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PROGRAM OVERVIEW:
The San Diego Housing Commission (SDHC) Affordable For-Sale Housing Program is a homeownership program
designed to assist low- and moderate-income households purchase a home at an affordable price. The price the
buyer pays for the home is below the fair market value of the property. The difference between the fair market
value of the property at time of purchase and the actual price paid by the buyer is structured as a secondary
loan documented in a Promissory Note executed by the homeowner and payable to SDHC at the end of the
affordability period. During the affordability period of 45 or 55 years, the home can only be sold to an eligible
buyer at a price that is affordable as determined by SDHC; this price will be less than the fair market value of the
home.
There are homes in six developments with long-term affordability requirements that are currently owned by
families and individuals. When the current owner sells the property, it must be sold to an eligible buyer as
determined/approved by SDHC. An extremely limited number of homes become available for resale each
year. Properties available for sale are generally listed on Multiple Listing Service (MLS), Redfin & Zillow.
Interested buyers should ask their real estate agent to check the MLS for available units.
To learn more about the Affordable For-Sale Housing Program properties, visit SDHC’s website at www.sdhc.org
(select “Housing Opportunities” from the menu at the top, then “Affordable For-Sale Housing”).
ELIGIBLE BUYER(S):
Income Limit: The household’s gross annual income must be below the income restriction for the property,
which varies by property. Income limits range from 60 to 120 percent of Area Median Income. The income limit
is based on the San Diego County Area Median Income (AMI), as adjusted for household size. Gross income will
be calculated based on the program guidelines stated below. To establish program eligibility, income of all
household members 18 years old and older will be taken into account.
Household Size: The bedroom size (number of bedrooms) in a home for which applicants qualify is dependent
on the number of members in the household. Applicants must meet the following occupancy standards:
• 1 bedroom unit: 1 – 2 people
• 2 bedroom unit: 2 – 4 people
• 3 bedroom unit: 4+ people
For the purpose of determining household size, any person claimed as a household member must have lived
with the borrower for a minimum of one year prior to the purchase and must provide evidence they will live in
the subject property. In addition, any non-borrowing person listed as having no income on the application, must
be a dependent on the applicant’s tax return for the previous year to be considered a household member.
Co-borrowers or co-signers who will not occupy the property as their primary residence are not permitted. A
non-borrowing spouse is considered a co-borrower even if they will not be on the loan for the first mortgage.
Student dependents who live on campus or in another city / county at or near their college will not be counted
as a household member.
The borrower(s) is required to provide all pertinent documentation requested by SDHC.
CITY OF SAN DIEGO
AFFORDABLE FOR-SALE HOUSING PROGRAM GUIDELINES
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First-Time Homebuyer: Applicants and all household members over the age of 18 must be first-time homebuyers.
“First-time homebuyer” means a person who has not owned a home during the three-year period prior to purchase
of a property under the Affordable For-Sale Housing Program.
The following individual or individuals also qualify as
a first-time homebuyer under this definition:
• A displaced homemaker who, while a homemaker, owned a home with his or her spouse or resided
in a home owned by a spouse. A displaced homemaker is an adult who has not, within the
preceding two years, worked on a full-time basis as a member of the labor force for a consecutive
12-month period and who has been unemployed or underemployed, experienced difficulty in
obtaining or upgrading employment and worked primarily without compensation to care for his or
her home and family; or
• A single parent who, while married, owned a home with his or her spouse or resided in a home
owned by the spouse. A single parent is an individual who is unmarried and has one or more minor
children (under age 18) for whom the individual has custody or joint custody (borrower must have
custody a minimum 51 percent of the time if joint custody).
Current County of San Diego Resident(s): Applicants must be currently LIVING and WORKING in the County of
San Diego for a minimum of two years. Supporting documentation will be required.
No Prior Participation in First-Time Homebuyer or Affordable For-Sale Housing Programs: Applicants may only
participate once in the homeownership programs (First-Time Homebuyer or Affordable For-Sale Housing)
currently or previously administered by SDHC.
Students: Applicants or co-applicants who are enrolled in an educational institution as full-time students
pursuing post-graduate degrees are not eligible for this program.
INCOME QUALIFICATION FOR PROGRAM ELIGIBILITY:
The combined gross annual income of all members of the household age 18 and older who are currently living
together and have lived together for 12 months or more and will be living in the property must be included in the
determination of income. The household’s income must be projected as an annual income. . All households must
be income-qualified no more than 60 days prior to the closing date. For the purpose of determining income
eligibility, all income is included even if there is less than a two-year work history. The income from employment or
any other source ended within 6 months of the application date will be counted for eligibility purposes if it was not
replaced by new verifiable employment.
INCOME QUALIFICATION FOR UNDERWRITING/DEBT-TO-INCOME CALCULATIONS:
Program guidelines require the combined income of all persons on title, including a non-borrowing spouse (if
applicable), to be included in the calculation of income. The household’s actual / average income will be calculated
for underwriting purposes.
Applicants, co-applicants and non-borrowing spouses must have a minimum of a two-year recent and continuous
work history.
SDHC, at its sole discretion, reserves the right to request any supporting documentation necessary to calculate the
household income and may use alternative methods for calculating income based on information and
documentation available.
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DEBT-TO-INCOME RATIO:
The borrower’s proposed monthly housing debt including principal, interest, property taxes, property insurance,
and if applicable, mortgage insurance and homeowner’s association dues, plus all other household monthly debt
(including credit cards, automobile payments, etc.) reflected on the credit report, cannot exceed 45 percent of
the borrower’s gross monthly income.
The income of a non-borrowing spouse is included when calculating the debt-to-income ratios if s/he has a work
history of two or more years.
COOLING-OFF PERIOD FOR DECLINED APPLICATIONS:
If an application is declined for exceeding the income or assets limit, there will be a 12 month cooling-off period
before a new application will be accepted.
One exception to this “cooling off” period is when HUD increases the program income limit. If the new income limit
is higher than the declined borrower’s income, the borrower can apply again without having to wait 12 months.
The household members and income sources must be the same at the time of re-application. A change in
employers may be acceptable; however a loss or reduction of income and/or assets that would otherwise have put
the household over the income or asset limit will not be accepted. SDHC, at its sole discretion, reserves the right to
refer to the original application to confirm consistency.
DOWN PAYMENT REQUIREMENTS:
• Minimum required down payment is 3 percent of the purchase price.
o The borrower’s down payment must be from their personal funds or a gift from an immediate
family member. Immediate family members include the following people: father, mother,
brother, sister, grandparent, uncle, aunt or child. The 3 percent requirement cannot be
substituted by any seller/lender contributions, subsidies, using 100% VA financing, subordinate
financing, grants, etc.
• Maximum down payment: 20 percent of the purchase price.
o An exception to the maximum down payment guideline may be made for buyers whose sole
source of income is derived from Social Security, Social Security Disability or Veterans Disability,
in which case a down payment sufficient to bring their housing debt-to-income ratio to no less
than 30 percent may be accepted.
o As the program is designed for low-income buyers with limited assets but sufficient income to
support a first mortgage payment, large down payments from family members with significant
assets to assist the buyers qualify for the mortgage loan will not be considered.
• All-cash transactions are not permitted. An exception may be made for buyers whose sole source of
income is derived from Social Security, Social Security Disability or Veterans Disability, and the proposed
payment for property taxes, Homeowners Association (HOA) dues and homeowners insurance is equal
to or greater than 30 percent of their income. The buyer must meet all eligibility requirements, have
acceptable credit and have sufficient income to support the HOA, property tax and monthly debt
obligations.
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ASSET LIMITATION:
At the time eligibility is determined, the liquid assets of all household members, including children, must not
exceed an amount equal to the maximum income limit for the particular affordable unit, as adjusted for family
size.
• The term “liquid assets” refers to cash and assets, which are readily convertible to cash within a
reasonable period, including but not limited to savings and checking accounts, certificates of deposit of
any term, marketable securities, money market and similar accounts, mutual fund shares, annuities and
insurance policy cash values.
• The term “liquid assets” shall not include retirement account funds if those accounts are not accessible
to the buyer.
• An exception may be made for buyers whose sole source of income is derived from Social Security, Social
Security Disability or Veterans Disability and a down payment of more than 20 percent is required to
bring their housing debt-to-income ratio to no less than 30 percent. In this case, the borrower’s assets
must not exceed an amount equal to the maximum income limit for the particular affordable unit, as
adjusted for family size after the maximum allowable down payment contribution.
• The minimum household reserve requirement is $1,000. The reserves must be from liquid assets.
CREDIT GUIDELINES:
• Minimum credit score: 640
• No foreclosure or bankruptcy (Chapter 7 or 13) within the last 7 years;
• A letter of explanation is required for all derogatory reporting dated within two years of the close of
escrow;
• All collections, charge offs and judgments must be paid or settled with the creditor through escrow or
prior to the close of escrow. Back-up documentation showing the account has been paid is required if
paid outside of escrow; and
• A credit report for a non-borrowing spouse is required. All debt of the non-borrowing spouse will be
used in the debt-to-income ratio calculations.
• SDHC, at its sole discretion, reserves the right to decline for unacceptable credit history.
FIRST TRUST DEED LOAN:
The loan must be a 30-year, fixed interest rate loan. Conventional, FHA and VA financing are acceptable.
First trust deed lenders are required to collect and manage an impound account for payment of taxes,
assessments and property insurance for the term of the first mortgage.
SUBORDINATE FINANCING:
Subordinate financing is allowed provided the loan is deferred with no payments required for 30 years.
Subordinate financing documents must record in junior position after all SDHC loans/grants.
HOMEBUYER EDUCATION:
All applicants, co-applicants and non-borrowing spouses, whether on title or not, are required to complete
Homebuyer Education AND Pre-Purchase Counseling from an SDHC-approved Homebuyer Education Provider.
Visit www.sdhc.org
for the Homebuyer Education Provider List.
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OCCUPANCY REQUIREMENTS:
For so long as the borrower(s) owns the affordable unit, the borrower(s) must continuously occupy the Property
as their sole place of residence, and they can own only the affordable property and no other property. After
purchase of the affordable unit, if the borrower decides to buy, or owns another residential dwelling (regardless
of the purpose or use), the borrower must contact SDHC immediately to initiate sale of the affordable property.
The borrower is not permitted to own ANY other residential dwelling anywhere while owning the affordable
unit. The borrower(s) shall also not rent or lease all or any part of the restricted unit at any time. Borrower(s)
must comply with annual occupancy certifications.
Any violation of the above constitutes a default of the terms and restrictions of the affordable unit, and SDHC
has the right to initiate default proceedings, including without limitation, foreclosure.
AFFORDABLE RESALE RESTRICTIONS:
On the date of the first sale of each Affordable For-Sale Housing Program unit, SDHC records resale restrictions
on each property. Depending on the development in which the unit is located, the resale restrictions include
income restrictions, sales price restrictions, occupancy restrictions, and length of restriction (restrictions remain
in effect for 45 or 55 years). The resale restrictions include the following documents:
• Affordable Housing Resale Restrictions, Option to Designate Eligible Purchasers and Option to Purchase
Upon Default
• Affordable Deed of Trust
• Affordable Promissory Note
PROPERTY CONDITION:
Upon opening escrow, the eligible buyer will be required to have a full home inspection, and a Housing Quality
Standards (HQS), done on the Affordable For-Sale Housing Program unit. The inspections must be completed by
a qualified inspector approved by SDHC. All approved inspectors on the list provided by SDHC are qualified to do
the full property inspection and HQS inspection.
Any work that needs to be completed is the seller’s responsibility and is non-negotiable. The property is to be
left in a “move-in” ready condition. All required repairs are to be made prior to the close of escrow.
Once the inspection is completed, a copy of the report will be sent from the buyer, or their agent, to SDHC.
SDHC will review the report, and the seller, buyer and their agents will be notified of any repairs that need to be
completed by the seller prior to escrow. Due to the nature of some required repairs, SDHC may require some
items to be completed by a licensed contractor.
REAL ESTATE AGENT REPRESENTATION:
The seller and buyer must be represented by a real estate agent. The sales contract, disclosures and division of
real estate costs, i.e., agent’s commission, title and escrow, etc., is negotiated between the seller and buyer, and
SDHC is not involved. SDHC may recommend real estate agents who have contracted with SDHC to represent
either the seller or buyer for a reduced, flat commission. In addition, for sale by owner and dual representation
are not allowed in any Affordable For-Sale Housing Program transaction, except in the case of the initial sale
from developer to the first purchaser.
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SDHC’S ROLE:
SDHC is the Affordable For-Sale Housing Program administrator and secondary lender. As the program
administrator, SDHC is responsible for oversight and compliance of the affordable resale restrictions. SDHC’s
responsibilities include but are not limited to:
• Calculating the sales price for affordable for-sale units at the time of the first sale and for each
subsequent sale
• Ensuring that upon resale, the property is in a “move-in” ready condition
• Verifying eligibility of buyers that participate in the program
• Annual occupancy monitoring
SDHC is a lien holder on each unit and does not have an ownership interest in the properties.
REFINANCE:
The Affordable Deed of Trust and Promissory Note may be subordinated to the refinancing of the existing first
trust deed loan in order to lower the interest rate or reduce the loan term. Refinancing for cash out may only be
approved if the funds will be used to complete capital improvement upgrades on the affordable unit. All
refinances are subject to prior written approval by SDHC in accordance with the Affordable For-Sale Housing
Program Refinance Guidelines.
These guidelines are provided as a basis for the determination of program eligibility and underwriting of
Affordable For-Sale Housing Program loans. Additionally, certain sections of the First-Time Homebuyer Program
guidelines may apply. SDHC reserves the right to request any supporting documentation or information as
needed. SDHC at its sole and reasonable discretion may make exceptions to any guideline which is not driven by
the SDHC Policy 600.101.
Please be aware that reporting fraudulent, untrue and/or incomplete documentation is a serious program
violation. This could lead to the termination of your participation in the Affordable For-Sale Housing Program.
Title 18, Section 1001 of the United States Code, states that a person is guilty of a felony for knowingly and
willingly making false or fraudulent statements to any department or agency of the United States. It is very
important to provide complete and accurate information as requested by SDHC.
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The San Diego Housing Commission (SDHC) is committed to affirmatively furthering fair housing by promoting fair
and equal housing opportunities for individuals living in the City of San Diego. This commitment extends to all
housing programs managed or owned by SDHC and to all grant-funded programs provided by SDHC. It is the policy
of SDHC to provide services without regard to race, color, religion, national origin, ancestry, age, gender, familiar
status or physical/mental disability. For more on our commitment to affirmatively furthering fair housing, visit our
website at www.sdhc.org
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Applicant Eligibility
Standards
Co-Signers
Co-signers who will not occupy the property are
prohibited.
Documentation
• If married: spouse must sign SDHC forms,
disclosures and promissory note, regardless of
vesting.
•
If divorced: copy of final divorce decree and
judgment from the court.
•
Death certificate for deceased spouse.
•
Non-U.S. Citizen: copy of permanent alien
registration card (green card). All borrowers
must be a U.S. Citizen or Permanent Resident.
• Copy of driver’s license or other photo ID
Income (Required for ALL households
members over age 18)
Standards
Alimony and Child Support
Copy of divorce decree and/or child support
agreement, with twelve months proof of payment.
To be used for eligibility and underwriting. Support
must continue for 36 months or more.
Disability Income
Copy of most recent award letter
Social Security Income
Copy of most recent award letter
Pension Income
Copy of most recent award letter or 1099-R
Tax Returns & W-2s
Three years Federal signed tax returns including all
filed schedules. Two years W-2s for all employers.
Salaried / Wage Earners
Most recent pay stubs covering a minimum of two
month’s income. Pay stubs to reflect year-to-date
earnings and deductions. If there are multiple
employers, all pay stubs showing year-to-date
earnings.
Part-Time Employment
Most recent pay stubs covering a minimum of two
months income. Pay stubs to reflect year-to-date
earnings and deductions.
Bonus, Commissions, Overtime, and
Double-Time Income
Must be documented on pay stub. Will be used if
there is a two-year history and likelihood of
continuation.
Self-Employed
Three years Federal signed tax returns including all
filed schedules and a year-to-date signed profit
and loss statement. Three years signed business
tax returns if applicable. 12 months of bank
statements. Must have a documented minimum
two-year history of self-employed income.
Commission Only
Two years of tax returns with Schedule C and a
year-to-date signed and dated profit and loss
statement or most current pay stubs covering a
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minimum of one month. Must have a minimum
two-year history of commission income.
Assets (Required for ALL households
members over age 18)
Standards
Checking and Savings Accounts
Three months most recent bank statements for
ALL accounts.
Stocks and Bonds
Must be verified by brokerage firm or similar
company and statement of account.
401K or Retirement Accounts
Copy of account statement and letter from
employer verifying that borrower does not have
access to the funds, if applicable.
Liabilities
Standards
Alimony/Child Support
Included as debt if more than six months
remaining. Copy of divorce decree.
Installment Loans
Included as debt if more than six months
remaining.
Revolving Accounts
Payment stated on credit report or application is
used, whichever is higher. If payment is not stated,
the higher of $10 or 5 percent of the outstanding
balance owed is used.
Student Loan
Payment stated on credit report is used. For
student loans in deferment, 1% of loans will be
used unless borrower provides documentation to
prove they are on an income based repayment
plan with a lower payment in which case the
income based repayment plan payment will be
used.
Credit History
Standards
Credit Reports
Must be a “three repository merged” credit report.
Any items not belonging to borrower must be
removed from the report. Credit report must be
dated within 90 days of SDHC approval.
Collections
All unpaid collections must be paid. Need letter of
explanation from borrower.
Derogatory Credit
Letter of explanation is required for all derogatory
credit. No accounts can be past due at the time of
loan application.
Bankruptcy
No bankruptcy (Chapter 7 or 13) within the last 7
years.
Short Sales / Foreclosures
No short sale or foreclosure within the last 7 years.
Judgments, Garnishments and
Involuntary Liens
No outstanding judgments, garnishments or
involuntary liens are allowed.
Inquiries
Any inquiries within the last 90 days must be
explained.
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No or Limited Credit History
Alternative credit history is required. Utility
payment records (at least 12 months most recent
statements), rental payments (past 12 months) or
other personal loans (past 12 months). Need
three forms of credit history, at least one must be
a rental history.
