Home-loan program back on the block 

San Francisco residents will be able to tap The City again to help purchase their first home — a sign that there may be new life in the local housing market.

Starting Aug. 1, Mayor Gavin Newsom’s Office of Housing will restart its stalled program of loaning low- and moderate-income residents money for the down payment on their first home.

In October, The City’s most popular homebuying loan program came to a standstill when money dried up. The Downpayment Assistance Loan Program is a revolving fund where repayments are invested to help more residents with down payments. These are second loans that require no payments for 40 years. The loan is repaid when the house is sold. Houses sell, on average, between seven and nine years.

As the recession trickled down to The City’s housing program, the revolving fund was depleted to $2 million, city officials said.

“We had a good go; in 18 months, we went through $11 million in down-payment assistance, but it was going out the door faster than it was being paid back,” said Myrna Melgar, director of the Mayor’s Office’s homeownership programs.

Melgar said The City restricted loans to residents purchasing properties through short sales or in foreclosures and capped the amount at $60,000 or 15 percent of the purchase price, whichever was less. The fund grew to roughly $5 million, allowing officials to ease qualifications for down-payment assistance.

Starting in August, a potential buyer looking to purchase a single-family home in San Francisco must earn no more than 120 percent of the area median income and have gone through homebuyer counseling with an approved agency. The median income varies by the number of people in a household. For a household with three people, it’s $89,450, and 120 percent of that is $107,340.

The maximum loan amount will increase in August to $100,000, or 20 percent of the purchase price.

“We can start lending normally again without fear of running out of money,” Melgar said.

Steve Adams, vice president of San Francisco’s Sterling Bank & Trust, said the fact that Newsom is restarting the loans signals the beginning of economic recovery.

“There is life back in the housing market, especially for first-time homebuyers” Adams said. “We are getting a lot of inquiries about that program, which is saying that people are getting back to work here.”

The program was started when voters approved Proposition A in 1996. The $100 million general obligation bond set aside $15 million for down-payment assistance for first-time homebuyers with annual incomes at or below The City’s median.

Since then, The City has given out more than 500 loans, totaling $38 million. There have been no foreclosures on any of those loans since 1998, when the first one was issued.


Buying property

$636,500: Median price of S.F. home
39: Percentage of residents in San Francisco who own homes
9: Percentage of S.F. residents able to buy home on their own
3: Percentage of low-income people in S.F. who can afford to buy home
67: Percentage of Americans who own homes

Sources: Mayor’s Office of Housing, DataQuick Information Systems


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