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Property values, competitive housing demand, and available inventory are just a few of the things that have come to define the San Francisco real estate market. For prospective buyers, this describes a thriving market to step into, especially when median home prices sit at $1.2 million. Making sense of the correct home loan options for your particular situation becomes key. Be it a high-value property refinance, an investment purchase, or a first-time buy, having a firm grasp of mortgage options allows better mobility across the ever-changing housing landscape of the city.
The fuels that keep San Francisco’s housing market among the most expensive in the country stem from the concentration of habitants in the tech and finance sectors, making the average home price soar. The following statistics highlight the housing market status of the city:
Median Home Price Circumference: 1.2 million USD
Homeownership Percentile: Close to 37 Percentage
Median Household Earnings: Roughly 130,000 USD
Property Tax Circumference: In the realm of 0.73 Percentage
Average Rental Fees: Approximately 3500 USD per month with such exorbitant housing prices, buyers heavily rely on specialized loan programs such as government backed mortgages and jumbo loans to take advantage of the San Francisco market.
The most common type of a mortgage loan in San Francisco is a conventional loan. Throughout the years, it has proven to be a useful option for borrowers possessing income on a steady basis and good credit history. A typical conventional loan carries a set interest rate that is fixed along with an average down payment of 5% to 20% of the purchase price.
San Francisco, like many other places in the U.S., suffers from a massive housing crisis. Many buyers are getting priced out of the market and struggle to afford buying a home. FHA loans are specifically designed to help those who have a smaller down payment or have a lower credit score. These loans allow qualified buyers to put down as little as 3.5%, making homeownership easier for first time buyers. This is a great way for first time buyers to break into San Francisco’s notoriously expensive market.
Veterans and active military personnel can take full advantage of VA loans that provide zero down payment and no private mortgage insurance (PMI). These types of loans truly stand out because they are incredibly beneficial for eligible buyers in need of further capitalization.
Most home prices in San Francisco surpass $1,089,300 which is why a lot of buyers need to resort to jumbo loans. These loans are often accompanied with higher credit score requirements, bigger down payments, and are relatively more difficult for average buyers to get.
An issue facing investors and other potential buyers looking to enter the market is the increased competition. With so many people trying to buy homes, a variety of tailored financing solutions become necessary in order to stand out from the crowd.
Unlike traditional lenders that check one’s credit score, hard money loans arrange speedy finances on the basis of property value. These are ideal for real estate investors and house flippers who require quick funding for purchases and renovations.
Home equity, lower interest rates, or lesser monthly payments can be accessed through the process of refinancing. This tool is ideal for any homeowner in San Francisco that wants to modify their mortgage in relation to current market conditions.
These types of loans are ideal for investors looking to buy, renovate, and sell houses. They tend to provide short-term loans that cover both acquisition and renovation costs. These loans, similar to a construction mortgage, are based off the home’s after-repair value.
Bridge loans solve the issue of financing a new property without waiting to sell your current one. This type of loan is perfect for San Francisco, as it is known to have a fast-paced property market.
Construction loans offer funds to make major home renovations, or build a new home. Payment is made in stages throughout construction, and converted to a standard mortgage once building has finished.
A purchase loan is classified as a more traditional type of mortgage that is used to buy a home. A buyer’s credit history, income, and down payment determine whether he or she qualifies for a Conventional, FHA, VA, or Jumbo Purchase loan. Each buyer can have a different Purchase loan.
San Francisco is known for having extremely high property values; therefore, it is no surprise that mortgage qualification standards tend to be stricter. Some of the things lenders look at are:
Credit Score – Better loan terms come with higher credit scores, and with most jumbo loans, a score of 700 or above is usually expected.
Down Payment – With conventional loans, a minimum of 5% is required, while many jumbo loans require anywhere from 10% to 20%. FHA loans can allow for much lower down payments, at 3.5%.
Debt-to-Income Ratio (DTI)- Most lenders prefer a lower DTI; in fact, it is believed that having a lower DTI significantly improves a borrower’s chances of being eligible for a loan.
Employment and Income Stability- In a high cost city such as San Francisco, consistency of income is something lenders evaluate and can make a large difference to qualifying.
With the high housing costs that makes San Francisco an expensive city, there are a number of programs available to hope homebuyers. One such program is the:
SF Mayor’s office of housing and community development (MOHCD) programs: helps with the down payment and gives an affordable opportunity for home-ownership for eligible buyers.
CalHFA Loan Programs: helps qualifying buyers buy homes with lower market interest rates and assists with the down payment.
Below Market Rate (BMR) Housing Program: This program is designed for eligible buyers to purchase homes at below the market price with resale restrictions.
Strategic planning and an appropriate financing solution is a must when buying a house in San Francisco. As a first time buyer, a homeowner looking to refinance, or an investor, the right loan will enhance your chances of claiming a stake in one of the hottest real estate markets in the country.
If you are looking to learn more about different mortgage plans, you can get in touch with a trusted lender to kick start the process today.
1. What is the best home loan for buying in San Francisco?
It all depends on your financial profile, but conventional loans work best with people who have strong credit, FHA loans are great for first time buyers, while jumbo loans tend to be the standard for high end properties.
2. How much downpayment do I need for a home in San Francisco?
That depends on the type of loan. FHA’s can go as low as 3.5%, while conventional loans average around 5%-20%, and jumbo loans typically request 10% or higher.
3. Are there programs offered for homebuyer assistance in San Francisco?
Indeed, there are financial aids offerings for qualifying buyers under MOHCD, CalHFA, and Below Market Rate Housing Program.
4. Is it possible for me to get a jumbo loan in San Francisco?
Qualifying for a jumbo loan usually requires a credit score of 700 or above, a relatively low debt income ratio, and a 10-20% downpayment.
At Save Financial, we specialize in a wide variety of loan options to meet your unique financial needs. Our offerings include hard money loans secured by real estate, fix and flip loans, bridge loans, construction loans, purchase loans, and refinance loans. Whether you have good or bad credit, our experienced team is dedicated to guiding you through the entire loan process. Discover how we can help you secure the perfect loan for your situation. Contact us today to learn more about our comprehensive loan solutions!