Supplemental Home Loan Program
In addition to the Mortgage Origination Program (MOP), there are the Supplemental Home Loan Program (SHLP) and the Centrally-Funded Supplemental Home Loan Program (CF-SHLP) which can reduce the amount of cash a borrower needs to cover the down payment. While the supplemental program reduces the funds needed at the time of purchase, the SHLP is a second mortgage and increases the borrower's monthly mortgage payment over the life of the second loan.
The SHLP program is designed to assist junior faculty in the purchase of a first home by decreasing the down payment required for the home purchase. These are faculty candidates who may be able to afford a higher monthly mortgage payment with their new appointment but do not have the resources available for the 10% down payment.
While the MOP has a 90% loan-to-value-ratio, adding a second SHLP loan in conjunction to the MOP may result in a combined loan-to-value ratio (CLTV) of 95%, reducing the required cash down payment to 5.0% of the purchase price. The amount the down payment is reduced depends on the size of the SHLP loan and the amount of the total financing.
Loan-to-Value Thresholds for MOP and SHLP Loans
|Combined Loan Amount||MOP LTV||SHLP CLTV|
|Less than or equal to $2,370,000||90.0%||95%|
|Greater than $2,370,000*||80.0%||90.0%|
*MOP loans above $2.37 million require approval of the University President, Chair of the Board of Regents, and Chairs of the Committees on Finance and Compensation and are not supported by the San Francisco campus. Campus SHLP loans may be added to the maximum MOP loan of $2.37 million for combined financing exceeding $2.37 million. Under that scenario, the loan-to-value ratio is not reduced and there is no down payment reduction benefit.
Sample scenario: A recruit has been a student for many years and does not have a lot saved for a down payment. However, they are getting a new faculty position at UC and will have enough income to cover a first and a second mortgage. They find a home for $1 million, but do not have the $100,000 for the down payment. The MOP financing covers up to 90% of the purchase price, getting them to $900,000 in financing. The candidate can borrow up to 5% more ($50,000), with a second mortgage under the Supplemental Home Loan Program, and finally contributing $50,000 from their own pocket. (Program rules require at least 5% of the purchase price be contributed by the borrowers own resources.)
Under this scenario, the MOP Loan-to-Value ratio (LTV) has maxed out at 90%, the SHLP LTV maxed out at 5%, for a Combined Loan-to-Value Ratio (CLTV) of 95%. (This does not include the additional funds needed to cover closing costs, real estate taxes, insurance, or reserves.)
Standard Campus SHLP terms:
- Loan Amount: $75,000
- Rate: 2.75% minimum fixed
- Loan Term: 15 year
The standard structure for a campus SHLP is $75,000 at 2.75% fixed interest (or the current MOP Index Rate if higher) for a period of 15 years; this results in an additional monthly payment of about $509. Departments may offer larger or smaller loan amounts, a higher interest rate, and loan terms up to 30 years. (The SHLP rate may not be below the most recently available average earnings rate of STIP for the four quarters preceding the issuance of a loan commitment letter for the mortgage loan, plus an administrative fee component of 0.25%. This fee is netted out of the gross interest rate paid by the borrower.) The UCSF MOP loan limit is $2.37 million.** In order to benefit from the reduced down payment (i.e. the higher CLTV), combined financing must be below $2.37 million. Financing may be estimated using the UC MOP Loan Calculator. The monthly SHLP payments (depending on the amount, rate, and term supported by the department) can be estimated using any number of online mortgage calculators, such as this one at Bankrate.com.
The minimum SHLP and CF-SHLP program rate is 2.75%, subject to the minimum MOP index rate at the time of funding. The minimum rate to be used for SHLP or CF-SHLP loans approved during the period August 1, 2023 through October 31, 2023 will be 3.05%.
SHLP loans are uncommon, and are related to specific recruitments for which funds have been set aside for this purpose. MOP loans are funded by the University (systemwide) while SHLP loans are funded by the department (or in some cases by the school).
If a department would like to support participation in the SHLP program as well as the MOP program, a funding source (COA) must be identified on the MOP/SHLP Allocation Request Form when the MOP request is submitted to the dean's office.
SHLP loans are requested in conjunction with MOP loans (they are supplemental to the MOP) and the eligibility and qualifying criteria for SHLP loans are the same as MOP loans.
**The maximum loan amount is now indexed to any increase in the annual median sales price of existing homes in California for the prior calendar year, as published by the California Association of Realtors in their December Home Sales and Price Report.
- The Centrally-Funded Supplemental Home Loan Program (CF-SHLP)
In 2016, the Office of Loan Programs announced limited support for a Centrally-Funded Supplemental Home Loan Program (CF-SHLP). This is to assist departments who do not have the resources to fund individual SHLP loans. The SHLP and CF-SHLP do not benefit everyone, but can provide essential assistance to those borrowing less than the maximum under the MOP program and need like to borrow additional funds to cover part of the down payment. Candidates and recruiters should discuss this option during recruitment as it may enable a home purchase. Departments and candidates are free to contact Home Loan Program Manager Wilson Hardcastle to see if this program is right for them.
Access to these funds can be requested by the department and dean's offices by indicating their intent and approval on the MOP/SHLP Allocation Request Form. Allocation reservations will be reserved on a first come, first serve basis.
As with standard SHLP loans, CF-SHLP loans must be in the second position and may only be associated with a purchase transaction. Property and candidate eligibility criteria remain the same as the existing MOP and SHLP programs. The SHLP and the CF-SHLP cannot be combined.
- The maximum CF-SHLP loan amount is $75,000 or 5.0% of the purchase price, whichever is lower.
- The CF-SHLP maximum loan term is 15 years.
- The CF-SHLP rate is equal to the MOP rate index plus 0.25% servicing fee. The minimum rate is 2.75%.