and CLTV Ratio: The minimum first mortgage Loan to Value (LTV) cannot be less than 50% of the purchase price or appraised value, whichever is less. The maximum Combined Loan to Value (CLTV) cannot exceed 97%, which includes the first mortgage, TND and any other borrowed subordinate financing.
- Front-End (Housing) Ratio: No less than 28% and no more than 40%
- Back-End (Total Debt) Ratio: No more than 45%
- 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: TND Funds may be used to pay for non-recurring closing costs up to 2% of the purchase price or appraised value, whichever is less.
- TND loan amount: The maximum TND loan amount is $40,000 on a market rate unit (effective on July 5, 2017), and $20,000 on a BMR unit. Each household is limited to one TND loan, regardless of the number of SFUSD Educators in that household.
- Layered Financing: The TND loan may be layered with other City programs, such as Downpayment Assistance Loan Program (DALP), City Second Loan Program (CSLP), and Below-Market Rate (BMR) Program. The Borrower must meet all of the other eligibility requirements for those programs. In the case of any conflicting requirements, the more restrictive will apply.
- TND Loan Reservation: TND funds, as specified in the commitment letter issued to a borrower, will be placed on reserve for a period of no more than thirty (30) days from date of the commitment.
The term of the TND is 10 years. There is no interest, nor shared appreciation. The loan is due upon sale, rent or title transfer of the property, or upon borrower’s unemployment with the SFUSD at any time during the entire loan term. Borrower must remain an educator with SFUSD during the entire loan term. If any defaults occurred within 5 years of the date the loan is issued, the loan must be paid off in full.
After the 5th year, the loan is forgiven at rate of 20% per year, and at the end of the 10th year, the loan is forgiven in its entirety. The following chart illustrates repayments of TND loans in the amount of $20,000.
Year 1 $20,000
Year 6 $16,000
Year 2 $20,000
Year 7 $12,000
Year 3 $20,000
Year 8 $ 8,000
Year 4 $20,000
Year 9 $ 4,000
Year 5 $20,000
Year 10 $ 0
MOHCD issues Form 1099-C Cancellation of Debt to borrowers who get their TND loans forgiven during the previous calendar year. To ensure that correct taxpayer information is used for 1099-C reporting, borrowers must provide a Form W-9 Request for Taxpayer Identification Number and Certification if signed tax returns and/or signed Form 4506-T Request for Transcript of Tax Return is not in file. Additionally, borrower must evidence continued service and owner occupancy by the end of loan term to satisfy the loan repayment obligations. For more details regarding the information provided on Form 1099-C, please view the Form 1099-C and its instructions on the IRS website (www.irs.gov). Borrowers shall consult a tax advisor for full details of its tax effects.
Step 1: Applicant completes Verification of Homebuyer Education Requirements through one of MOHCD- approved housing counseling agencies.
Step 2: Applicant enters into a purchase agreement with a seller.
Please note that TND loan may be layered with other City programs, such as Downpayment Assistance Loan Program (DALP), City Second Loan Program (CSLP), and Below-Market Rate (BMR) Program. View the specific program website for more information about application procedures.
Step 3: Applicant applies to a Participating Lender for Primary Mortgage Loan.
Step 4: Applicant works with their Lender to submit TND loan package.
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 deleted from our system.
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 business 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 30 days from date of the commitment. If for any reason, escrow cannot close within the commitment period, please notify MOHCD immediately or the loan will be void.
- Funding will be wired to the escrow account on the 4th business day, after we have received and reviewed all closing documents. We require 4 business days for wire transfer funds.
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.