Most loan programs allow you to put as much down payment into your home purchase as you desire. But, not the CalSTRS 80/17 loan program for California’s teachers and school system employees.
What is the CalSTRS 80/17 Loan Program?
As you may recall, the CalSTRS 80/17 loan program allows teachers (or anyone who puts money into the CalSTRS program) to put 3% down and get a 17% deferred 5 year second loan with an 80% first loan. Both the first and second loans have interest rates fixed for 30 years. The difference is the second loan you don’t have to make payments on for 5 years, so you are able to qualify for more with this program, than with any other loan program available today.
Can I Put More than 3% Down if I Want to Buy a More Expensive Home than I Qualify for?
The question often comes up from a borrower who has more than 3% to put down, if I want to purchase a more expensive home, can’t I just make up the difference with my down payment?
Unfortunately the answer is no if you want to use the CalSTRS 80/17 loan program. They only allow a 3% down payment, no more and no less. So, if you are approved and decide to buy a house for $500,000, you must put down $15,000, get an $85,000 second loan and a $400,000 first loan. You can’t buy a house for $501,000 and put $16,000 down to make up the difference of what you are approved for ($500,000) and what you want to offer ($501,000) on a house. You are locked into the strict 3% down payment.
Most borrowers want to save their cash and put as little down as possible, so this usually is not an issue. However, from time to time this question comes up.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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