San Francisco Mortgage Rates

Living in San Francisco, CA

Known for some of the country’s most iconic landmarks — the Golden Gate Bridge, Alcatraz and Fisherman’s Wharf — San Francisco hosts more than 25 million visitors per year. The city, which has the 15th largest population in the country, is home to both small, innovative start-ups and well-established companies across tech and other industries.

San Francisco has the notorious honor of being one of the most expensive U.S. cities to live in, a distinction most exemplified by the housing market. The median sales price for a single-family home in June 2019 was $1,762,500, a 3.8% increase over the previous month and an 8.8% increase over the previous year. The median price for a condo or townhome in June was $1,325,000.

The number of homes sold in the San Francisco Bay Area decreased in June but is trending upward. While inventory has been declining, it inched up slightly over last year, according to the California Association of Realtors.

Low inventory and increasing prices make for favorable conditions for sellers. Across California, sellers received 99.2% of the list price in June — a slight dip from May, which was the highest in the previous 10 months. And homes in San Francisco stayed on the market for typically only 13 days. Buyers looking in the area should be prepared to make purchasing decisions quickly.

The rules and costs of buying a home in San Francisco

The process and legal requirements for purchasing a home vary from state to state, and in California, laws can differ from city to city. Here’s what you need to know about buying a home in San Francisco:

Home seller and buyer laws

California law states that sellers must complete a real estate Transfer Disclosure Statement (TDS) detailing the condition of the property. The form covers a range of areas in and around the home, including the state of appliances, structural components and the presence of environmental hazards.

Additionally, sellers must provide a Natural Hazard Disclosure (NHD) statement indicating if the property is in a flood hazard area, earthquake fault zone or an area with a high fire hazard. Sellers are required to submit the disclosures before the purchase agreement is executed, or the buyer can cancel the contract or withdraw the offer within three days of receiving the disclosures (five days if delivered by mail).

California buyers are not required by law to hire an attorney to represent them at closing, as is necessary in some states. Buyers can use an escrow agent, such as a title insurance company, escrow company, real estate agent or attorney. Note that in northern California, where San Francisco is located, title companies typically act as the escrow agent in addition to performing the title work.

Should you encounter problems paying your mortgage, know that there are two types of foreclosure processes in California: non-judicial and judicial. With a non-judicial foreclosure, lenders do not go through the courts to foreclose on your home. Instead, they follow a series of steps that results in the sale of your home. In a judicial foreclosure, lenders must file a lawsuit and get a court order to foreclose. Non-judicial foreclosure is typically a faster process and is the most common type of foreclosure in California.

For homeowners who face divorce, California is one of only nine community property states. In a community property state, all assets and liabilities acquired during the marriage belong equally to both spouses. This is in contrast to equitable distribution states that split property and debt proportionally between spouses, rather than equally. Living in a community property state can affect your ability to qualify for a mortgage as some government loans count the debt of both spouses during the loan approval process even if one spouse will not occupy the home.

Taxes

Dealing with taxes when purchasing a home can be confusing in any state. In California, it’s even more complicated. Here is an overview of what you need to know.

Transfer taxes

In San Francisco, real estate transactions incur a transfer tax, which is based on the purchase price of the home. Properties priced higher than $250,000 but less than $1 million incur a tax at the rate of $3.40 for each $500 or a portion thereof. Properties priced above $1 million but less than $5 million have a transfer tax rate of $3.75 for each $500 or a portion thereof.

For example, a home bought for $500,000 would incur a transfer tax of $3,400, while a home at the median price of $1,762,500 would incur a transfer tax of $13,218.75.

Work with your real estate agent and escrow agent to determine if the transfer tax will be split between you and the seller. This could be a point of negotiation during the process. Your lender will provide you with the final amount you’ll need to pay, if any, on your Buyer’s Statement as you near closing.

Supplemental assessments

Under California law, the value of a home is reassessed annually and whenever a change in ownership occurs to determine the current property tax. As a result, your property taxes may be different than the previous owners’.

And depending on the month you close on your home, you may receive one or two supplemental tax bills in addition to the taxes due at closing.

Property taxes

Once you own your home, of course, you’ll be responsible for paying annual property taxes. The City and County of San Francisco has one of the highest property taxes in the country, according to Tax-rates.org. The median property tax collected in the county is $4,311 for a home worth $785,200, significantly higher than the state median tax of $2,839.

In California, while property taxes may fluctuate from year to year, state law places a cap on how much taxes can increase in a single year.

Property tax exemptions

To help ease the strain of property taxes, California provides exemptions to eligible homeowners. The Homeowners’ Property Tax Exemption is a $7,000 reduction in the taxable value of a property. To be eligible, homeowners must occupy the home as their primary residence and file with the San Francisco Tax Assessor’s office. Residents can continue to receive the exemption as long as they qualify.

Disabled veterans and surviving spouses in San Francisco can claim the Disabled Veterans’ Exemption, which reduces the taxable value of a property by $100,000 or $150,000 depending on the homeowner’s income.

Conforming loan limits

The conforming loan limit for a single-family unit in San Francisco is $726,525. This represents the maximum loan amount for a conventional mortgage ensured by the government-sponsored enterprises Fannie Mae and Freddie Mac. Because San Francisco is a high-cost area, the limit is significantly higher than the standard limit of $484,350 in place for much of the country.

Buyers who wish to finance a home in San Francisco for more than $726,525 will need to apply for a jumbo loan, which typically has a higher interest rate and is harder to qualify for.

Programs for homebuyers in San Francisco

San Francisco buyers have multiple resources to turn to for assistance in purchasing their home. The California Housing Finance Agency (CalHFA) provides statewide programs that offer financing and down payment assistance. Buyers can also access programs on the city level through the Mayor’s Office of Housing and Community Development (MOHCD). We’ll highlight a few programs below, but be sure to visit each agency’s website as well as the U.S. Department of Housing and Urban Development (HUD) for additional California housing programs.

CalHFA Conventional Program

With this program, buyers can secure a fixed-rate, 30-year conventional mortgage.

Who qualifies:

  • Household income cannot exceed $228,300
  • Single-family units only
  • Property purchase price must be $765,000 or less
  • Property size must be five acres or less
  • Can be combined with down payment assistance
  • Borrowers must complete a homebuyer education course

Learn more

MyHome Assistance Program

In this program, CalHFA offers down payment assistance to first-time homebuyers in California in the form of a deferred-payment second mortgage for up to 3.5% of the purchase price or appraised value of the home, whichever is lesser.

Who qualifies:

  • First-time buyers (defined as someone who has not owned a home in the last three years)
  • Borrowers must finance the first mortgage through CalHFA
  • Buyers must occupy the home as their primary residence
  • Single-family units only (guest houses and granny quarters may be eligible)
  • Property purchase price must be $765,000 or less
  • Household income cannot exceed $228,300
  • Property size must be five acres or less
  • Borrowers must complete a homebuyer education course

Learn more

Below Market Rate (BMR) Ownership Programs

With this program, San Francisco residents can purchase a home at below-market prices from MOHCD combined with a 30-year, fixed-rate mortgage to finance it.

Who qualifies:

  • First-time buyers (defined as someone who has not owned a home in the last three years) are eligible
  • Borrowers must finance the property with a 30-year, fixed-rate mortgage from an approved lender
  • Household income must be within program limits, which vary by unit
  • Borrowers must put a minimum of 3% down
  • Maximum loan-to-value ratio is 97%
  • Total debt-to-income ratio cannot exceed 45%
  • Buyers must have three months of housing payments in reserves after purchase
  • Borrowers must meet household size requirements (MOHCD requires a minimum of one person per bedroom. (e.g., a single-person household cannot purchase a two-bedroom property)
  • Buyers must occupy the home as their primary residence
  • Borrowers must complete a homebuyer education course
  • Lenders may require additional qualifications

Learn more

Rate shopping tips

With home prices at the level they are in San Francisco, you’ll want to keep your mortgage payment as low as possible by shopping around for the best interest rate. Here are some tips to keep in mind:

Contact at least three lenders on the same day

One of the best ways to make sure you are getting a competitive rate is to comparison shop. Select at least three lenders to get rates from — ideally different types of lenders, such as a large national bank, credit union or online lender. Because rates fluctuate, get your quotes all on the same day.

Give each lender the same information

Make sure you give complete details of your situation to all lenders. You don’t want an initial rate to increase because you weren’t upfront with all your information.

Add up all the lender fees to confirm the costs

The interest rate on your loan is just one piece of the puzzle. When rate shopping, look at all the fees associated with the loan, such as an origination fee, discount points and other additional charges. These vary from lender to lender, so look at the APR of each loan for an apples-to-apples comparison. Some fees, such as a credit report fee or appraisal, may not be reflected in the APR, so make sure you consider those fees, too.

Know when to lock in the rate

You can protect yourself from market fluctuations by locking in your rate, so it does not rise as you go through the sometimes-lengthy homebuying process. Find out what your lender’s procedure is and communicate with your loan officer to discuss when to lock it in. Some lenders may have a float-down feature, which permits you to take advantage of a rate decrease after locking in, although it’s typically at an additional cost.

Beware of mortgage fraud

Mortgage fraud can take many forms. In California, beware of lenders pushing you to sign loan documents without giving you time to read them or ask questions. This may be a sign you are working with a disreputable lender.

To protect yourself, make sure you ask for clarification on any loan terms you do not understand, and refuse to sign anything unless you are given the time to read it.

The information in this article is accurate as of the date of publishing.