At Mosaik Real Estate, we believe it is our duty as real estate agents to be a source of knowledge for our clients. We are well aware that the housing market in San Francisco can seem daunting and exclusive to those who surpass a certain income threshold. Fortunately, the City and County of San Francisco offers three lottery-based down payment assistance programs for up to $500,000: the Downpayment Assistance Loan Program (DALP), Educators-DALP, and First Responders Downpayment Assistance Loan Program (FRDALP). 

What is the DALP program?

DALP provides down payment assistance to help low- to middle-income first-time homebuyers purchase a market-rate property in San Francisco. This loan is intended to be used for the down payment on a property that will become a primary residence. The owner can re-sell the property at market prices at any time. The biggest change to this program in 2023 was raising the loan amount from $375,000 to $500,000. This year, the matched out of pocket downpayment also decreased from 3% to 1%.

The following groups can apply for the three DALP loan programs: 

• General public get DALP loans from the DALP funding source.
• First responders get DALP loans from a separate funding source, called FRDALP.
• SFUSD educators get DALP loans from another funding source, called Educators-DALP.

Although the portal for 2023 is now closed, you can read about applying for a Downpayment Assistance Loan in preparation for next year.

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 when the borrower sells, rents, or transfers the 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 $500,000 with a purchase price of $1,250,000, the DALP loan amount is 40% of the purchase price. Therefore, the share of appreciation would also be 40%.

See all MOHCD loan terms

2023 Total DALP Fund Balances (also available at 2023 DALP fund balances):

Maximum Income Levels for DALP Eligibility

Eligibility 

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).

1. First-time homebuyers (in the 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.
2. Completed homebuyer education course: Homeownershipsf.org
3. Maximum Income Limits: household income must not exceed 200% 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. 
4. Minimum Borrower Contribution: Borrower must contribute a minimum of 1% of the purchase price toward the down payment or closing costs. The entire 1% can come from gifts, if necessary.
5. Liquid Assets: Borrower must have no more than $60,000 after purchase.
6. Post-Purchase Reserves: Borrower must have a minimum of 2 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 2 months of:
   • Principal
   • Interest
   • Mortgage Insurance (if any)
   • Property taxes
   • Hazard insurance
   • Homeowner’s Association dues
7. Occupancy: The property must be owner-occupied during the life of the loan.
8. Household Size: The size of a Household must be no greater than the total number of bedrooms in the Property plus one (1). In other words, a single person may purchase a two-bedroom property or a smaller property if they choose; a two-person household may purchase a three-bedroom property or a smaller property if they choose; and so on.
9. 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 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.

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
• There is a different funding source for applicants above 120% AMI.
  • Both 120% AMI and 200% 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 will 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 the 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 a participating lender that best 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 $500,000.

Borrower's financial information shall not be altered on the application to qualify for a larger DALP loan. Reasonable fee changes resulting from an underestimation of customary closing costs are acceptable.

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 105%. 
• 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 30% 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 45% of the household’s gross income.
• Front-End (Housing) Ratio: No less than 30% and no more than 43%. MOHCD may consider a maximum front-end ratio of up to 45% 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 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: DALP funds may be used to cover customary, non-recurring closing costs normally incurred in a residential real estate transaction, and subject to MOHCD's approval in its sole discretion.

DALP Manual and documents

• 2023 DALP Manual
• 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)
• 2023 DALP Flyer (PDF)