San Mateo Mortgage Blog » Loans for Teachers

Can I Put More than 3% Down on a CalSTRS 80/17 Loan?

Chris Williamson — Fri, 15 Jan 2010 22:10:36 +0000

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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How does the CalSTRS 80/17 Home Loan Program Differ from Conventional Financing?

Chris Williamson — Thu, 18 Jun 2009 15:00:15 +0000

Max Down Payment is 3% of the Purchase Price with the 80/17 Program

Keep in mind with the 80/17 CalSTRS Home Loan program you are only allowed to put 3% down payment, no more. Most programs allow you to put more down if you want to purchase a more expensive home. For example, if you were approved for a purchase price of $500,000, you would put $15,000 down and get a $400,000 first mortgage and an $85,000 deferred second mortgage. If you wanted to purchase a home for $510,000 and thought you could just increase your down payment to $25,000 and purchase the home, you could not use the 80/17 loan program. The maximum amount you could purchase would be $500,000.

Since the 80/17 program offers a deferred 17% loan with no payments for 5 years, borrowers are not allowed to put more than 3% down to increase their purchasing power. For borrowers who would prefer to put more down, they should probably go with the conventional CalSTRS programs.

How Does the 80/17 Measure Up to Conventional Financing?

The CalSTRS program does offer traditional conventional financing with loan amounts up to $834,000 as well as the 80/17 deferred second loan plan for loan amounts up to $650,000. Because the 17% deferred loan is not factored into today’s affordability, you can afford 17% more than you would be able to afford with conventional financing.

For example, a borrower who qualifies for a $500,000 purchase price with the 80/17 CalSTRS program would only qualify for a $435,000 purchase price and have to put down 3.5% down with an FHA loan. So, for borrowers who don’t have at least 10-20% to put down, the 80/17 program is usually the best option.

Ready to Explore How Much You Can Afford with CalSTRS?

Call us at (650) 520-0915 or email us today and we will arrange a free, no obligation consultation to explore your financial situation and how you can best position yourself to finance your home.

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Home Loan Program Just for California Teachers!

Chris Williamson — Mon, 15 Jun 2009 15:00:44 +0000

Are You a California Teacher Looking to Buy a Home?

If you are a teacher in California looking to buy a home, you should consider the CalSTRS Home Loan Program before selecting a mortgage. With CalSTRS Home Loan Program teachers who are members of CalSTRS can buy a new home, refinance to a lower payment or take cash out with these competitive rate programs.

Who is Eligible?

If you are a California teacher who is a member of CalSTRS or if you receive a paycheck from a California public school (custodians, administrators, teacher’s aides), you are eligible for the CalSTRS Home Loan Program.

What Programs Are Available?

With the conventional 15 or 30 Year fixed rate program, competitive rates are available for the purchase of a new home or refinancing your existing home on loan amounts up to $834.000.

With the 80/17 Program, borrowers put 3% down and get an 80% first mortgage and a 17% deferred second mortgage that has no payments due for 5 years. Loan amounts for this program are up to $650,000.

Tell Me More About the 80/17 Program

With the 80/17 program, California teachers are able to qualify for a higher loan amount than they would with conventional financing due to the deferred second mortgage because the deferred payment is not factored into the borrower’s affordability. For example, a borrower with $72,000 gross yearly income and no debt would qualify for a $500,000 loan amount with the CalSTRS 80/17 program, $435,000 with the FHA 3.5% down payment program and $335,000 with a conventional 5% down payment loan. With the CalSTRS loan, the borrower would need $15,000 for a down payment, the FHA loan would require a $15,225 down payment and the conventional loan would require a $16,750 down payment.

Interest will accrue on the deferred loan over the 5 years, but no payments will be required. At that point, you can either pay the increased mortgage payment, or refinance to a CalSTRS conventional loan program or other loan program.

Don’t worry about forgetting this deadline. We monitor our client’s mortgages with our Mortgage Adoption Center and will contact you yearly to reevaluate the suitability of the loan program for your financial goals at no charge to you. We’ll also continue to monitor the market and alert you when there is an opportunity for you to save money on your mortgage for the life of the loan!

Ready to Explore How Much You Can Afford with CalSTRS?

Call us at (650) 520-0915 or email us today and we will arrange a free, no obligation consultation to explore your financial situation and how you can best position yourself to finance your home.

Stay tuned for our next post comparing the CalSTRS 80/17 Home Loan Program to conventional financing.

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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.

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