Purchase Assistance Loan (PAL)
for first-time home buyers

The City of Menlo Park’s Purchase Assistance Loan (PAL) is an affordable second mortgage loan program and is designed to help low to moderate-income first time homebuyers purchase homes in Menlo Park. PAL can also eliminate or substantially reduce the first mortgage lender’s requirement for Private Mortgage Insurance (PMI).

PAL Terms

• Maximum loan amount is $75,000 or up to 20% of a home's purchase price, whichever amount is less.
• Loan term is 35 years. The first 5 years of the loan is at 0% interest with no payments required. The following 30 years are fully amortized (monthly payments required) at 5% fixed interest.
• PAL applicants pay a nonrefundable $300 processing fee at the time of application. 

PAL Benefits

• PAL makes it easier to qualify for home purchase by allowing low to moderate-income homebuyers to apply for smaller market-rate first mortgages.
• PAL helps homebuyers to qualify for lower monthly mortgage payments overall.
• PAL can help avoid the requirement for PMI (Private Mortgage Insurance) by the first lender.
• PAL applications are easily processed along with the first mortgage application.
• PAL applicants can work with the first-mortgage lender of their choice*. 

*Borrower must qualify for a first mortgage secured by a deed of trust from a lender who will use Fannie Mae “Community Homebuyers” Program qualifying criteria or other prudent and appropriate qualifying criteria commonly used in the lending industry. 

PAL Requirements

• Applicant (or a member of applicant’s household) must have lived or worked in Menlo Park for at least one year.
• Applicant must be a first-time homebuyer (has not owned a home in the last three years).
• The home to be purchased must be located within incorporated City of Menlo Park.
• Applicant’s gross annual household income may not exceed 110% of Area Median Income (please see chart).
• Applicant must be creditworthy and able to qualify for a market-rate, first mortgage loan.  Applicant must be able to provide a down payment in the amount specified by the first mortgage lender (typically 0%-20% of the purchase price).

For a complete detailed description of the PAL Program, please request a copy of the Purchase Assistance Loan (PAL) Guidelines & Application at: (650) 330-6728

How to Apply for PAL

While PAL loans are funded by the City of Menlo Park, the County of San Mateo administers the application process.  To receive an application packet, call the County of San Mateo Department of Housing at (650) 802-5033. 

Mortgage Credit Certificate Program (MCC)

San Mateo County’s Mortgage Credit Certificate Program (MCC), a federal tax credit program, may be used to complement PAL.  The MCC Program helps to increase the first mortgage loan amount for which a homebuyer may qualify.  Funding for MCC’s is not always available, however, and MCC's will be made available to qualified PAL applicants as long as there is sufficient funding available to do so.   

PAL applicants can apply for the MCC Program at the same time that they apply for PAL.  Unlike the PAL Program, however, the Mortgage Credit Certificate Program requires that applicants work with participating MCC mortgage lenders (also there are differences in qualifying criteria between the PAL and MCC Programs).  Information about MCC’s, including a list of participating MCC lenders, is included in the PAL application packet.  For further information or to find out about funding availability, call the County of San Mateo Housing Department at (650) 802-5033.