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The LGBTQIA guide to purchasing property in San Francisco

The LGBTQIA guide to purchasing property in San Francisco

There’s no place like home: The LGBTQIA guide to purchasing property in San Francisco

Are you at that point where you really hate paying stupidly high rent but don’t want to leave the city that you love? We get it; San Francisco just has something special that makes sacrificing a large part of your income for accommodation acceptable but annoying. After all, no matter how nice your landlord is handing over a few grand each month is pretty painful especially if you’re helping them to pay their own mortgage! If you’re not earning a few hundred thousand per year buying your own property in San Francisco probably feels impossible, but you might be surprised to learn that owning your home is just as financially viable as paying high rent every month. You’ll also be building equity in your own property. Let’s start by looking at the financial requirements of buying a home in the Bay:

Affording a home in San Francisco

San Francisco ranks as one of the most expensive cities in SF, with an income of $119,000 needed to comfortably live in the city. So how do you afford a property where homes easily sell for six figure amounts and rental prices are crazy? The answer: you get creative and use the system to your advantage.

We’ll break this down into two sections: affording the down payment and affording monthly mortgage payments:

Saving For a Down Payment

Traditionally mortgage lenders required homebuyers to save a 20% of the property purchase price to qualify for a mortgage, that’s $200,000 for a $1M home. However, things have changed and there are mortgage lenders who will approve loans for buyers who only have a 5% deposit. So what does this mean for a deposit on an SF home? It’s reduced from $200K to $50K, which is a large saving but that’s still $50,000 you’ll need in your bank account to purchase a home in SF. So what’s the alternative?

If you’re a teacher, first responder, or on a limited income you should contact the Mayor’s Office of Housing and Community Development to learn more about the loan options to help you purchase a home in SF.

If you don’t fall into any of these categories you’ll need to be a little more creative!

Covering the down payment the non traditional way

So to begin let’s throw out that 20% figure as it’s really not needed any more. We’ll do the math based on a 5% down number, which is a more common option among mortgage providers and you can still avoid paying PMI (private mortgage insurance). Say you want to buy a two-bed property in SF for $1,000,000. For a 5% down payment you’ll need $50,000 as a down payment if you choose to buy the property on your own. However, if you buy with friends or a partner you can reduce that down to $25,000 with one co-buyer, or $16,667 with two co-buyers. Saving just under $17K is much easier than $200,000 dollars needed to buy a home on your own while paying 20%! Making the down payment affordable without saving for many years can be done if you know how to hack the home buying system and are willing to share your home with a friend. Remember, this doesn’t have to be your forever home; it’s a home to build equity in a property rather than paying rent towards your landlord’s mortgage!

Affording Mortgage Payments

HSH estimates that you need to be earning $181,000 per year to afford a home on your own in San Francisco, but that’s if you’re able to put down a 20% deposit. How many people can actually afford to drop $200k to buy a million dollar property without saving for at least the next ten years? So how much do you really need to be earning to afford mortgage payments in SF? If you able to put down 5% of the property value it’s actually closer to $216,000 to comfortably afford the mortgage payments on a million dollar property. So, what are your purchase options if you’re not yet bringing in over $200k per year? The simplest answer is to split the mortgage with someone else, this doesn’t need to be a romantic partner, it can be a friend or multiple friends if you buy a multi-bedroom home. By doing this you could lower the income requirement down to $108,000, or even $72,000. The key thing to remember is to keep your mortgage payments under 30% of your pretax income to ensure that you can afford the payments.

LBTQIA Guide To Getting a mortgage

Finding a LGBTQIA friendly lender

We’ve all been there, I’ve personally lost count of the amount of times I’ve had to correct someone when they presumed my spouse was male. Getting a mortgage is already stressful so I highly recommend finding a mortgage broker who is LGBTQIA friendly to eliminate unnecessary causes of stress. Even though discrimination is illegal it doesn’t mean that you won’t still find unfriendly brokers. So how do you go about finding a helpful broker to help you secure a loan? Some businesses actively advertise to the LGBTQIA community, making them a good starting point, but you can also ask friends and family for recommendations. Don’t settle for poor treatment!

Once you’ve found a selection of LGBTQIA friendly lenders you’ll want to narrow down your options based on their mortgage options. Here are a few ways mortgages can vary:

  • The mortgage length
  • The interest rate terms (fixed vs. variable)
  • Whether the mortgage can be transferred (is it assumable?)
  • Deposit amount required
  • Requirement for private mortgage insurance
  • Whether the mortgage is payable on sale
  • What fees are included
  • Equity building or interest only
  • Jumbo loans vs. conforming loans

Ask your lender how these differences affect you monthly mortgage payments, how you build equity, and what happens when you sell your share of the property (should you buy with another person or persons).

What does you marital status mean for mortgages?

Now that we’ve looked at the ownership options when buying a home as an LGBTQIA person, couple, or group lets move on to potential financing issues you might face depending on who’s purchasing the property.

-Married couples, civil partnerships, and unmarried couples

Traditionally mortgages are paid by an individual or shared between a couple who both complete one application, it also means that both parties share financial responsibilities until the mortgage is paid off. If one of you chooses to leave the home the partner remaining in the property will generally have to refinance the mortgage in order to remove your name from the loan.

-Poly families, and groups of friends

You don’t need to be in a relationship to by a home with someone. In fact it’s totally possible for a group of 3 or more friends to buy a property together if you choose the right mortgage lender. Not all lenders will fund these types of mortgages but HomeSavvy can help you secure your loan. For maximum flexibility and protection you need to acquire mortgages that allow co-buyers to sell their share when then want to and also have a legal framework in place to protect your credit.

Getting pre-approved

There’s no denying, buying a house in the extremely competitive SF housing market can be brutal. In fact, you shouldn’t even start making offers on homes until you’ve been pre-aproved for a mortgage. If you’re new to mortgages you might not even know what pre-approval is, but don’t worry it’s actually a pretty simple process. Pre-approval is basically a pre mortgage application. You’ll provide a mortgage provider with basic info about your income, existing debts, and credit rating etc. They’ll use the info to pre-approve you for the mortgage amount that they think you can afford. Once you have this you’ll be able to show proof to home sellers that you’ll be able to close on the offer you’ve made on their property. Why do sellers want this? It helps prevent sales falling through, saving them time and money. It’ll also help you establish a realistic budget.

Here’s what you’ll need to get preapproved:

  • The social security numbers for anyone who will be named on the mortgage.
  • Employment information for all borrowers.
  • Proof of income for everyone who will be named on the mortgage.
  • Self-employment information.
  • Tax documents for the last two tax years.
  • Current address and list of past addresses for the last couple of years.
  • Information about your current finances.
  • Information on your existing debts.
  • Information on your monthly spending habits.
  • Declaration of cash gifts.

Closing On a property

You’ve probably noticed that we’ve skipped talking about finding a home. Honestly, we could probably write another few thousand words on this, and we have a blog post with more info here. But we have two recommendations to help make this process as quick and painless as possible:

  1. Find a local LGBTQIA friendly mortgage broker. Someone who knows the area and is happy to work on your behalf can make a big impact on your property options.
  2. Act quickly, everything on the SF housing market happens at light speed. You’ll need to be quick if you don’t want to miss out on properties.

Once You’ve Found Your Home

Once you’ve had an offer accepted on a property things will really kick into high gear. This is the time when you’ll submit your full mortgage application, have inspections completed on the property, and fill in a lot of paperwork. One important step and often one of the final steps is to choose how you’ll legally own the property with your co-buyers.

Choosing an ownership framework establishes your legal rights

This is perhaps the most important piece of advice any potential homebuyers need to know, and this applies whether you’re married, in a civil partnership, unmarried, or buying with friends:

Make sure you understand the legal rules around the different types of property ownership.


It can make a huge difference on what happens if one of the property owners passes away or wants to leave. Let’s take a look at the options:

Joint Tenancy:

Number of people on the property deed: 2 or more

Share sizes: Must all be equal

Are the stakes transferable to another person: No

Who inherits the share upon the death of an owner: Split between remaining property owners

Joint Tenancy with rights of survivorship:

Number of people on the property deed: 2 or more

Share sizes: Must all be equal

Are the stakes transferable to another person: Yes

Who inherits the share upon the death of an owner: Split between remaining property owners

Tenancy in Common:

Number of people on the property deed: 2 or more

Share sizes: Property holders can own different sized shares

Are the stakes transferable to another person: Yes, even without the permission of other owners

Who inherits the share upon the death of an owner: Property holder’s heirs named in their will

Community Property

Number of people on the property deed: 2 (married couples only)

Share sizes: Equal

Are the stakes transferable to another person: While both parties are living shares can only be transferred with both parties consent.

Who inherits the share upon the death of an owner: Property holder’s heirs named in their will. You can also choose Community Property With Right of Survivorship as the legal framework to give your spouse automatic inheritance.

So how do these options fit with your relationship status?

You’ll have a few options when it comes to deciding on a legal framework for how you own the property with your loved-ones or friends. Your relationship status isn’t important at all when it comes to buying a house, where it does matter is in establishing your legal ownership rights and what happens if an owner passes away or wants to leave. It could also have tax implications both for annual tax returns and inheritance tax.

-Married or Civil Partnership

Married and civil partnership couples have the most options when it comes to legal tenancy choices. You’ll be able to choose from all of the options above, including tenancy in common if you live in California. So why does it matter? Tenancy becomes important if you want to leave your share of the property to someone other than your spouse, for example your children. In this case you’ll want to choose between joint tenancy in common and community property. It also works the other way too in that if you want to ensure that your spouse gets the property you should choose joint tenancy or joint tenancy with rights of survivorship or ensure that your will names your spouse as the heir to the property. It’s important to note that many married couples are often automatically named joint owners with rights of survivorship, if this isn’t what you want make sure the changes are in place before you close on the property.

-Unmarried couples

In many respects you’ll have similar options to a married couple, however you’ll need to decide how combined you want your finances to be. Both joint tenancy options require all parties to own an equal share, but only the option without right of survivorship prevents one party from selling their part of the property. The other key consideration is who you’d want to leave your share of the property to if you passed away. This is actually where tenancy in common agreements give you added flexibility and control over your finances as they allow you to define who will inherit your property using a will rather than the other owner automatically inheriting your share.

-Poly and buying with multiple partners

Do you want to buy a house and have all of your partners named on the property and mortgage? It’s totally possible but not all lenders will allow it. You can name as many people as you want on the property deeds but if you’re taking out a mortgage for your share of the property they’ll have to sign to acknowledge that they’re aware of the loan when the mortgage paperwork is finalized. You’ll need to decide how flexible you want your resale options to be and who will inherit your share if you pass away. You’ll be able to chose from both types of joint tenancy and tenancy in common for your ownership framework, you should research which option will best fit your needs as a family unit.

-Just good friends

It’s totally possible to buy a house with friends instead of paying rent every month! So, what are your legal options if you want to purchase a property with either one or multiple friends? The key thing here is you’re going to want to retain your financial independence from your co-buyers, which leaves tenancy in common as the strongest option. This type of agreement will allow you to sell your share in the property independently and name who inherits your share if you pass away. You’ll want to get a clear legal framework in place to ensure that all buyers are protected.

Making sure you own your property using the legal framework that best fits your needs not only has tax implications; it also ensures that you’re protected from legal issues in the future. If in doubt ask an expert about which option is right for you and your co-buyers!

Get help on the home buying journey

Dealing with mortgages and buying a home can feel overwhelming, especially when you’re looking for property in San Francisco. HomeSavvy is here to guide you through the entire process. From securing a mortgage to closing on your home, our free concierge service is designed to help you through ever step of buying a home in San Francisco. We specialize in helping friends or families co-buy properties and will even provide you with the legal framework you need to protect the rights of each buyer. Sign up today to stop paying rent and instead buy your own home in the Bay.

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