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Mayor's Office of Housing

Below Market Rate Program: OWNERSHIP PROGRAM OVERVIEW

 

The San Francisco Below Market Rate ("BMR") Inclusionary Housing Program requires developers to sell 15% of units in new, private developments at a "below-market-rate" price that is affordable to low to moderate income households. The program is administered by the Mayor’s Office of Housing (known as "MOH") and currently includes over 750 ownership units. We expect at least 100 new units to become available each year.

 

This document is a helpful overview of the BMR program. The formal rules and requirements of the Mayor’s Office of Housing BMR program are described fully in the City and County of San Francisco Residential Inclusionary Affordable Housing Program Monitoring and Procedures Manual 2007 (referred to as the "Procedures Manual").

 

Please visit the  First-time Homebuyers  page of our website and take a first-time homebuyer course through one of  MOH's five approved housing counseling agencies  to learn about all of the programs available through the City for first-time homebuyers. We encourage you to apply!

 

APPLYING FOR A BMR UNIT

You can learn about new affordable BMR homeownership opportunities three ways:

Once a unit is listed on the Mayor’s Office of Housing website, you will contact the developer's dedicated sales team directly to obtain an application for units available.

Applicants must submit a complete application to the developer's sales team by an established deadline date. The Mayor’s Office of Housing will then hold a public lottery for the available BMR units in each development. Placing high on the lottery list does not guarantee the unit, as applicants must still be qualified by the Mayor’s Office of Housing, they must be the correct household size for an available BMR unit, and the household must able to secure a mortgage loan.

 

ABOUT THE UNITS

 

How the BMR Units are Priced

Most BMR units are priced to be affordable to median income households spending no more than 33% of their income on housing expenses. We price the units to include condominium association fees, property taxes, the current interest rate, and we assume a 10% down payment from the buyer. 

 

QUALIFICATIONS

 

Qualified Household Member

A household is defined in terms of financial relationships and can include any owner partnerships as long as their combined gross, annual income meets the eligibility guidelines. To be considered a member of a household, a person must either be (1) on the title and the loan documents for the unit or (2) claimed as a dependent on the tax returns of a household member who will appear on the title and loan for the BMR unit.

 

First-time Homebuyer

While the definition of first-time buyer can differ for various programs, for those units restricted under the BMR Inclusionary Housing Program, it is as follows:

A qualifying household of which no member has owned any interest in a dwelling unit, any commercial real estate, or any land for a three-year period prior to applying to qualify for purchase of a BMR unit.

This definition is a legal requirement and includes, among other properties, those in which an applicant’s name appears on title regardless of whether or not that interest results in a financial gain, is in another state or country, or if they have ever used the property as a primary residence. If any purchaser has had their name on title of a property but it was sold more than three years ago, the program considers them a first-time buyer.

 

Live or Work in San Francisco

All individuals and households may enter the lottery for a BMR unit. However, those households that live or work in San Francisco will be given preference in the lottery ranking process. If the number of units available exceeds the number of qualified applicants who live or work in San Francisco, the units will become available to other qualified applicants outside of San Francisco.

 

First-time Homebuyer Education

BMR applicants must attend an  approved, intensive first-time homebuyer workshop  before applying for a unit. Currently approved workshops include those offered by Asian, Inc., Mission Economic Development Agency (MEDA), Consumer Credit Counseling Service of San Francisco (CCCSSF), San Francisco Housing Development Corporation (SFHDC) and San Francisco Urban CHC. Please visit our first-time homebuyers page for contact information. Only one applicant who will hold title to the unit must attend the workshop but we encourage everyone to attend. The certificate is valid for all MOH programs for 2 years.

 

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. There is no restriction on purchasing a unit that has fewer bedrooms than the household size.

 

Maximum Income

The majority of projects will be available to households with a combined income of no more than 100% of median income, although some will be available to households whose income is at 80% or 120% of median income. The amounts are adjusted on an annual basis. Our office will update these income maximums between March and May of each year.

100% of Median Income for the City and County of San Francisco 2008

  • A one person household can make no more than $58,050
  • A two person household can make no more than $66,300
  • A three person household can make no more than $74,600
  • A four person household can make no more than $82,900
  • A five person household can make no more than $89,550

(Please visit www.sfgov.org/moh for information on larger households.)

Income maximums are based on "gross" income derived from all sources as detailed in the City and County of San Francisco Residential Affordable Housing Monitoring Procedures Manual 2007.

 

Basis for Determining Income Eligibility

For purposes of determining household income, each person who is 18 years or older in an applicant household must present: (a) a complete set of past three years’ federal (only) Income Tax Returns (signed & dated) and W-2 forms; (b) three recent and consecutive pay stubs (for the self-employed, provide copies of last 3 year’s Profit and Loss statements); and, (c) three recent and consecutive statements from each savings, checking or any other type of account in which each person has money saved. (Retirement savings will be excluded from the asset test, but should be included in the application package.) The Mayor’s Office of Housing will determine final income eligibility based on your household’s current income and assets.

 

FINANCING

Please see our Lending Guidelines for important information on securing a loan for a BMR unit. And please contact a lender from MOH's List of Approved Lenders . This list is available on our website at www.sf.gov.org. You must work with an approved lender to purchase a BMR unit through our program.

 

RESTRICTIONS ON BMR UNITS

 

Period of Restriction

Per Section 315.7 of the Planning Code, all BMR ownership units that entered the marketing process on or after the effective date of June 28, 2007 are restricted in their resale price and other applicable restrictions for the life of the project unless otherwise noted in the planning approvals or other use restrictions for the project. All BMR ownership units that entered the marketing process before the effective date of June 28, 2007 are restricted in their resale price and other applicable restrictions for 50 years unless otherwise stated in the planning approvals or other use restrictions for the project. The 50-year restriction period shall restart with each resale of a BMR unit.

 

Owner Occupancy

BMR units are intended to be owner-occupied at all times and used as a principal residence for the duration of ownership.

 

Renting

BMR units are intended to be owner-occupied and never used as investment property. However, it is recognized that there are circumstances in which an owner may be forced to relocate from his primary residence for employment reasons. In cases of verified job relocation for a period of less than six months, it is possible to rent the unit with approval from MOH and for a rent as specified in the City and County of San Francisco Affordable Housing Monitoring Procedures Manual.

 

Estate Planning

A BMR owner may leave their unit only to a qualified adult child or legal guardian. This new owner must be income qualified, a first-time homebuyer and otherwise qualified under the BMR program.

 

Re-Selling BMR Units

  • A BMR owner is required to re-sell a BMR unit at a restricted price established by MOH guidelines to a new income-eligible buyer.
  • The owner will contract with a realtor to list the unit on the Multiple Listing Service and work through MOH to resell the unit in a lottery process.
  • MOH will add 5% to the sales price to pay commission for the seller and buyer's realtors.
  • Any appreciation gained from the sale belongs to the owner (unless the owner owes a share of the appreciation as a part of a downpayment assistance loan or other loan from the City).
  • The price of a BMR unit at resale is not guaranteed to exceed the initial purchase price of the unit. However, most long term BMR owners tend to see some appreciation on their units upon resale.
  • A BMR resale price is dependent on local median incomes at the time of sale.
  • Please review MOH’s resale guidelines for more information.

 

Capital Improvements

Owners may add eligible capital improvements and special assessments to their resale price only if the improvements are (1) eligible and (2) made after the unit is 10 years old. There ia an exception for any special assessments that are levied before the 10-year period. Please review MOH’s capital improvements policy for more information.

 

OTHER HOUSING RESOURCES

 

Finding More Information about City Programs

For further information about BMR units available and other City sponsored first-time homebuyer programs, please refer to our  First-time Homebuyers webpage . Another helpful source for affordable housing options may be found through the  San Francisco Redevelopment Agency . The Redevelopment Agency also offers affordable homeownership opportunities in San Francisco.

 

Finding More Information about Housing Programs

The best way to find information on all housing programs available in San Francisco is to take a first-time homebuying class through one of  MOH's five approved housing counseling agencies . These agencies are equipped to tell you about all of you options for purchasing an affordable home in San Francisco.  

 

Thank you!

(rev.1/9/09)

 

Return Below Market Rate Program: INFORMATION FOR BUYERS page.

 

 

 


 

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