INTEREST
RATE

Fixed interest rate for the entire loan term. See the current published rates.

TERM

Interest-only payments for the first five years, followed by a 30-year fully amortized loan for a total of 35-year term

LTV

Maximum LTV: 95%

CLTV

Maximum CLTV: 102%

ORIGINATION FEES

1.5% origination fee
(or combination of origination fee and discount points)

PROPERTY ELIGIBILITY

Property must meet all of the following requirements:

• Sales price of the home cannot exceed CalHFA’s sales price limits established for the county in which the borrower is purchasing.
• Be a single-family, one-unit residence, including approved condominium/PUD (See Program Bulletin #2008-04 for Condominium requirements)
• Manufactured housing is not permitted on the CalHFA IOP program.
• Meet the requirements of CalHFA.

MORTGAGE INSURANCE

Mortgage Insurance is provided by CalHFA Mortgage Insurance Services and is required on the first loan in excess of 80.00% LTV as follows:

BORROWER ELIGIBILITY

Borrowers must meet the following requirements:

• Be a U.S. citizen, permanent resident alien or qualified alien
• Be a first-time homebuyer, unless home is located in a federally designated Targeted Area
• Occupy the property as their primary residence; non-occupant co-borrowers are not allowed
• Borrower’s income cannot exceed CalHFA’s income limits established for the county in which the borrower is purchasing
• Meet credit, income and loan requirements of CalHFA

TRANSACTION TYPE

Purchase transactions only

PARTICIPATING LENDERS

Refer to our Lender List by Product to find an IOP participating lender.

MAXIMUM LOAN AMOUNT

Financing is available up to 95% of the lesser of the appraised value or the sales price limits established for the county in which the property is located.

SUBORDINATE FINANCING

All CalHFA subordinate loan programs are eligible to be used with this loan program. These include:

• High Cost Area Home Purchase Assistance Program (HiCAP)*
• CalHFA Housing Assistance Program (CHAP)*
• California Homebuyer’s Downpayment Assistance Program (CHDAP)**
• Extra Credit Teacher Program (ECTP)**
• Affordable Housing Partnership Program (AHPP)
• School Facility Fee Down Payment Assistance Program (SFF)

*Only eligible for one program per transaction (HiCAP or CHAP)

** Only eligible for one program per transaction (CHDAP or ECTP)

UNDERWRITING GUIDELINES

See CalHFA’s Underwriting Guidelines. 

Automated Underwriting: A maximum total debt-to-income ratio of 55% is permitted on IOP loans that are qualified by using PITI assuming a 35-year amortization and not utilizing the interest only monthly payment. Loans may be underwritten by Desktop Underwriter (DU) MyCommunityMortgage Approve/Eligible; Approve/Ineligible is acceptable provided that the ineligibility is acceptable within CalHFA loan programs (e.g. CalHFA loan amounts and LTV ratios, CalHFA approved subordinate financing, CalHFA income limits, and CalHFA Conventional Loan Underwriting Guidelines). Expanded Approvals (EA) are not acceptable and will require manual underwriting.

INTEREST ONLY PERIOD

During the interest only period (first five years), the required monthly payment will consist of interest, taxes and hazard insurance. Flood and mortgage insurance and homeowner's association dues may also be included if required.

PREPAYMENTS

No prepayment penalty.

If principal prepayments are made during the interest-only period, the required monthly payment will adjust downward to reflect the principal reduction.

Additional principal payments made after the interest-only period will be applied to decrease the outstanding principal balance.

DOCUMENTATION

Only one package is necessary for CalHFA conventional loan files. Refer to the Loan Submission Checklist for documentation needed.

Send all package loan files and documents to:

CalHFA Homeownership Division
1121 L Street, 7th Floor
Sacramento, CA 95814

Refer to our Lender List by Product to find an interest only PLUS participating lender.

Lenders make reservations through CalHFA’s Lender Access System (LAS). Follow procedures outlined in Lender Program Manual and applicable Program Bulletins.

IOPs are not available through BLOCK forward commitments.

NOTES AND DEEDS

Non-conforming loans may use either the CalHFA conventional documents or Fannie Mae/Freddie Mac uniform documents until September 1, 2007. At that time use of the Fannie Mae/Freddie Mac documents are mandatory.

Conforming loans must immediate use the Fannie Mae/Freddie Mac documents, including but not limited to:

• Fannie Mae/Freddie Mac, Form 3271 (1/01)
  
• Multistate Interest-Only Period Fixed Rate Note, Form 3005 (1/01)
  
• California – Single Family – Fannie Mae/Freddie Mac Uniform Instrument (Deed of Trust)
  
• CalHFA Financing Rider to the Note and Deed of Trust

Lenders must use applicable documents (e.g., MERS, PUD Rider, etc.).