The CalSTRS 80/17 home purchase loan is hands down the best loan program out there if you are an employed by or teach at any California public school or community college.
If you have already attended one of our on-line classes then you know that this loan program simply does not have enough lenders that are raving fans. My suspicion is that because CalSTRS sets the Rates and Fees for these loan programs, many lenders seem to have the attitude that it’s not worth their time to offer the CalSTRS 80/17.
We are home ownership experts specializing in California Teachers, Public employees and First Time home buyers. As a result of our on-line classes about the CalSTRS 80/17 we get to talk to a lot of home buyers that never knew this program existed.
Working with a lender that specializes in these loan programs is the very best way to make sure you don’t get caught by surprise during the process. These loans are not complicated but they are significantly different in the way they are structured.
The last thing you want is to let a lender “experiment” with your family as they try to learn about how this loan works. I am confident that there are many other lenders out there that have an expertise in this loan program, just make sure that you’re working with one.
The closing costs on a CalSTRS 80/17 are different from an FHA loan due to the fact that CalSTRS does not allow the lender to “roll in” closing costs into the interest rate. You are guaranteed by CalSTRS that the lender can not manipulate your interest rate in order for them to make more money.
The good news is that you always have full disclosure about what the rates are – the bad news is, the closing costs associated with a high loan to value loan trickle down to the bottom line of your good faith estimate. These fees are by no means exorbitant, especially when compared to an FHA loan and the Mortgage Insurance Premium (MIP) that is due both upfront and monthly.
Beware of bait and switch tactics that try to push you toward a FHA loan. This is becoming more and more common as more eligible borrowers are asking about the CalSTRS 80/17.
The “bait and switch” usually goes something like this:
- You are pre-approved for the CalSTRS 80/17 with a lender
- About two weeks into the process you are informed that the underwriting guidelines changed
- An FHA loan is presented as the solution to this challenge
What you need to know about a CalSTRS 80/17 is that the approval is automated and instant. If you have a loan approval and the rate has been locked, the underwriting guidelines can not be changed retroactively.
Get a second opinion on the GFE if you are even remotely concerned about your lender’s expertise in this program. It’s not worth the losing your deposit and possibly your dream home because the bank is trying to make a few extra bucks off you. Buyer beware always.
I’m not saying take my word for it either. But if i can help to educate you about the process and empower you with the knowledge of how these loans work, then there’s a possibility that I can help one more family move confidently forward toward the American dream of homeownership….and I call that a good day.
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Chris "Doc" Apodaca
Jeff Brown – BawldGuy
Scott Schang
{ 25 comments… read them below or add one }
We have recently been approved for a CalSTRS 80/17 loan. The lender has provided us with a worksheet detailing the fees, etc. associated with the loan. While most aspects of the estimate seem proper (3% down, fixed interest rate determined by CalSTRS), we are a bit suspicious of the 2.0 Points rate that has been indicated. With this type of loan, is paying 2.0 Points acceptable?
Hi Paul,
There should be no “points” associated with the interest rate. You will see “loan level price adjustments” in the amount of .25% for delivery, .75% for Flex 97 or High LTV and possible additional fees if your credit score is below 740. I strongly recommend you get a second opinion to make sure there is no “bait and switch” going on here. It is quite common for lenders to try to push you into an FHA loan in order for them to make more money. Give me a call at 866-667-6724 if you have additional questions. Also, click on the “Web Classes” tab on the site and attend our free homeowership education classes. They are on-line and at no cost. You should attend “A Complete Guide to the CalSTRS 80/17 Purchase Loan” – we discuss all of the fees allowed under this program.
HI Scott, if I am employed part-time by a school as a music teacher, am I eligible for these housing programs? Thanks for your time,
Amy
Hi Amy,
Yes, that would be accurate if you meet the other qualifying guidelines for employment and income. You have to have had a two year history of being employed in that line of work and the verification of employment needs to show that your probability of continued employment is good. I hope that answers your question – let me know if there’s anything else I can help with
Hello,
Thank you for all of this great information!
Here’s my situation: After having my offer accepted on a bank-owned condo, my mortgage broker told me that the guidelines changed recently, so the condo complex wasn’t approved by CalSTRS (because it wasn’t HUD approved) & that CalSTRS no longer is doing spot approvals…though I could get an FHA loan on it. (Yeah, sound familiar?) However, I’m getting conflicting information. A phone call to CalSTRS confirmed what my broker told me about the “constantly changing lending environment,” but another broker (who runs CalSTRS home loan workshops) said that didn’t make sense to her: CalSTRS & FHA both follow Fannie Mae guidelines, & there’s no “list” of approved condo complexes.
As everyone advises, I’ve done a lot of research about the homebuying process, but when it comes to this issue, I just can’t find any information. (Is this true? If so, as of when? Are there really only a handful of “approved” {by whomever} condo complexes in my county?) I do not know who or what to believe, & I am frustrated and exhausted. Any light you could shed would be helpful. Thanks so much!
Hi Kris,
Yes, this comes up quite often. The information you are being given is not entirely accurate in that you aregetting a little bit of information as it regards to FHA, HUD guidelines and it’s being confused with Fannie Mae (CalSTRS) guidelines. I am going to have Lori Campos from our office email you – give here a call and she will straighten this out for you!
It really isn’t as confusing as it sounds – you just need to find one person that knows both FHA and Fannie Mae guidelines
I am so thankful I found this site! I am working with a lender right now who pre-approved me for the CalSTRS program about a month ago. I am now in escrow and last week told me that the guidelines recently changed on the CalSTRS program and that my deferred student loans (which don’t count while calculating FHA eligibility) are now counting in my debt to income ratio and that I wouldn’t qualify for the CalSTRS program unless I got the student loan payment down within the acceptable ratio.
I can’t seem to find “new” guidelines on the CalSTRS program. Would someone kindly guide me in the right direction?
Also, is there a requirement to attend a first-time home buyers workshop linked to obtaining this kind of loan?
Hi Marlene,
Ok, a couple of things I have questions about. Do you work for ucla? If so, are you a member of CalSTRS? It seems like the lender you approved with does not do these loans very often. There have been no guideline changes recently but yes, we do have to count your student loan payments (or what they would be) because CalSTRS is a fannie mae loan and must follow fannie mae guidelines. Are you a member of CalPERS as an employee of UCLA? If so, there is an FHA option through CalPERS that would allow you to not include deferred student loan payments.
In response to your question about home buyer workshop, the answer is “sort of”. If you qualify for a CalSTRS loan, you are required to do a free, online test that will provide you with a certificate of completion. This is really easy though, it’s nothing to worry about.
I’m concerned about the options that are being presented to you though – If you would like to talk about this more, please shoot me your number and the best time to reach you. In the meantime, i’m going to try to have a loan specialist email you with their contact information so we can make sure you are getting all of your options, because right now, i don’t believe you are.
Hello and thank you for responding so quickly!
I actually work for LAUSD, I’ve been a counselor for the last four years and yes I am a CalSTRS member.
I contacted several of the local people listed on the CalSTRS website and spoke to many until I found someone who I felt (based on the little I know about the program) knew the most information and was confident that would be able to help me….that actually was before I found this website! (One person even said that I may have to pay up to 3 points for the loan!!
I will shoot you my contact information. Thank you for having this website!
Great Marlene,
I forwarded your email to Frank Homonai – he knows these programs inside out! We get quite a few inquiries from people just like you with almost the same story. There are many lenders listed on the CalSTRS site but very few loan officers know about this program. I’m glad you found us!
Hi Scott……
I am actually looking for a lender in my area (Fresno, California) who knows about the CalSTRS loans. This is my first time trying to get qualified and am quite scared. Like many other teachers, I also have student loan debt and is scared that my amount owed will count against me. I also have a bankrupcy still on my record, that will be off in 2-3 years. Will either of these not qualify me for a CalSTRS loan?
Thanks
Denise
Hi Denise,
We help teachers like yourself all over the State of California. I am not aware of a lender that has the same expertise as we do in this program in the Fresno area. What I would recommend is that you speak to one of our specialists first. If you are not comfortable with your loan approval you may absolutely seek out someone in your area as long as they really know this program well. If you would like to explore this further, email me the best time and number to reach you and let’s talk a little more about it
I was approved for a CalSTRS loan and opened escrow on July 26. We were supposed to close on August 28th. Today is Monday, September 21. I signed loan docs a week ago today, and escrow papers the next day. I paid my closing costs last Wednesday. I still don’t have my keys, but have been assured that I will have them by Wednesday. EVERYTHING that I have been assured has been delayed by days throughout this process. My broker constantly blames CalSTRS because of it’s changing regulations. He also blames CalSTRS for my high closing costs. Now, he is blaming escrow for the delay in getting my keys. This is my first time buying a house and it is no longer exciting. I’m sure I was a victim of the ‘bait and switch’ which I fell for, so that delayed everything by another week and a half. I had already been approved for the CalSTRS, but my lender said my closing costs would be a lot less if I went with FHA, so I said okay. He had given me a quote of what my monthly payment would be and it was very close to the CalSTRS. Hah, turned out ‘he was incorrect’ with his quote and my payments would be a lot higher, SO, we had to go right back to underwriting (per his words, anyway) and start all over with the CalSTRS. Fortunately, my landlord has been in no hurry to rent out my condo because I have had to ask for 3 extensions. We’ve also had to ask for 3 extensions from the seller (bank owned). I’m frustrated and just not quite convinced that this is CalSTRS fault, although my lender says they are difficult, confusing, and expensive loans that require a lot more paper work. Does anyone agree? I would like to justify this process being such a disruptive part of my life. I would also like to know if there is anyway to ever recover some of the closing costs after we close. I think I’ve been ripped off. Susan
Oh my gosh Susan! The CalSTRS is a conventional loan program and requires no extra paperwork. The only way your “closing costs” would be higher is if your credit scores are below 740. The higher “closing costs” are from Fannie Mae, NOT from CalSTRS – this should have been explained to you from the very beginning.
Unfortunately, you lender/broker is not familiar with the CalSTRS 80/17 because most of what you’ve been told is not my experience and we approve, process and close these loans every single day. The challenge here is the lender makes a lot less money on the CalSTRS 80/17 and it sounds like they are doing almost everything they can think of to turn you off to it.
I am so sorry to see that you ended up in this situation and this is the entire reason for creating this website. We specialize in this loan program and I can assure you that it is NOT CalSTRS that is causing the challenges with your loan. I truly appreciate you sharing this experience so that others may be able to avoid the problems you’ve encountered.
I am not quite clear about whether you’ve finally closed on your home? If not, and if you would like the “truth”, maybe let me take a look at your situation. I’m sure I can explain everything so that it will make more sense to you.
I’m almost out of my mind right now reading your story. We hear this kind of thing more often than I would like to admit and it hurts everyone when a bad apple like this blames everybody except their own incompetence for the challenges you are experiencing.
If you’ve been to my homeownership education webinars or read the articles on this site that I’ve written, you hear me say it all the time: If you are using a special program like CalSTRS, CalPERS, CalHFA, USDA, VA, FHA – heck, almost any loan program – ask for references from the loan officer or lender of people that they have done this loan for.
Even if there are normal challenges (there always are) or delays throughout the process, an experienced and professional home buying team (your agent and lender) should be able to explain to you what the challenges are, why they are happening and what options are available to you. This whole blame game thing is a bunch of crap. Ok, sorry – i’m getting more upset as I continue to write so I’m going to leave you with this.
Give me a call if you want to talk about it just to straighten things out in your own mind. I absolutely assure you that this is a case of unprofessional incompetance and not a problem with using the CalSTRS 80/17 purchase loan. My cell is 714-336-8286
Good luck with the rest of your purchase Susan.
Scott
Hello Scott,
I live in the Monterey County area, and have bankruptcy that was discharged three years ago. Does the bankruptcy disqualify me for the 80/17 loan program?
Also, living in Monterey County can you get me prequalified for this loan or do I have to have a lender in this area?
Susana
Hi Susana,
Unfortunately the CalSTRS 80/17 is a Fannie Mae loan. Fannie Mae changed their guidelines recently (last couple of years) to 4 years from bankruptcy and 5 years from foreclosure. The good news is that you could qualify for an FHA loan which would require only 3.5% down. Are you a member of CalPERS by any chance? If so, you may also be eligible for down payment assistance.
We can certainly get you approved for a loan, i’m sorry we do not have a branch in Monterey County but I would LOVE one! That’s such a beautiful area, I try to get out there several times a year
Shoot me an email at ScottS@broadviewmortgagecorp.com with the best time and number to reach you and we can look into this further if you like.
Scott
Hi Scott…thank you for your fantastic education & advocacy! I have a question. I am concerned about the Loan Officer (?) handling my CalSTRS 80/17 communication, etc. My husband and I got pre-qualified for the CalSTRS 80/17. It took 3 business days from when I faxed her our financials to receive the letter. She did not provide a Good Faith Estimate. Recently, I requested a GFE, and I’ve had to send reminder e-mails twice. I still have not received a Good Faith Estimate. I’m wondering if I should try to find a different CalSTRS lender?
Hi Kim,
You’ve caught me at an interesting time in my tolerance for communication, or miscommunication when dealing with other lenders. I’m pretty tired of hearing all of the horror stories from folks that are working with lenders that claim to know this program only to provide bad service, bad advice or bad business by trying to talk folks out of this program and into a more profitable one (for them!).
At the risk of sounding self serving I would like to offer this – Give us a call, let us take a look at everything and then you can make a decision after having a difference perspective and second opinion. Tonight i’m going to talk about a situation that happened yesterday where a loan officer “fired” the buyer because they were educated about the CalSTRS 80/17 and asked too many questions.
The buyer called us for a second opinion, John Evans, a loan specialist, called the lender and discovered that they did indeed understand the program. John informed the buyer that their lender was knowledgeable and should not be concerned. The lender however, kept pushing the buyer toward an FHA to the point where the lender got sick of trying and told the buyer to use us instead! Crazy huh? I couldn’t believe it….so now, I’m more passionate about protecting buyers from having this experience than I am concerned about sounding self serving by asking folks to call us for their loan approval.
Thanks for your question – hope that helps
I’d like to know how to find a home inspector and if there is anything I should know before I agree to hire one.
I am almost ready for the escrow and I need to know if there is anything I should be aware of. My agent called today and said that the bank is almost accepting the deal and they give me 11 days to close the escrow. doe sit sound fishie?
Monica
Hi Monica,
Ok, there’s a couple of things going on here…I’ve got questions. First, as far as the home inspector – your real estate agent should be able to refer you to someone. Typically, they know inspectors. If your agent does not know an inspector, let me know and I’ll rustle you up a referral. There’s not really anything to watch out for with a home inspector.
What makes me nervous is that your agent says the bank is “almost accepting the deal” – is this a short sale? 11 days to close is NOT going to happen if you are getting financing, it might be close but you have NO room for error. Are you approved with Broadview? I know that most turn times with lenders are lucky to close in 30 days. Our quickest most recently was 17 days that just closed last week but that’s really pushing it.
If you really only have 11 days, you need more details – what happens after 11 days? Are you penalized per day for not closing within that time period? If so, tack on about 10 days to that because it’s much more realistic.
Yeah, it sounds kind of fishy to me only because I don’t think the situation is being properly explained to you. If you are working with us, who’s your loan officer? If you are not….just be very careful.
If you would like, give me a call on my cell phone and I’ll help you put together a game plan to ask your agent the right questions so that you know exactly what you’re working with here!
Thanks for the email – I hope this helps.
My cell is 714-336-8286
Hi! I love your website and your web seminars. You’ve really opened my eyes to the possibility of owning a home! My husband and I have just made an offer of $300K on a condo with 3% down. According to our realtor, it is a fully approved short sale with Wells Fargo. There have been previous offers which were accepted, but then the buyers were unable to secure an FHA loan (the unit is in goodcondition, described by seller as an “as is” sale…maybe the people who made other offers couldn’t get PMI?). We wanted to do CalSTRS but we were told we could only get approved for $275K, and I’m concerned that if our offer gets accepted, that the property won’t be FHA approved. We have $9,000 for our down payment and another $20,000 from a family member. That’s another issue: the $20K is from my grandfather and we were planning to repay what he gives us when we sell the place. This means it is not a “gift,” and I don’t know how that factors in to our loan, because I know they would consider that as affecting our debt to income ratio. Do you think it is possible that we could get a 10% conventional with PMI?
Hi Kim,
Oh boy, you’ve got a lot of things going on here that I want to address because I think it’s important for other home buyers to understand. For you, I would like the best time and number to reach you because it does not seem like your options are being clearly explained. I am so happy to hear that you eyes are open to the possibility of owning a home, now I want to make sure you’re doing everything possible to make this a great experience with YOU in the drivers seat.
Let’s start with the condo that fell out. It wouldn’t have anything to do with PMI. PMI for FHA loans is automatic if you qualify for the loan. There are a couple of reasons why it could have fallen out and it wouldn’t necessarily be because of the type of loan. Condos are a real challenge in this market mostly because of law suits and HOA delinquencies of the current owners. Your agent should be able to probe the sellers agent to find out exactly why the other sale fell out. It could have nothing at all to do with the type of loan.
The next thing, you’re making a $300,000 offer with 3% down and you’re told you can only qualify for $275,000? I have a couple of questions. First, FHA requires 3.5% down payment (it’s only a little difference, but it’s a difference). Next, on a CalSTRS loan, you only have to qualify for the 80% first mortgage. Do you qualify for a maximum purchase price of $275,000 or a maximum loan amount of $275,000? If it’s the loan amount, you would qualify for a $343,750 purchase price.
The money from your grandfather, is he going to “lend” you the money and execute a promissory note? If he is giving you the money with no legally binding contract to repay and you simply “want to” pay him back eventually, that may not create a challenge. You are correct though, if he lends you the money and there are repayment arrangements made – you have to factor that into your DTI.
You can get a conventional loan with 10% down, but the PMI is very difficult to qualify for and you would not be able to use the CalSTRS 80/17 if you are putting 10% down.
There are many concerns that I have with the scenario you’ve presented. Let’s talk about this in more detail. I think there are many better options than what you are describing here. You can email me at ScottS@broadviewmortgagecorp.com or call me on my cell phone at 714-336-8286
hi scott,
can’t thank you enough for this great site. do you happen to know if the 80/17 program still does not require PMI? in looking at their site, it looks like all the loans require PMI, though it doesn’t distinguish between the different loan types, so I’m not sure if the 80/17 program has an exception to the apparent PMI rule or if things have changed recently?
also, the interest rate…currently set at 6.375% is this a “good” rate? seems a bit high from my lay look around…we don’t have much to put down (5%) but want to make sure we get a good rate. my husband is a teacher in california.
thanks so much.
Hi Laetitia,
PMI is only required if your first mortgage exceeds 80% of the value of the home. The 80/17 does NOT require PMI. 6.375% is the interest rate if your first mortgage (the 80% on a 80/17) exceeds $417,000. The interest rate will only be 5.375% (today’s rate – 1/27/10) up to a purchase price of $521,250.
If you are just now getting information about this program and this is confusing, feel free to shoot me a direct email: Scott@BroadviewMortgageCorp.com or give me a call on my cell phone: 714-336-8286
Hello All,
I recently found out that a condo that I wanted to purchase was not approved by HUD as a result of a soil issue. I had been approved for an FHA loan, but the mortgage company pulled the loan because the property was not HUD approved. I am interested in the CAL STRS Home loan, but I want to know if a property also has to be on the HUD approval list. I really want to purchase this property. Can someone answer this question for me? What are my options?