Below Market Rate (BMR) property offer a unique opportunity for individuals and families to own homes at prices below the market rate, providing a pathway to secure housing in otherwise expensive real estate markets. This page is dedicated to providing you with essential information, guidance, and steps involved in acquiring a BMR home. Explore our comprehensive resources and gain insights into the eligibility criteria, application process, and the benefits of owning a BMR property. Empower yourself with the knowledge to make informed decisions and take a significant step towards achieving your dream of homeownership.

Definitions:

1. “Adult” shall mean any persons who are 18 years of age or older.
2. “Applicant” shall mean a potential homebuyer who submits an application to the City of Hayward (the “City”) and any Adult who will be added to Title of the Property if the application is approved.
3. “Non-Applicant Adult” shall mean a household member who is 18 years of age or older who will live in the Property but will not be added to Title.
4. “City” shall mean the City of Hayward.
5. “Gross Household Income” shall mean the anticipated income of all Adult household members for the twelve (12) month period following the date of determination of income who will be living in the Property.
6. “Household” shall mean one or more persons occupying the same housing unit.
7. “Property” shall mean the qualified residence to be purchased through the program.
8. “Seasoned Funds” shall mean the Applicant’s own monies that have been verified as held in an account with a financial institution in the Applicant’s name for a minimum of three (3) months.

Program Requirements:

Down Payment

The Applicant must provide Seasoned Funds in an amount equal to a minimum of 3% of the purchase price.

The Applicant may be gifted funds towards the purchase, evidenced by a “gift letter” and bank statements verifying the gift amount which must be submitted with the Applicant’s application. Gifted funds may be used for any down payment amount greater than 3% of the purchase price.

Homebuyer Education Requirement

Applicants must complete an 8-hour, HUD approved homebuyer education course. The homebuyer education curriculum shall include: preparing for homeownership, available financing and credit analysis, loan closing and homebuyer responsibilities, and home maintenance and loan servicing. Successful completion of the training must be evidenced by a Certificate of Completion and obtained within the prior 24 months before application.

First-Time Homebuyer Requirement

There is no first-time homebuyer requirement, but Hayward does have a live/work in Hayward preference.

Minimum Asset Requirements

Applicants must show that they have enough cash to pay all down payment, closing costs and fees and must have at least three (3) months reserves after paying all acquisition costs.

Determining Household Income

Determination of Gross Household Income shall be calculated using the guidelines provided in Calculation of Applicant Income.

Final credit and income eligibility verification shall be based on a review of third-party documentation submitted by the Applicant’s first lender. Final loan approval will be subject to the City’s verification of eligibility.

Underwriting Guidelines

Front-End Ratio. The Front-End Ratio must be at least twenty-five percent (25%) and no more than forty percent (40%).

Back-End Ratio. The Back-End Ratio must be no more than forty-five percent (45%).

Statement of No Income

Any Adult household members that do not work or will not have any income in the next 12 months must complete a notarized, zero-income affidavit.

Determining Credit Worthiness of the Borrower

Applicants must meet minimum credit requirements of the first mortgage lender.

Co-Signors and Non-Occupant Borrowers

Co-signors and non-occupant borrowers are not allowed.

All Cash Purchase

All cash purchase is not allowed. 

Minimum Required Documents to Determine Eligibility:

The information below will need to be provided to the City for review and approval.

1. Gross Household Income analysis to determine program eligibility provided by real estate agent, broker, lender, etc. The City does not have a template but recommends that the analysis be provided in Excel format. Regardless, whatever format is used, the City must be able to easily follow and understand the calculation and how the income eligibility determination was reached.

Applicants

1. Application & Disclosure Form
2. Applicant’s Authorization to Release Information Form
3. Copy of Certificate of Completion of HUD-Approved 8-Hour Home Buyer Education Workshop
4. Copy of ID
5. Income
   • Pay stubs for the most recent pay periods (most recent 3 months)
   • Income tax returns for the most recent tax years (last 3 years)
   • Income verification form from the Proposed Purchaser’s current employer
   • An income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either such agencies
   • If Proposed Purchaser is unemployed and has no such tax return, another form of independent verification (i.e. notarized Zero Income Affidavit)
6. Assets
   • Bank Statements (most recent 3 months)
   • Retirement Account Statements (most recent 3 months)
7. Copy of Credit Report
   • A credit report must be submitted for each Applicant and must be a tri-merged credit report that shows credit scores for all three bureaus along with payment history for all accounts.
   • If an Applicant does not have an established credit history and is unable to provide a credit report, they will need to provide twelve (12) months of bills and receipts/proof of payment for three (3) types of recurring payments such as utility bill, cell phone, cable bill, etc. 
8. Gifts
9. Lender Documents
   • Pre-qualification letter
   • 1003
   • 1008
   • Estimated Closing Disclosure
   • Conditional Loan Approval

Non-Applicant Adults

1. Adult Household Member's Authorization to Release Information Form
2. Income
   • Pay stubs for the most recent pay periods (most recent 3 months)
   • Income tax returns for the most recent tax years (last 3 years)
   • Verification of employment from the Proposed Purchaser’s current employer
   • An income verification form from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either such agencies
   • If Proposed Purchaser is unemployed and has no such tax return, another form of independent verification (i.e. notarized Zero Income Affidavit)
3. Assets
   • Bank Statements (most recent 3 months)
   • Retirement Account Statements (most recent 3 months)

Where applicable, all documents must be dated within 30 days of the date a complete packet is submitted to the City for review. The above list are minimum requirements and the City may also request additional information, if needed, to clarify any questions or discrepancies in an Applicant’s submission.

City Approval and Re-Certification of Household Income:

If the City has provided approval of the Applicant’s application, then the approval is good for six (6) months from the date of approval. In the event the Applicant has not closed escrow within six (6) months of City approval, the Buyer will need to submit documentation to re-certify Gross Household Income.

If the City has not provided its approval, the City may request that Applicant provide updated documents that are dated within 30 days of the date of the City's request in order to accurately certify Gross Household Income.

Minimum Occupancy Limits to Apply for a Unit:

The City does not have an occupancy standard for minimum household size allowed to apply for a unit as long as it does not conflict with any state or federal laws and the buyer is income eligible and can afford the unit.

Maximum Occupancy Limits:

The City does not have occupancy restriction guidelines except for building code. Please see the code below:

Section 503.2 of the Uniform Housing Code (1997) (the "UHC"), as adopted by the State of California pursuant to 25 California Code of Regulations Section 32 (2005), utilizes a square footage formula to establish the maximum number of people permitted in residential units. The UHC requirement reads as follows:

Dwelling units and congregate residences shall have at least one room which shall have not less than 120 square feet of floor area.  Other habitable rooms, except kitchens, shall have an area of not less than 70 square feet.  Where more than two persons occupy a room used for sleeping purposes, the required floor area shall be increased at the rate of 50 square feet for each occupant in excess of two.

Hazard Insurance:

Buyer must maintain a standard all risk property insurance policy equal to the replacement value of the Home (adjusted every five (5) years by appraisal, if requested by the City), naming the City as an additional insured and loss payee. If the Home is located in a flood plain, the Buyer shall also obtain flood insurance. The insurance carrier providing the insurance must be licensed to do business in the State of California. Additional insurance requirements are set forth in Section 5 of the Deed of Trust.

City Title Policy:

Upon close of escrow, Title Company must deliver to the City a CLTA Policy on the Home insuring the City Deed of Trust in the amount of the Purchase Price of the Home, subject only to the City Resale Agreement, First Mortgage Loan Deed of Trust issued by the Title Company (the “City Title Policy”).