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San Francisco’s Biggest Homeownership Secret: Below Market Rate Housing

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Most San Franciscans have no idea that they qualify to own their own home! I’m not talking miles outside of the city in suburban child factory land, but in San Francisco proper!  A portion of all new construction in San Francisco, currently a minimum of 12%, is required by law to be sold as price restricted Affordable Housing. That means, if you make under 120% of the Median Income, then “broke-asses” just like us can qualify to enter a Housing lottery to buy a below market Rate (BMR) home – for about 1/3 of the market rate price!  Yes, you read me right.  Have you noticed all the construction in the city? Although it is a drop in the bucket to our housing affordability woes, Mayor Lee says he aims for 30,000 new units to be built in next 6 years. That is at least 3,600 units (12%) which will be required to be sold at Below Market Rate prices. That is 3,600 opportunities with YOUR potential name on it (well, depending on your income).


For reference, the Area Median Income (AMI) required for a single person in SF to qualify for this Below Market Rate Housing Program, is generally 80-120% or  $54,350 – $81,550 maximum income. For a two person household, for example, it’s currently $62,150 and $93,250 maximum income. If you make between that golden number, then you are on your way to qualifying for a Below Market Rate Ownership Opportunity!

If my broke-ass can become a Homeowner,  then you can!

Stumbling upon the Below Market Rate and Down Payment Assistance Loan Program  has forever changed my life. I am writing this article because it is extremely important that we maintain the soul of San Francisco by diversifying those who live and thrive here. I wish there was an article spelling it all out when I was researching. Still to this day when you google BMR Housing, there is a plethora of noise that is hard to decipher. My hope is to tell you like it really is, so you can prepare yourself and partake in this incredible housing opportunity!

I’m not going to lie: There are hurdles.  Personally, I had to improve my credit score from 670 up to 685 in order to qualify for a loan. I had to save up $22,000 for a downpayment which took a lot of sacrifice, hard work, and time. (*The $22,000 number is based on a $265,858 2 bedroom property with $57,000 Down payment Loan assistance). I even had to get a w-2  salary job to satisfy a lender (bank that loans money) as I was previously a 1099 freelancer without a proven track record of consistent income. Banks will only loan money to freelancers with 2 years track record vs loaning to anyone with a w-2 salary job. Apparently a salaried position shows “security.”  I managed to overcome all of these hurdles in a year period because, if there is a will, there is a way! Regardless of your current financial situation, if you believe that, then keep reading.  If not, then you might as well get back to Craigslist.


300ivy in Hayes Valley was the 3rd lottery we entered since I found out about BMR Housing back in March of 2012. It wasn’t until about a year later that we actually won – although we had a few very close calls.  In my case, 96 other people entered for 10 available units, so there was a 1 in 10 chance to win… and we placed #12 out of 96. Although we initially did not place in the top 10, we were told we still had a great chance. Within two months,  two lottery winners dropped out  for varying reasons (either disqualifying for not meeting requirements when vetted further or deciding the opportunity was not for them). When we were up, we were absolutely ready, ecstatic and JUMPED on the opportunity!

The Real Cost

The unit was appraised Market rate at $974,000, yet was able to be purchased for $267,858.  I also utilized DALP (Downpayment Assistance Loan Program) which gave me $57,000 in downpayment assistance without any interest, for which I am responsible for paying back in one full lump sum in 40 years time. After the $57,000 DALP and putting $22,000 down of my savings, I borrowed $195,565 from First Republic bank at 4.25% interest.  My mortgage (approx $1400) plus monthly Home Owners Associate dues (approx $600 for Condo maintenance) plus utilities leaves me at about $2,100 monthly living cost for the household.  At the end of 30 years, the 4.25% interest on $195,565 (will be $150,343 interest fee)  equaling a total of $346.343 + $57,000 to repay the DALP =  a grand total of $403,343. 

There is no penalty to paying down the principal of your mortgage early with this program,  so if you can manage to squeeze a few extra hundred dollars a month to pay down the principal, it is possible to shave off a lot of interest fees. For example: If I were to add an extra $200 to my monthly mortgage payment from $1400 to $1600 per month, then I can pay off the balance in 23.5 years vs the 30 years I am currently signed up for,  reducing my interest almost $50k and shaving off 7.5 years of payments. With the rate of inflation over 30 years,  you have to decide if it makes more sense to keep the money in your pocket or to pay your mortgage down earlier.

Living room move-in day

To this day, I still cry tears of joy walking around the Condo.  Im still in disbelief that I will never have to lug my laundry up a hill ever again, or worry about hiding my dog (that I was not allowed to have), or most importantly,  ever worry about being evicted!  I never dreamed I would be at a homeowner  when the median market rate sales price is  $953,000 (according to needing $137,129.55 of yearly income to even qualify for an average home loan.

Do YOU Qualify for BMR Housing/DALP?

If you can answer yes to the below questions, then you are on your way to qualifying for your own BMR unit:

a) Do you live and work in San Francisco and can prove it with a Paystub, PG&E bill, or bank statement?

b) Are you a first-time home buyer or  not owned a home for at least 3 years?

c) Do you make under $81,550 (for 1 person), $93,250 (for 2 ppl), or $104,900 (for 3 people)? If so, then you make under $120% of San Franciscos median income and can qualify for Below Market Rate Housing depending on the property.

d) Is your Credit Score above 685, which lenders generally require for pre-approval for a loan?

e) Do you have a W-2 job showing a salary that can cover the mortgage (at least $50k year for a $200k loan over 30 years) or if you work for yourself, you need to 2 years of tax returns that prove your salary consistency aka abilities to pay off a loan.

f) Do you have $10-$25k savings to cover 5% downpayment and closing costs? Of the total 5% downpayment, 3% must be the BMR Buyer’s own funds (held in a financial institution) and 2% can be from gift funds (not yet received). You may satisfy all of the qualifications, but unless you can put down the down payment and pre-qualify for a loan when it matters, you will miss out on this opportunity.

g) Can you or your Household meet these requirements without a co-signer?  Co-signing for a loan for a BMR Unit by a non-BMR Household member is not allowed.

Current Listings on the Market Today

Here are the Current Listings of Below Market Rate Houses that are for Sale today! It depends on the specific properties that are available, as most units are priced at a level that is affordable to households earning 90% or 100% AMI ( area median income) but they do vary. There are reasons and equations behind all these numbers. The housing prices are based on what is determined as affordable by the Mayors Office of Housing and Community Development based on HUDs recommended housing ratios, so as a Homeowner making 100% of the median income, you will not be in a position to spend more than 33% of your income on housing (including payments for taxes, insurance, homeowner or association’s fees and related costs Income) when you enter these programs. Your back-end ratio or debt-to-income ratio (i.e. monthly housing payment plus debt) must be no higher than 38% of the BMR Buyer’s income. Over time, since all mortgages are required to be 30-year fixed loans, your housing payments will generally become more affordable with time, assuming the trend of incomes in San Francisco, continue to raise.

Although there are not many listings currently, 1400 Market Street will have over 160 BMRs coming on the market in Spring 2015. They will also have units for families earning up to 150% AMI. 


The process usually takes about 4-6 weeks to gather all the elements you need to put together a BMR application. The main hurdle is signing up to get your 8 hours of required Homebuyer workshops. Once you have that, it can take a matter of days.  You also need a pre-approval letter from a bank, which takes a few days to process (depending on speed of the lender).  If you were to win a lottery, it will take another 2 months minimum to get into contract, go into escrow, and close. There are many people involved, and an uncanny amount of paperwork. The process is not trivial. When you meet the requirements, which is a very specific “goldilocks number”, not to high/ not too low, the odds are actually statistically in your favor that if you keep applying to lotteries, you will eventually win.

Application Process

You must submit a BMR application with supporting documentation by a specific deadline for each BMR Ownership Unit by a specified deadline for that unit. All applications for BMR Ownership Units will be entered into a lottery. This lottery takes place at the Mayor’s Office of Housing on the 5th floor at 1 South Van Ness. This fall the mayors office plans to begin online application for BMRS. This would allow you to use the same application to apply for multiple BMRs.

Step 1. Attend 8 hours of  “First-time homebuyer workshops” from a MOH-approved First-time Home Buyer Education Provider (which you will get a Certification upon completion, that is required for your BMR application packet).  Classes can be quite full and sometimes,  booking about a month out. Since it is required that you have a Certificate for your workshops completed in order to apply for any of the BMR’s, this is the task that takes the longest to complete.  Make sure you prioritize taking these classes, as if you see a BMR listing you want to apply for,  you want to make sure you can get your classes done in time to apply. (The Certificate lasts 2 years).

Step 2: Choose which Unit(s) you want to apply for by going to Current Listings on Mayors Office of Housing Website and get your BMR packet together. Any units that are of interest to you, and which your income is under the Area Median Income, you can contact the buyers agent and send them your completed  BMR application before the given due date. Each new construction  will be on the market for 45 day before the lottery and 21 days for re-sale BMR Properties.

Step 3:  Get pre-approved by a MOHCD approved lender.  They give you a ridiculously long list of BMR approved lenders, so make sure to work with an experienced and dedicated lender with high customer service. Interview a few different lenders. Ask them specific questions like how many BMR deals have you closed?  It is essential in dealing with the copious amounts of paperwork and deadlines. I chose to work with Duane Phillips of First Republic, and was mostly pleased that I did.  My lender required that I have at least a 685 Credit score, and a W2 job or proof of an income over $50k for 2 years if I was a 1099 before they would pre-approve me for a loan. Essentially you must satisfy the bank by proving you will be able to pay back a loan and satisfy the requirements of the city, which is set with a maximum total household salary.

Step 4. Obtain your past three (3) years IRS returns and include in BMR packet.

Step 5. Obtain your p three (3) years W-2 forms in BMR packet.

Step 6. Obtain three (3) current and consecutive pay stubs or equivalent in BMR packet.

Step7. You must  obtain and include three (3) current and consecutive statements from every liquid asset account or personal cash holdings, including all custodial accounts held for minors.

Step 8. You must include Federal Tax Form T4506

Step 9. You must include your California Driver’s License or State ID

Step 10. Lastly, you want to include verification of San Francisco residency or employment.  Preference is given for people who live or work in SF, so functionally you probably need it- but it is possible to buy a BMR if you neither live nor work in SF- particularly resale units.


Once your BMR application is complete, you will be given a lottery ticket (that is a picture of my actual ticket that I won the Condo with). The Lottery is scheduled about 45 days after the property is listed.You can attend the lottery,  but usually happens during the workday and does not affect your chances of winning if you attend or not.  The lottery ticket has numbers on it which they have an exact copy of and put in a box with all the other BMR applicants. Yep, they announce your future out of a cardboard box with tacky decorative gold reflective tape, which the staff (usually Aissa from MOHCD) reads all the tickets of the applicants. The reason for doing this, is even if you aren’t a winner outright, you still have a good chance of lottery winners falling out of contract, and the next name on the list gets the chance. We were actually #12 in a lottery for 10 available units. That meant that two people did not qualify or follow through for whatever reason.  The #1 reason people fall out of contract, is not reading and internalizing all the information to be prepared and understand how the system works. Just because you qualify for the lottery initially, does not mean when they go through your file with a fine tooth comb, that you haven’t missed something, so make sure you are prepared.

Differences Between BMR & Regular Market Rate Sale

When you move into a BMR, you must occupy the BMR Ownership Unit as your primary residence, (defined by living in the BMR Unit at least 10 out of 12 months of the calendar year) and must occupy the BMR Unit within 60 days of the completion of the purchase. So all you Airbnb opportunists looking to win a BMR lottery, just to rent out your apartment at market rate, this program is NOT for you. This is for folks who really want to live in this city.

You can resell your BMR- but never at market rate.  There is a price restriction equivalent to whatever % AMI you bought it for, based on AMI at the time of sale. For example, if your place was bought as 100% AMI in 2013 for  $200k and 5 years later want to sell- you would price it according to the affordability ratios for 100% AMI in 2018. This is why it’s a limited equity program, not a NO equity program. Your BMR home value can appreciate over time, but indexed to actual incomes, not the random whims of whatever buyers can be scared into paying at the time. AMI does tend to go up over time, but it goes up more slowly (and hopefully measuredly than  the open real estate market.)

If you end up marrying after you become a homeowner, you can add your spouse as a co-owner regardless of their income. Title transfers are only permitted under the following circumstances: marriage, domestic partnership, divorce, dissolution of partnership or death. When it comes to your offspring,  you can only pass on your property as inheritance to your kid or anyone else for that matter,  if they meet the Annual Median Income restrictions. If your child does not otherwise qualify, the proceeds of the BMR sale will go to your person of choice. These rules are in place to keep these properties available to those who are in need.


I am beyond grateful that this BMR/DALP program exists, even if it is a mere bandaid on the disaster that is our current affordable Housing shortage.  Rest assured, there are certain factions in our great city doing all they can to fight the good fight.  Now you armed with all the dirty details on this amazing BMR Housing opportunity,  I hope all you deserving readers will dare to dream, fight to stay, thrive, and continue to be a part of what makes this city great: (you)!

For any questions, you can contact Shannon Way (the most educated and amazing resource I know) & Homeownership SF team at or the fine folks at the Mayor’s Office of Housing at (415) 701-5500,

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A. Rose

A. Rose

A Rose is a San Francisco native Renaissance Woman: a licensed clinical Hypnotherapist, Private Investigator, Existential humourist, Refined Hustler, and lover of the weird and the wonderful that makes up the San Francisco Bay Area.


  1. tyronus
    August 1, 2014 at 12:11 pm

    This is a great summary, but IMO, ownership of a BMR is less appealing is that it’s basically the same as rent control. You, as an owner of a BMR unit, cannot gain any equity out of it — unlike a “normal” purchase. For example, if you buy your home for $250k (but the market value is $750k), you cannot turn around and sell it for market rate (even if the market rate went up to $1.5m or something crazy). The price you sell if for in the future is governed by the same rules that helped you buy it so cheaply. So that’s more of a rental situation than ownership. But it’s great that it’s there for some people.

    by the way — there may be a new proposal in SF to increase the minimum percentage of affordable homes up to around 50%. This could very easily stop development of new housing, but I suspect those supervisors who are putting it forward kind of want that. There’s no way you can finance the construction of housing when 50% of the units are being sold for 30% of their value. Try doing that with anything and see how long it makes sense.

    • A. Rose
      August 14, 2014 at 1:20 pm

      This is a REALLY good point! I have felt the same way, that in many ways this is glorified rent control. Also, because these properties are usually Condos, EVEN if you end up “purchasing” your $300k home in 30 years, you still have HOA dues… but to be fair, even when you are a homeowner there are maintenance/property taxes so I guess its better to pay a small amount monthly than unexpected huge amounts… Also, although you can’t sell your home for a huge profit, you still come up, and your property ends up being a piggy bank. For example, I know a 2 bedroom home at 850 King st that was bought in 2006 for $200k, and 5 years later, was sold for $250k… So not only did they make ALL their “rent” money back, they even made a small profit… We must remember this program exists to help house people, not make a profit. The program is designed in many ways to provide lifetime security, but to be passed onto new people who need it. One other crucial difference in this program, is lets say you have a child, and you want to pass the property onto them. Turns out that they must meet the median income requirements at 18 years old. However, if you have a spouse, you can add them to your title (regardless of what income they make AFTER the home is purchased). Its all sorts of complicated…

    • A. Rose

      BMR is not quite the same as rent control, because a) you can’t pass on your rent control apartment to your child or spouse b) you can’t sell your control apartment and ake all the money you invested back! Btw, you still will make some profit. I personally know a BMR family who purchased their 2 bed/2 bath in SOMA for about $200k in 2005.. and in 2010 (5 years later) they sold it for $250k… Not only did they make all their money they invested, they still make $50k… Again, the point of BMR is not to make a profit in the rental market and getting rich.. it is to create housing for people who need it. There are a lot of rules around BMR, but they are in place to ensure people don’t manipulate the system… I heard that there is a proposal to increase Affordable Housing — but I heard 30%, not 50%… also, I doubt it would ever pass at such a high ratio. I do think, until we are out of this Housing crisis (maybe never?), the percentage of affordable housing should be raised from 12% to a higher percentage. Thanks for your comments 🙂

  2. Sabbie
    August 1, 2014 at 1:34 pm

    Dang, I make a little too much money to qualify. I guess I shouldn’t work so hard, or maybe I should have gone to a crappier college.

    • A. Rose
      August 14, 2014 at 1:12 pm

      Sabbie, I totally hear you. Its not a perfect system, but there has to be a cut off somewhere ;-/. Although MOH is trying to meet more middle income needs, as there will be a bunch more properties that are 120% of the median income, so you actually might qualify for some! Good luck 🙂

  3. Joel
    August 4, 2014 at 10:48 am

    When talking about median income, is it gross or net income?

    • Joel
      August 4, 2014 at 11:29 am

      It is gross: How the
      Mayor’s Office of Housing and Community Development Calculates Household

      reviews the most recent three paystubs or other income statements (e.g. social
      security statements, unemployment income) for each applicant. The annual gross
      income is derived by dividing the current year-to-date gross income as
      stated on the most recent pay stub for the calendar year by the current pay
      period and then by annualizing the estimated pay period amount by the number of
      times the person will be paid in one year.


      (YTD) income as stated on the most recent paystub for the calendar year =

      pay period on most recent pay stub = 10

      pay period amount = $2,000 ($20,000 divided by 10)

      number of pay periods in one year for the applicant = 24

      pay = $48,000 ($2,000 x 24)

      In the
      case of a self-employed person or other special circumstances, please see the
      BMR ownership application instructions for more information.

      Mayor’s Office of Housing office must review income for all household members
      18 years old or older, regardless of dependent status.

      Test for BMR Buyers

      will also apply an asset test to all applicants. Assets include all savings,
      checking accounts, gifts and other sources of money (cash) other than
      retirement accounts. (If your retirement account is currently generating income
      — i.e. you are living off of your retirement — you must count this money as
      income on the BMR application.) Assets also include any money that will be used
      toward a down payment on a BMR unit. Ten percent (10%) of all assets over
      $60,000 will be added to the total household income. Retirement savings
      will be excluded from the asset test, but all retirement statements should be
      included in the application package.


      of 4 earns $85,000 a year

      household cash assets = $140,000

      $60,000 of assets is excused: $140,000 – $60,000 = $80,000 in remaining assets

      10% of
      remaining assets is added to income: $80,000 x 10% = $8,000

      amount added to income: $8,000

      New total household
      income: $85,000 + $8,000 = $93,000

    • A. Rose
      August 14, 2014 at 1:10 pm

      In short: gross. Although if you are W-2 or self-employed 1099 situation, its a bit different. I highly recommend you go to a free Housing Counselor to get the deets 😉

  4. BettyG
    March 31, 2015 at 11:45 am

    I can’t seem to find any information online, so I was wondering if you knew. What if i applied to purchased a BMR, qualify, and then purchase it as a single person. Some time after that, I get a boyfriend or get engaged? Can that boyfriend or fiance move in? Or can that only happen when we get married and have legal documentation? If the couple exceeded the maximum salary while married, that’s fine, but if a fiance exceeds the maximum salary requirement, does that mean they can’t move in?

    • A. Rose

      You can unofficially move in who ever (finance) you want to your home — but on paper you can only be single, hence apply for a 1 bedroom (vs two bedroom)… but if you want to add them your spouse to the title AFTER you have purchased, you do need to have legal documentation of your spouse.

  5. Sally
    April 6, 2015 at 3:08 pm

    Thanks for writing this informative piece! The information on BMR is so confusing, and this made it easy to understand in one place! You have inspired me to actually sign up for the free, required classes! Maybe I will be a homeowner in this city!

  6. December 3, 2015 at 3:03 pm

    Disagree with policies when pay taxes governmental services: neglect what considered eligibility of “BMR” status charade. Whom behind the polices corporate influence Lennar,Mercy,TNDC and Mission given chance gain entrance using obstacles for those. Not making expecting income when, mention office of (MOHCD) only posting fragmented selection of available housing which “BMR” it was political during mayoral race 2015. Yes, most rentals located neighborhoods of gentrified polices eventually anyhow speak of Rincon Hill, Mission Bay,5M,3rd Evans former Post office and Candlestick whom getting qualified for BMR sale units? Chosen few displace rest ideal illiberal San Francisco Ed,London and Scott concurred your not eligible because you lost housing “Ellis Act” regain units former neighborhoods. Rules broken strife what about TNDC 1400 Mission 190 units for sale pricing be dismal or near market rate? San Francisco aware potential imbalance refuse find adequate resolution to solution reelected Mr.Lee try’s to be pious favoring not rentals sales excluding residents never mention this goal ideal buyers whom? Income of $80,000 barely make eligibility for “jumbo loans” since price out those able pay with cash!