As a member of CalPERS, you may be eligible to take out a personal loan against your retirement account for the purposes of purchasing a new home with no money out of pocket for your down payment.
As tightening underwriting guidelines and mortgage insurance company restrictions have all but disabled the CalPERS loan program, the personal loan option survives as a saving grace.
FHA offers a low 3.5% down payment option for the purchase of an owner occupied home through CalPERS. You have the ability to take out a personal loan which is not secured by the the property as a second or third mortgage or silent mortgage, but is secured by your CalPERS retirement account to use for this 3.5% down payment or closing costs.
By taking advantage of this program you will not be taking money out of your retirement account, but only using it as security for the personal loan.
Personal loan highlights:
- Can borrow up to 50% of contributed balance
- Maximum loan amount is $18,421
- Loan terms up to 15 years
- Can be used for down payment or closing costs
For complete personal loan guidelines click here
For more information about this financing option, the CalSTRS 80/17 or other home buyer programs – you are invited to attend one of our no cost on-line web classes covering these programs and more.
Other articles about this topic that might interest you:
- Video: Introduction to CalPERS Downpayment Assistance Program 100% Financing Options for CalPERS Members Buying a Home You may be eligible for Down Payment Assistance of up to...
- Video-Webinar: 100% Financing Option for CalPERS Members June 27th, 2009 – New Video will be posted after today’s webinar about using the CHDAP down payment and closing...
- 100% Financing Option for CalPERS Members CalPERS offers several loan programs to it’s members. This class specifically explores the loan options available for purchasing a new...
Chris "Doc" Apodaca
Jeff Brown – BawldGuy
Scott Schang
{ 2 comments… read them below or add one }
Hello,
First of all, thank you for this wonderful informative website. I live in San Jose CA and am clinical social worker with the county. I was recently looking into an FHA CalPERS loan but the terms ended up being more unfavorable then a straight FHA loan because if CalPERS is a 2nd loan, I was informed I would pay an interest rate of 8.5% and on the FHA an interest of 5.625% (date quoted 08/14/2009). With an FHA CalPERS loan, although the underwriting guidelines state different, I was informed by the lender that I would not be able to use the CHADAP (I qualify under income guidelines etc) because using CalPERS would not be considered the required 3.5% down payment contribution from my own funds._ Also I would be charged about 4% in closing costs of the $290,000 purchase price, and was informed this was because of the FHA has higher closing costs. On top of that would have to pay the 1.75% MIP for the FHA loan. In the end, this would give me a much higher monthly payment then if I get a straight FHA loan. So I’m a bit confused about how an FHA CalPERS loan is of any benefit???
My question is, can I use the CHADAP down payment assistance if I get a straight FHA loan instead? And, would I qualify for the CHADAP assistance if 1.75% of my required 3.5% down payment is a family gift? or, can I use a separate personal CalPERS loan unrelated to the mortgage loan for the 1.75% that I am short (only have 1.75% of purchase price saved) and can that be considered my personal contribution? I have about $26,000.00 in my CalPERS and about $25,000.00 in my 401k. Would any of these resources be helpful?
I am a divorced single mother of a 4 y.o and have been working and paying taxes since I was 16 years old (now 43). Preschool is expensive and I have a high student loan so having the CHADAP 3% assistance, especially if I can use it to pay the FHA MIP upfront, my monthly payment would be reduced and this would be so helpful.
Can you please guide me and let me know if, given my particular scenario here stated, I would qualify for the CHADAP assistance? Also, the property I want to buy is a town home. How would I find out if it is the type of town home complex that would qualify for CHADAP assistance under their guidelines? Thank you very much for your attention on these multiple questions, I would greatly appreciate a response since I a in the process of looking for a qualified CalFHA approved lender, if in fact I can access the CHADAP assistance.
Eva,
Based on what you have presented, it sounds like you will be able to use the CalPERS FHA loan (the interest rates are set by CalPERS), the CalPERS personal loan (to cover the down payment) and CHDAP (the personal loan counts as your minimum 3% contribution).
Of course, you would have to meet the credit and underwriting requirements for these loans. The closing costs charged by the lender are limited to $350 using a CalPERS FHA loan and the lender is not allowed to charge more or charge discount points to make more money. The remainder of the closing costs, title, escrow, taxes, should not be as high as you stated.
If you qualify for all three programs (CalPERS FHA, CalPERS personal loan & CHDAP) there are several ways to structure your loan to keep your costs down. CHDAP can be used for down payment or closing costs and may even be used to pay the upfront MIP required by FHA. This would reduce your loan amount and your payments.
Lori Campos will call you this morning and go over everything in detail with you. Thank you so much for the email. I am so happy to hear that you are asking questions and making sure you completely understand all of your options before making a decision. YOU are an empowered home buyer!