Below Market-Rate Home Ownership Information for Owners and Buyers
Owners of below market rate ownership units are responsible for following City guidelines when marketing and selling their units.
There are a limited number of below market rate (BMR) ownership units in Berkeley that are privately owned by households who purchased the units under the Inclusionary Housing Ordinance. The units are made possible through an agreement between developers and the City to set aside a percentage of units at affordable prices for low- and/or moderate-income households. Most of these units remain affordable in perpetuity and continue to transfer to another low- to moderate-income family when sold.
The City of Berkeley sets guidelines for who is eligible to purchase a BMR ownership unit, and how the unit is marketed and sold. Owners of BMR units are responsible for marketing and selling these units. The City of Berkeley does not maintain a waiting list or track when these properties are on the market.
Owners must follow City guidelines for selling their BMR ownership unit
When an owner of a BMR ownership unit wants to sell their unit, they must notify the City before marketing their unit, and get City approval of the buyer’s eligibility.
Contact the City before marketing your BMR Ownership Unit
Owners of below market rate (BMR) ownership units must contact the City of Berkeley at least 60 days prior to marketing their unit. The City has right of first refusal and may choose to purchase the property. If the City chooses not to purchase the property, the City will inform owners of the process to follow for marketing and selling their property to the public.
Get City approval of buyer eligibility
Once owners have selected a buyer for the BMR unit, they must send the buyer’s income and asset documentation to the City for review. The City will review the documentation and will notify owner whether the buyer is eligible. The City will only communicate with the owner of the property or the owner’s agent, not with buyers directly.
Buyers must meet eligibility criteria
To be eligible to purchase a BMR unit, buyers must meet the following criteria:
- Be a first-time homebuyer (see definition below)*
- Meet Area Median Income (AMI) limits as established by US Department of Housing and Urban Development
- Limited Equity Cooperatives: 120% of AMI for the Oakland-Fremont MSA
- 80% AMI for all other units
- Must occupy the unit as their primary, sole residence
- Occupy the unit within 60 days of purchase
- Provide a down-payment of at least 5% of the purchase price, 3% of which must come from the buyer's own funds.
- People who live in the City of Berkeley has first preference
- People who work in the City of Berkeley has second preference
*First time homebuyer household meets one of the following conditions:
- None of the members have had an ownership interest in a principal residence for a three-year period ending on the purchase date of the property.
- A single parent who has only owned a home with a former Spouse while they were married or, for registered domestic partners, for the duration of the registered partnership.
- A displaced homemaker who has only owned a home with a Spouse.
- An individual who has only owned a principal residence not permanently affixed to a permanent foundation, according to applicable regulations.
As a condition of closing escrow, all buyers will be required to sign a resale restriction which details the guidelines of who the property can be sold to and the maximum sales price. In general, the maximum sales price is the original sales price plus customary closing costs multiplied by the change in the Consumer Price Index. Then, 50% of any capital improvements the homeowner has made will be added to this figure to determine the maximum resale price.