CAL STRS–Home Loans for California’s Teachers

The California State Teacher’s Retirement System (CalSTRS) created a home loan program for teachers back in 1984. I used to do a lot of them until the market went crazy and prices drove everyone into stated income loans. However prices are retreating to more affordable levels again, and CalSTRS restructured its program in 2004 to be significantly more helpful

CalSTRS offers a trio of programs. The Standard Conventional and the Zero Down 95/5 programs are solid performers, but the stand-out in the group is the “80/17” loan. Here’s why:

The 80/17

The 80/17 provides a combo 1st and 2nd that totals 97% of the purchase price. The 1st is 80%, eliminating PMI entirely. The 17% 2nd loan carries the same rate as the first. Both are set by STRS and as of this date are 6.625%. But here’s the cool part—payments are deferred for 5 years on the 2nd! Simple interest accrues—no compounding—and the borrower begins making amortized payments in the sixth year…

So, the CalSTRS participant enjoys a payment that feels like she put 20% down, and it gives her 5 years for her income to grow before requiring payments on the 2nd. Nothin’ not to like about that.

Requirements

Eligible borrowers must be employees of a California public school district and/or a member of CalSTRS retirement system. The property must be located in California and be the borrower’s primary residence. The 80/17 is available only for purchases, and the borrower must have a minimum of 1% of their own funds. The balance of the down payment and closing costs can come from a gift or grant. Closing costs can be paid by the buyer, the seller (up to 3%), gift or grant.

CalSTRS offers both conforming and jumbo loans on this product!

Do you have questions about CalSTRS financing? Do you need help with your CalSTRS loan? Give me a call or send me an email. I’d love to help.