Downpayment Assistance Loan Program (DALP)

DALP is a downpayment loan up to $375,000, to bid on a property on San Francisco's open market. The loan must be used on the downpayment of a single unit that will become a primary residence. The owner can re-sell the unit at market prices.

The DALP is a silent second loan that requires no monthly payments. When the property is sold or transferred, the owner pays MOHCD back the principal amount of the loan, plus an equitable share of appreciation.

Read about applying for a Dowpayment Assistance Loan.

View the summary of 2021 DALP fund balances.

Important dates:

Other DALP programs (FRDALP, Educators DALP)

First responders get DALP loans from a separate funding source, called FRDALP.

SFUSD educators get DALP loans from another funding source, called Educators-DALP.

Eligibility is the same for both FRDALP and Educators-DALP:

• Same application and lottery process as general DALP
• Applicants can't have owned property in San Francisco for the last 3 years. However, they can have owned property elsewhere.
• Household income cannot exceed 200% of the Area Median Income (AMI) in 2022.

Fees

• No fee to apply for the DALP lottery, which uses a pre-approval application.
• There is a non-refundable fee to process the paperwork for the DALP application. This will be collected when DALP funds are reserved to close on a property. See MOHCD program fees.

Lottery

Note: no lottery preferences are used in the DALP lottery. Read more about the DALP lottery.

• MOHCD will process and approve applications in lottery rank order, by the following:
  • SFUSD Educators (Educators-DALP)
  • First Responders (FRDALP)
  • General
• We have a different funding source for applicants above 120% AMI.
  • Both 120% AMI and 175% AMI applicants will be ranked on the same list.
  • Each household can only reserve funds under one program (General, First Responders, or Educators) if selected.
  • First responders or SFUSD educators can still be considered for funding under the General DALP list if they are not selected under FRDALP or Educators-DALP.
    • However, the applicant must meet the AMI requirements and first-time homebuyer requirements of the funding source they use.
• If you're selected by lottery, you will need to fill out a more detailed form and provide more paperwork. See post-lottery process for DALP applicants.

Loan reservation period

Only one (1) reservation (i.e. pre-approval lottery application) is permitted per eligible household.

Duplicate pre-approval applications from one eligible household, whether with one lender or multiple lenders, will automatically result in the disqualification of all applications. Borrowers are encouraged to shop around to find the best participating lender that suits their needs but must choose only one lender in connection with DALP.

A reservation does not constitute final loan approval nor guarantee funding. A DALP loan will only be funded when the borrower fulfills the loan commitment from MOHCD, satisfies the reservation timeline described below, and meets the DALP requirements.

Maximum loan amount

The maximum DALP loan amount is up to $375,000. The qualifying loan amount will be the minimum amount necessary, based on the borrower’s financial need to buy the home.

You may not alter the borrower's finances on the application to qualify for a larger DALP loan. These include:

• reducing the gift funds stated on the application
• lowering the first mortgage loan amount the borrower was pre-qualified for
• reducing third party credits and contributions
• any other changes for the purpose of increasing the DALP loan amounts.

Reasonable fee changes resulting from an underestimation of customary closing costs are acceptable.

Borrower eligibility

• First-time homebuyers (in General DALP list): All adult household members must not have any ownership interest in a residential unit for the last three years.
  • All adult household members who receive funds from the FRDALP or Educators-DALP must not have any ownership interest in a residential unit in San Francisco for the last three years.
• Completed homebuyer education from Homeownershipsf.org
• Maximum Income Limits: household income must not exceed 175% of the Area Median Income (AMI).
  • 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. 
• Minimum Downpayment: Borrower must contribute a minimum of 3% (1.5% from borrower's own funds, and the remainder from gifts).
• 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
  • Mortgage Insurance (if any)
  • Property taxes
  • Hazard insurance
  • Homeowner’s association dues
• Occupancy: The property must be owner-occupied during the life of the loan.
• 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.
  • 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 dependents as long as they are listed as dependents 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.

Financing requirements

• Primary Financing: Borrowers must be able to qualify for the first mortgage from an approved lender prior to submitting an application for DALP. Borrowers must have sufficient funds to meet the required downpayment, closing costs, and necessary reserves.
• Lien Position: DALP 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 monthly debts (including credit cards, car payments, etc.) should not exceed 43% of the household’s gross income.
• Front-End (Housing) Ratio: No less than 33% and no more than 40%. MOHCD may consider a maximum front-end ratio up to 43% if two or more indicators are present:
  • Proven ability to devote a larger amount of income to housing expenses. The applicant has made rental payments for 12 consecutive months that are equal to or greater than the proposed monthly payments for the housing being purchased
  • At least 6 months of housing expenses in reserves through liquid assets, or at least 12 months of housing expenses in reserves through non-liquid assets and retirement accounts
  • FICO score greater than 700
  • A large down payment (20 percent or more) toward the purchase of the property
  • The proposed housing expenses will not increase more than 5% over previous housing expenses
• Back-End (Total Debt) Ratio: No more than 43%.
• 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: DALP funds may be used to cover customary, non-recurring closing costs up to 2% of the purchase price or appraised value, whichever is less.

Loan terms

• DALP Loan Terms: DALP is a no-interest, no-monthly-payment, deferred loan. The principal balance amount plus a share of the appreciation becomes due at the end of the 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 DALP 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

DALP Manual and documents

• DALP Manual (PDF)
• DALP Full Application (PDF)
  • For determining income eligibility after the lottery
• MOHCD Lender Closing Checklist (PDF)
  • For final approval after getting a ratified purchase agreement
• Sample DALP Closing Documents (PDF)
• 2021 DALP Flyer (PDF)

Training for participating lenders

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.

See annual training information.

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