Finding Your Dream Condo in San Francisco: Navigating Loan Options
San Francisco Real Estate: Condos are a deal but can you get a loan?
As Kenneth Harney confirmed last week in his column , “Mortgage rates and house prices are down – which sounds great for buyers and refinancers. But a series of mortgage industry underwriting and appraisal changes taking effect this month is throwing new hurdles in the way of borrowers and loan officers.”
Bottom line: What does this mean for a San Francisco condo would-be home buyer?
A long time ago in an economy far away, home buyers needed 20% or more to buy a home. They also needed verifiable income and good credit.
Then, in the not-so-distant past, anyone could get a mortgage and buy a home. You didn’t need a down payment. You didn’t need to document your income. Heck, did you even need to have an income? You definitely didn’t need spotless credit. Who cared if the numbers looked good, right?
Well, we all know how that plan worked out.
But, now what?
The pendulum has swung back and lending guidelines are strict (and enforced). Yet, things are not as bad as they could be. AND, the combination of cheap money and cheaper home prices (an historical anomaly) makes it worth the effort to get yourself into a home before the market turns around.
Right now, here’s what I’ve heard…
Option 1: CONVENTIONAL SAN FRANCISCO CONDO LOAN
Minimum down payment = 15% or more
Option 2: FHA SAN FRANCISCO CONDO LOAN
Minimum down payment = 3.5% or more
Maximum loan amount = $729,750* which equates to a purchase price of $756,218. (You can put more down and get a higher purchase price. It’s just the loan amount that is capped.)
* The higher conforming loan amount of $729,750 for San Francisco real estate is only approved for purchases made in 2009. We hope it will be extended by Congress but there are NO guarantees. If you are going to buy in this price range, don’t delay b/c it may be a lost more expensive next year. Plus, this year, you can get a $10k CA tax credit with no income limits. The FED tax credit has income caps to qualify.
THERE IS A CATCH.
To obtain an FHA home loan for a San Francisco condominium it must fit into FHA guidelines. These are national guidelines so it can be tricky to navigate in our complex market. Basically, your new condo must either be in a FHA pre-approved building or be able to obtain “Spot Approval.”
FHA HOME LOAN PRE-APPROVED CONDOS: There are current 15 SF condo buildings with this coveted status.
FHA “SPOT APPROVAL”: There is a checklist for the HOA with about 14 questions. To simplify, look for an HOA with 4 units or more, no litigation or special assessments pending and decent reserves . If I’m your agent, I can help you determine your best options and if I’m not (which is a shame!) then make sure your Realtor and Mortgage Broker are FHA experienced.
Given the potential benefits of purchasing in this market (to reiterate cheap money and cheaper prices don’t often show up in tandem), it may be well worth exploring your options.
And, to those of you with the coveted 15% down payment (or the ability to raise the capital from the Bank of Mom and Dad), you are really in the driver’s seat. There are just SO many cute, charming, and amazingly priced San Francisco condos in the $650,000 – $850,000 range . This is truly the sweet spot of the SF buyer’s market! At least, in the condo arena. Accurately search for SF Condos & entire MLS HERE.
Have fun out there!