California State Teachers Retirement System Program
3% down Payment, 17% Second and an 80% First, No Mortgage Insurance
To be eligible for the CalSTRS Home Loan Program, the borrower must be an employee of a California public school district, a California community college or a member or employee of the California State Teachers Retirement System.
There are two programs, conforming and non-conforming. The maximum conforming program is an 80% first loan to $417,000, a second loan to $88,612 for a maximum combined loan amount of $505,612. The maximum purchase price is $521,250.
The maximum non-conforming program is an 80% first loan to $536,082, a second loan to $113,918 for a maximum combined loan amount of $650,000. The maximum purchase price is $670,103.
The borrowers cannot have credit scores below 620 for combined loan amounts up to $400,000 and 680 for combined loan amounts exceeding $400,000. The interest rate will be the same for both the first and the second mortgage, which is deferred.
The second mortgage rate has a 30 year term with a 5 year deferred payment structure. No payments are required on the second the first 5 years. Beginning the sixth year, the accrued interest will be added to the loan balance. The loan will then be amortizing using compounded interest over the remaining 25 years, with the borrower making a monthly principal and interest payment. Since there are no payments on the second the first 5 years, the payment is not counted into the qualifying ratios of the borrower.
There is no first-time home buyer requirement however, the borrower and their spouse may not own any other properties and they can only have one CalSTRS loan at any given time. The borrower must have 1% of their own funds and the remaining 2% may come from a gift from a relative.
The program is for purchase transactions only, owner occupied and primary residences. The property must be located in California and is only allowed on single family residences and approved condominium projects. No units, manufactured homes or coops.
Whatever the sales price is, the first must always be 80% loan to value and the second 17% loan to value not to exceed the maximum loan amounts above. Since the first is 80% there is no mortgage insurance. The borrower is required to impound taxes and insurance.
Feel Free to contact the Wise Team for more information and how we can help.
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