Wife and I are shopping for our first home in San Francisco. We looked at a condo (2 bed 2 bath) in the city that we really liked and wanted to get pre qualified so we can start the negotiation process. Our credit scores are in the 700 - 750 range and debt to income ratio is great..only debt is a car payment. After talking to a bunch of banks we were told that everything is great but we cannot do better than 10% down. 15% is ideal for the best interest rates but 10% can be done although the interest rates are ridiculous for a purchase price 685k+ and PMI is included.
In a city where the median condo price is 855K$ how in the world are we suppose to come up with 15% or even 10% down. All the major banks I've spoken to say that things have changed since April 1st (although SF is considered a non declining market). Before that they could do 2 loans but they dont do that anymore. I've heard of FHA loans as being an alternative as they require only 3% down but the interest rates are slightly high.. Is this our only alternative?

Riskier loans cost more. Film at 11.

Harpreet, is this you? Come back home to Fremont... vah!

Maybe you should be looking for a flat in London's West End since you are already value shopping.

delzy said:Maybe you should be looking for a flat in London's West End since you are already value shopping.
No thanks..San Fran is expensive enough for me. What r u talkin abt value shopping? There's a reason foreclosure rates in SF are no where as high as Florida or the rest of Cali.

lorcha said:AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.Well, did you pledge all that crap as collateral? No? Then it's a risky, high LTV loan.

As a matter of fact we are ready to.

FHA loans are still available for 3% down. Star one credit union has some great rates. (Between 3.75 and 5.5 for a 40 year fixed up to 700k)

That being said take a look on Trulia for real time market trends and note that MANY neighborhoods have declining year over year price per square foot and median prices.

Neighborhoods that make the list include SOMA, Nob Hill, Lower Pac Heights, Potrero hill, etc. Can you afford to eat at 10-20% loss in value over the next 5 years? If you can't - which if you don't have a 10-20% down payment seems to be the case - don't buy!

Pledging your other assets as collateral will not be simple, I would expect few lenders to be willing to work out the arrangements. If you want the loan without a lot of trouble, sell those assets and pledge the cash toward your down payment. They'll all understand that and won't need any special contracts.

No one cares how unrealistic it is for you to come up with a significant down payment for some of the world's most expensive real estate. There's no fairness or reasonability involved - the lenders don't set the prices or assets & income of the borrowers. If there's a significant and long-term incompatibility between those, it will correct itself and strict lending policies will actually help move that process along.

I'd love to be able to afford to live in San Francisco. I've looked into it at several different times. I can't, so I don't. It's still very nice to visit.

With all the recent news of bailouts falling on the backs of the responsible taxpayers, it's great to finally see some good news! Thanks OP!

AussieIndian said:lorcha said:Riskier loans cost more. Film at 11.
I dont see the risk. Our credit history is great. Our income to mortage ratio is around 25%. We dont have any debts other than our car payment. We have assets that cover up to 20% of the loan (stocks, bonds etc). The only thing is that we dont have 100k lying around in our savings account.It's simple, the banks want you to put up some of your own monies to purchase this asset. You think this is such a great purchase, great, put up some of your own money. They don't want to finance it (nearly) completely. If you don't want to put up a significant chunk of your own money, then they want to charge you a higher interest rate for the increase in risk that they are taking on - whether you perceive the risk to be there or not, a 95% LTV is riskier than 90% or 80% LTV. Really it's nothing personal, your numbers are crunched by a machine with a formula and this is what it came up with.