While it's true that in a competitive situation with all else being equal a buyer with 20% down will usually beat out one doing FHA financing, we have had many offers accepted using FHA financing in San Francisco. Have you been doing this on your own?
Lance King/Owner-Managing Broker
Michael is correct, and I agree that you want to to speak with a lender who knows these programs. But there is a caveat. It is likely going to be harder to get an offer accepted for a buyer with an FHA loan because of longer timelines to closing. In the "old days" of mulitple, non-contingent, over-ask offers, it would have been impossible, but with longer times on the market now if your offer is positioned properly you should be able to find something that works for you.
Keep in mind that if you want a condo it will have to be FHA approved or get an exception, and many HOAs are not approved and won't be. Again, your lender will be able to help with that. We recently worked with one who helped get a really tricky deal go through. If you would like that information or have any questions, contact info is below.
Besst of Luck,
Lance King/Managing Broker
Why yes of course you can buy a house in San Francisco with an FHA loan!
Point yourself in the direction of your 'favorite' bank with whom you already have a relationship. If you don't really have a 'favorite' bank then search out a good mortgage broker, I have several names I'd be happy to send you without obligation. FHA is restrictive with whom they certify, so make sure whomever you speak with is certified!
In addtion, FHA loans have substantially more complexity to them, but the reward is great when it means you can realize the goal of homeownership as a first time buyer with as little as 3.5% down.
Believe it or not, you can even buy 2 - 4 units with an FHA loan as the loan amounts step up with the addition of each unit up to 4 total. Honestly you will be surprised after talking with a lender at what YOU CAN AFFORD!
One-family Two-family Three-family Four-family
FHA Limits $729,750.00 $934,200.00 $1,129,250.00 $1,403,400.00
In some cases, FHA will allow you to count up to 95% of the income of rental property to quality. FHA is a complex program and NOT everyone is conversant in it's complexities and nuances. You definitely want to speak to a lender who knows the rules, after you are pre-approved, then you are in a position and ready to SHOP for your first home. }:-)
Zephyr Real Estate - Noe Valley
The new limits allow you to buy a home with as little as 3.5% down on 1-4 unit properties with the following loan limits:
1 unit: 729,750
2 unit: 934,200
3 unit: 1,129,250
4 unit: 1,403,400
For 3-4 units properties, the FHA has rules which require the market rents to fully cover the debt-service on the property which do not work for most properties in our area. There are many guidelines for FHA loans that make qualifying much easier. You can use a non-occupant co-borrower (co-signer) to help you qualify for instance.
Another thing about FHA loans that is overlooked is that they are assumable. This means that the loan that you take out right now at 5.00% for example can be assumed, or taken over by a buyer when you sell the property. So if market rates are at 7.00% in five years, you can sell your property with your terms as long as the new borrower qualifies. This is a HUGE advantage to financing your property with an FHA loan in a rising interest rate environment. There are many other reasons as well.
It's true - it is possible not only to buy a home, but also multi-unit property with an FHA loan. It's not easy and there are many stringent requirements, however IT IS POSSIBLE.
You may enjoy the story published in the NY Times 11/20/2009 about clients of mine purchasing in the hip Hayes Valley, San Francisco for as little as 3.5% down. The mortgage broker, Sue Florence of Guarantee Mortgage in SF was awesome as she helped the my clients navigate the entire F.H.A. process.
If you're interested in reading more check this link to the New York Times article:
All my best,
Michael Ackerman, CRS, e-Pro
Building Trust for Life
Zephyr Real Estate
4040 24th Street
San Francisco, CA 94114
The buyers for my recent listing in the Outer Parkside (price was similar) also used FHA financing. There were absolutely no problems. We had two appraisals, and both passed easily. Of course, I believe there is something to be said for having two Realtors involved on both sides who ensure that the financing moves along, and who can troubleshoot if need be.
You can also buy a condo with an FHA loan, but you are limited in selection to about 22 complexes, ranging from Diamond Heights to SoMa and south SF.
There are many homes in San Francisco that are spending time sitting on the market. Sellers are looking for well-qualified buyers, and FHA loans should not be a factor if you have a sharp agent and lender working with you. I would encourage you to explore your options.
FHA loans also extend to condos, but the loans are granted on a spot approval basis. There are certain buildings which are on the approved list. But it sounds like you are interested in a house. Good luck!
Of course, the selection of home is limited to those where your loan amount conforms... They bought in Outer Mission and Ingleside but many other neighborhoods like Bernal Heights, Portola, and the Sunset have options that would work.
Make sure to work with an FHA experienced Realtor and mortgage broker. Of course, I'm happy to see if I'd be the right person to help you.
Danielle Lazier, San Francisco Realtor
Zephyr Real Estate
PS. Check out my blog with lots of home buyer info: http://sfhotlist.com/blog/2009/03/29/its-your-moment-first-t