Catherine Saavedra Velasco was born in Parang, Cotabato, on the island of Mindanao in the Philippines in 1957, the seventh child of twelve. Her father served in the army and was away much of the time. Her mother oversaw the family's coconut plantation, the home, and the children while her husband was away. Her parents were both from a Roman Catholic background, but became Protestants through missionary evangelistic efforts and they attended a Christian and Missionary Alliance church. As a child, Catherine attended vacation Bible school and, when she was nine, she felt God's call to serve as a full-time Christian worker. Each time she heard an altar call, she would respond, until at eleven she finally understood that she did not need to continually go forward, but that receiving Christ was a one-time event.

When Velasco was six, her father transferred to Digos, Daveo del Sur, due to the violence associated with Muslim rebels around Cotabato. She attended Holy Cross Academy there, the only Protestant in the Catholic school. For a time, she thought she might become a Catholic because of the impression the nuns who taught her made upon her. However, she was even more impressed by her Protestant pastor and, after graduation from high school in 1973, told her parents that she was going to enter the ministry. They strongly opposed this, wishing her to become a lawyer. Nevertheless, she enrolled in Ebenezer Bible College in Zamboanga City, Mindanao.

After graduating in 1978 with a Bachelor of Religious Education (BRE) degree, she was recommended as a teacher to a sister school, the Mickelson Memorial Bible School in Jose Abad Santos, Daveo, a remote tribal region of Mindanao. Her ministry there was cut short due to illness. She did administrative work for a time for Campus Crusade for Christ "Here's Life Philippines" campaign. After that, she became Coordinator for Research and Statistics for the Christian and Missionary Alliance Churches of the Philippines (CAMACOP) in Zamboanga City. From there, she was invited to return to Ebenezer and teach. For that, she felt the need for further training and, through the school's Faculty Development Plan and the Billy Graham Center Scholarship Program, she was able to attend the Wheaton College Graduate School in Wheaton, Illinois. She received an MA degree in 1988 and planned to return to the Philippines. As of 1992, Velasco had married another Wheaton graduate, Bruce G. Peters, and lived in Illinois.