The California State Teachers Retirement System (CalSTRS) will discontinue the popular CalSTRS 80/17 Home Loan Program on October 1, 2011. This unique CalSTRS program consists of a first and a second mortgage with a 3% down payment. Because the first loan is only 80% of the purchase price, it does NOT require PMI. The second loan does not require payments for the first five years of the mortgage, thus allowing for a much lower monthly payment than FHA or other comparable loan programs. The buyer qualifies using the first mortgage payment only, along with taxes and insurance, and the second mortgage is not a consideration in qualifying.
The news is not all bad! 
CalSTRS will be replacing the 80/17 loan program with a new program. This new program has an estimated launch date of October 1, 2011, and will be called the CalSTRS Home Connection Program. Although the exact guidelines have not yet been released, CalSTRS has indicated what the new program will offer.
Here are some “highlights” of the new CalSTRS Home Connection Program:
- 80% first lien – fully amortized 30 year loan
- 15% second lien – fully amortized 30 year loan
- 5% down payment
- SFR Minimum FICO 700/ Condo Minimum FICO 740
- Interest Rate for the second lien remains the same rate as the first lien
There has been no indication if the “free float down” feature from the 80/17 program will be included in the CalSTRS Home Connection Program, but we are hopeful that it will remain. That feature allows a one-time drop in the interest rate if the market improves at any time during the loan process, prior to ordering loan documents.
Once this program is released, we will issue an announcement along with the guidelines.
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Doug Bullwinkel |
