City Second Loan Program (CSLP)

City Second Fund Balance


As of  

Detailed information for lenders

The City Second Loan Program provides a downpayment loan, which can be up to $375,000, but depends on fund availability. The loan is used to bid on a collection of properties also advertised on the open market. 

Interested buyers apply to listings, and are pre-approved by MOHCD for income. After winning the bid, the buyer then works with their lender to apply for loan funds. See MOHCD's Loan Application Process »

View listings and apply

                                                      Applicants must work with a MOHCD-approved lender

There is no interest or deferred payment. The repayment amount will be the principal balance plus a share of appreciation in the value of the property at the time of resale. The MOHCD loan is in the second position on the title after the first mortgage and can be repaid at any time without penalty.

Properties under this program can be sold at the market price, with no price restrictions.

These properties are privately owned homes. MOHCD’s role is to monitor the sale and assist the prospective eligible buyer purchase a unit.

When selling a City Second unit, MOHCD has a Right of First Refusal. Owners or listing agents must notify MOHCD before putting the properties on the market. The available unit must then be listed on the MOHCD website.

Read about selling a City Second property »

Program details

Pre-approval application, to apply for listings

To apply for a City Second property, the applicant must send in a pre-approval package to verify eligibility. It should include:

  • PDF icon DALP Full Application
  • Three (3) most current & consecutive pay stubs
  • Three (3) most current & consecutive months of Bank Statements
  • EDD Authorization for Release of Records (if applicable)
  • Unemployed Affidavit (if applicable)
  • Self-Employed Affidavit (if applicable)
  • Profit and Loss Statement (signed & dated, if applicable)
  • Three (3) most recent Federal Income Tax Returns with all applicable schedules and W-2s (signed and dated)


  • No fee to apply for City Second listings, which uses a pre-approval application.
  • Nonrefundable fee to process the paperwork of the City Second application. This will be collected after the purchase agreement is signed. See MOHCD program fees »

Grant of Right of First Refusal (GRFR)

Each property has its own Grant of Right of First Refusal document. It will include how long the period is for that property.

When a City Second property is being sold, MOHCD has the option to buy a City Second property, or assign such right to a participating buyer, within the Right of First Refusal period stated in the seller's GRFR. Any purchase will be at the same price offered by a bona fide buyer.

The general Right of First Refusal process when selling
Refer to the property's GRFR for specific rules

After a purchase agreement is signed and ratified, the seller must send it to MOHCD. Once MOHCD approves the ratified purchase agreement, the Right of First Refusal period then begins.

  1. If the ratified purchase agreement is from a non-participating (market-rate) buyer, MOHCD will review its pool of interested first-time homebuyers.
    • An eligible City Second buyer must be found within the time period to exercise our Right of First Refusal.
    • If MOHCD can’t find an eligible City Second buyer at the end of the Right of First Refusal period, MOHCD will allow the non-participating buyer to purchase the property.
  2. A buyer who wants to use the City Second Loan Program submits a  to MOHCD to determine eligibility.
    1. If they are eligible, the participating buyer then has their real estate agent contact the listing agent or the seller directly. MOHCD will assign its Right of First Refusal to the new participating City Second Program buyer.
    2. The participating buyer will prepare an offer that matches the price listed on the ratified purchase agreement. They will deliver it to the seller or the listing agent.
    3. After income-qualified, MOHCD has to determine the participating buyer’s final eligibility. The buyer's lender has to submit a PDF icon MOHCD Lender Closing Checklist
      along with all required financing documents.
    4. MOHCD will permit a fully eligible participating buyer to purchase the property by:
      • Assign the City's option to purchase the property to the buyer, and
      • Requiring the buyer to grant MOHCD a new Right of First Refusal.
  3. MOHCD may also decide to buy the unit at the market-rate offer price, on the City's behalf.
    • This is an option when no eligible City Second buyers are found.

Borrower Eligibility

  • 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
  • Maximum Income Limits: Household income cannot exceed 143% of the area median income (AMI) for the San Francisco Metropolitan Statistical Area as established by the U.S. Department of Housing and Urban Development (HUD), adjusted by household size. See Current Year Maximum HUD Adjusted Area Median Income (AMI) Limits »
    • 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. Calculate your household income »
    • Maximum loan amounts are tied to the household income category.
    • The amounts in the chart represent the current figures subject to an annual adjustment based on HUD AMI limits.
  • Minimum Downpayment: Borrower must contribute a minimum of 3% (1.5% 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:
    • Principal
    • Interest
    • Property taxes
    • Hazard insurance
    • Homeowner’s association dues
  • 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, as listed on the two most recent tax returns. An unborn child will be not counted as a household member. Elderly adult household members may be considered as dependent as long as they are listed as dependent on the two most recent tax returns. All income from dependent adults and children must be included in the total household income. A spouse or domestic partner of any titleholder is not considered a dependent.

Property Eligibility

  • Property Size Requirements: The size of a household must be compatible with the size of the unit being purchased. A minimum of one person per bedroom is required.
    • In other words, a single person may purchase a studio or a one-bedroom unit; a two-person household may purchase a two-bedroom unit or a smaller unit if they choose. And a three-person household may purchase a three-bedroom unit, and so on.
    • There is no restriction on purchasing a unit that has fewer bedrooms than the household size.
  • The City Second loan is available only on the purchase of units located in the following developments:
Development Name # of Units Size Street Location
Parkview Heights (Potrero Hill) 122 2-3 bdrms Wisconsin, DeHaro, Caire, Blair & Littlefield Terraces
Holloway Terrace (Ingleside) 42 2-3 bdrms Holloway, Faxon and Capitol
Armancio Ergina (Western Addition) 72 1-3 bdrms Scott, Ellis & O'Farrell
Cayuga Terrace (Outer Mission) 13 2-3 bdrms Delano at Geneva
Parkview Commons (Haight Ashbury) 114 1-3 bdrms Frederick & Carl
101 Valencia (Mission-South of Market) 109 1-3 bdrms Valencia, Stevenson & McCoppin
Goodman II (Potrero Hill) 18 1-3 bdrms 18th Street (BMR Units)
Baycrest Towers (Downtown) 29 Studio, 1 & 2 bdrms 201 Harrison Street

Financing Requirements

  • Primary Financing: Borrowers must be able to qualify for the first mortgage from an approved lender prior to submitting an application for a City Second loan. 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: Unless pre-approved by MOHCD, the City Second loan must be in the second position behind the first mortgage.
  • 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.
  • Co-Signing: Co-signing for a City Second loan by a non-household member is not allowed.
  • Closing Costs: CSLP Funds may be used to pay for non-recurring closing costs up to 2% of the purchase price or appraised value, whichever is less.

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).

Loan Terms

  • City Second Loan Terms: The term of the City Second Loan is 30 years. The City Second Loan is a  no-interest, no-monthly-payment, deferred loan due upon sale, rent, or title transfer of the property. The principal balance amount plus a share of the appreciation should become 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 City Second 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%.

See all MOHCD loan terms

City Second Loan documents

Training for Participating Lenders

Mortgage Loan Officers (MLO) or mortgage brokers who would like to become participating lenders for MOHCD's homeownership programs, including City Second, 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.

See annual training information