MortgageReal Estate

San Francisco Federal Credit Union unveils zero-down jumbo mortgages

No requirement for mortgage insurance either

Citing the struggle to save money that many San Francisco residents face due to the city’s skyrocketing housing costs, one San Francisco credit union is going to extreme measures to try to help area residents buy a home.

San Francisco Federal Credit Union announced a new loan program that will allow San Francisco-area borrowers to finance up to 100% of their mortgage – with no requirement for mortgage insurance – on loans up to $2 million.

According to San Francisco Federal Credit Union, the new program is called POPPYLOAN, which stands for Proud Ownership Purchase Program for You.

POPPYLOAN was created in response to skyrocketing home prices throughout the San Francisco Bay Area,” San Francisco Federal said in a release.

In its release, San Francisco Federal said that many San Franciscans are paying more than the average mortgage payment in rent every month, but cannot afford to buy a home because they cannot save enough the down payment required for a conventional mortgage.

San Francisco Federal is certainly right about the rent in the area. A recent Zillow report showed that renters in San Francisco are currently paying 47% of their incomes in rent.

And a recent report from PropertyRadar showed that more than half of all homes sold in San Francisco and San Mateo counties in September exceeded $1 million.

PropertyRadar’s report also showed that homes in the “Silicon Valley Corridor,” which consists of San Francisco, San Mateo and Santa Clara counties, continue to see double-digit price appreciation.

Rebecca Reynolds Lytle, senior vice president and chief lending officer for San Francisco Federal Credit Union, said that the POPPYLOAN program was created to address the stark realties of San Francisco’s housing situation.

“We see POPPYLOAN as a game-changer for the San Francisco real estate market," Reynolds Lytle said.

"Too many of our members have given up hope of buying a home because of escalating home prices and the required down payment,” she continued.

“However, these same families are paying more than a mortgage payment for monthly rent,” Reynolds Lytle said. “Paying $3,600 for a one-bedroom apartment is about the same as making a monthly payment on an $800,000 mortgage. We created POPPYLOAN to help middle class families realize their dream of buying a home without having to move out of the Bay Area."

According to San Francisco Federal, POPPYLOAN is available to anyone who works in San Francisco or San Mateo Counties and can be used to purchase a home anywhere in the nine Bay Area Counties: San Francisco, San Mateo, Marin, Napa, Sonoma, Santa Clara, Alameda, Contra Costa, or Solano.

Qualified borrowers can finance up to 100% of the purchase price of a home, up to $2 million. Additionally, there is no requirement for private mortgage insurance.

To qualify for POPPYLOAN, borrowers must be 18 years or older and purchasing a single family home, townhouse, condominium, or 2-to-4 unit multi-family dwelling as their primary residence.

POPPYLOAN is structured as a 5/5 adjustable rate, 30-year mortgage.

According to San Francisco Federal, interest rates and monthly payments are fixed for the first five years and every five years thereafter, with no more than a 2% increase every five years and no more than a 6% increase over the life of the loan.

San Francisco Federal said that POPPYLOAN is not available to refinance an existing mortgage.

With Fannie Mae and Freddie Mac offering 97% loan-to-value  loans, many lenders have not allowed for down payments less than 3% since the housing crisis, but San Francisco Federal isn’t the first lender to offer a zero-down mortgage recently.

Earlier this year, BBVA Compass (BBVA) also announced its own zero-down mortgage program, which was called Home Ownership Made Easier or HOME for short.

Under the HOME program, qualifying borrowers are eligible to finance 100% of the home’s value. In addition to offering 100% LTV loans, BBVA will also contribute up to $4,500 toward “certain closing costs” associated with obtaining a home loan.

But San Francisco Federal’s program takes a zero-down lending to a whole new level – a level that Steven Stapp, president and CEO of San Francisco Federal Credit Union, said that they are more than comfortable with.

"The rising cost of real estate is creating a housing crisis in San Francisco, and while POPPYLOAN isn't a solution for everybody, we want to do what we can for our friends and neighbors," Stapps said.

"We studied the problem and realized that there was no reason our credit union couldn't offer up to 100% financing without requiring PMI,” Stapp added. “Other credit unions have had success with similar programs and we built POPPYLOAN as the best possible solution we could offer to our members."

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3d rendering of a row of luxury townhouses along a street

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