Faculty Mortgage Program
Guiding Principles
The Faculty Mortgage Program, to be effective academic year 2023-24, provides assistance to tenured faculty members to buy their first homes in an effort to recruit and retain excellent researchers and teachers. In recognizing the difficulty of buying a home in the greater Boston area and the ecological footprint of commuting from long distances, the FMP encourages faculty to buy homes in towns within twelve miles of campus, even if the location of the residence within that town falls outside the radius. Having faculty live close to the university allows for greater participation in the university, closer student-faculty interaction, and a better use of campus resources for faculty in research, fitness, and recreation. The focus on tenured faculty is stipulated by the bank underwriting this effort. At this point, the university will offer 3 loans in 2023-24. In the case of multiple applications, the Provost will decide on the merits of the case, keeping in mind the mission and strategic objectives of the University. Please contact your Dean for additional information.
The program provides money towards a down payment that does not need to be repaid as long as the faculty member lives in the house and is employed at Brandeis. This makes homeownership more accessible and affordable. The funding for the program will come from the University’s cash balances. The assumption is that the silent second mortgage will be repaid with proceeds from capital appreciation on the purchased home.
The program is intended to help support the purchase of a primary single-family residence (duplex or condominium is acceptable) in relative proximity to the Brandeis campus.
The key element of this program is to provide a second mortgage for the eligible faculty member. The second mortgage allows the home purchaser to qualify for a standard mortgage, with a sufficient down payment to avoid Private Mortgage Insurance (PMI). As the primary mortgage is for a smaller amount the monthly mortgage payment required is lower and more affordable.
The second mortgage will impute interest at the minimum required Applicable Federal Rate (AFR). This interest will accrue beginning at the loan origination and last until the original first mortgage is repaid (either through refinance or sale of the home).
The amount of the second mortgage will be set according to the following table:
| Home Purchase Price | 2nd Mortgage Amount |
|---|---|
| $0 - $666,000 | 30% of the purchase price |
| $666,000 - $1 million | $200,000 |
| $1 million + | 20% of the purchase price up to $300,000 |
The university is arranging with a commercial bank to provide the first mortgage on the home purchase. The faculty member must qualify for a conforming loan at the amount needed for the first mortgage.
The second mortgage must be repaid, plus accrued interest and a proportional share of any appreciation, when the residence is sold, or the original mortgage is refinanced. Should the house sell for less than the original purchase price then the portion of the university provided mortgage that is not covered by the sale price will be written off (not need to be repaid, but by IRS regulation the amount written off will need to be considered imputed income for the faculty member and payroll and taxes will need to be adjusted accordingly). Should the home sell for more than the purchase price, there will be a sharing of the appreciated value, calculated as the sale price less the purchase price, less the cost of capital improvements that Brandeis has approved for purposes of the section priors to commencement of such capital improvements, less the 50% of AFR that will be required to be repaid at this time.
In simple terms, if the original purchase price was $800,000 and the Brandeis loan was $200,000 then Brandeis would receive 25% of the appreciated value. In cases where the loan recipient leaves Brandeis employment, the loan will need to be repaid upon the end of the employment period and any capital appreciated will be calculated by an independent appraisal at the time of sale.
Parameters
- $3 million pool established
- Loan amount:
| Home Purchase Price | 2nd Mortgage Amount |
|---|---|
| $0 - $666,000 | 30% of the purchase price |
| $666,000 - $1 million | $200,000 |
| $1 million + | 20% of the purchase price up to $300,000 |
- Home purchase must be a primary residence
- Single family home, condominium or a duplex primary residence
- The municipality must be within 12 miles of the Brandeis campus (see attached map)
- Rate on the loan is AFR, payments of 50% of the interest, the remainder accrues to be repaid upon the sale or refinancing of the residence from capital appreciation.
- If capital appreciation is negative, the loan will be forgiven, but will be considered imputed income for IRS purposes
- If there is capital appreciation it is proportionally shared by the borrower and the university.
- Borrower must qualify for a conforming loan (jumbo may be acceptable) with “down payment” covered by the university silent loan
- Recipient must be awarded tenure at Brandeis, eligibility for the program is upon the granting of tenure
- Awards limited to 3 recipients per year, approved by the Provost
- Primary loan must be underwritten by the bank that we negotiate a rate with unless the borrower secures another lender who will abide by the parameters of the program
- Borrower must repay outstanding loan principle upon separation of employment, including if they do not sell the property