The housing market in Massachusetts can be described as “very hot.” Home prices throughout the state have been rising steadily for the past few years, with a current median home value of $433,883, according to Zillow. But as is often the case, you get what you pay for. There’s a reason the Pilgrim State is the most populated state in New England: Massachusetts is consistently rated No. 1 in the country for education, residents have access to excellent health care, the scenery is gorgeous, and history lingers around every corner.
Seeing that rent prices in many parts of Massachusetts are increasingly outrageous, investing in a home might be a smart move. If you’re interested in becoming a Massachusetts homeowner, but could use a little assistance, check out these programs available to first-time homebuyers in the state:
MassHousing is a self-sustaining agency in Massachusetts that offers a variety of mortgages for first-time homebuyers with modest incomes. All of its programs come with income limits, but you might be surprised how much you can earn while still qualifying. Here are the four main programs MassHousing offers:
The MassHousing Mortgage has similar benefits to an FHA loan, but often ends up costing you less money. The loan offers competitive interest rates and up to 97 percent financing. You can put as little as 3 percent down, and all of the down payment can be a cash gift from someone else if you want, meaning you don’t have to save up a substantial amount of money to buy a home through this program. The loan also allows for non-traditional credit considerations if, for example, you have a limited credit history. Here are some more details about the mortgage:
- Income limits: As high as $147,420; varies by community
- Mortgage loan limits: $510, 400 for single family
Another attractive feature of the MassHousing Mortgage is its Mortgage Insurance (MI) Plus, which offers up to six months of mortgage payment coverage in case of unemployment. As with most mortgages, you will have to pay for mortgage insurance if you put less than 20 percent down, but you may be eligible for a discounted premium if you earn less than or equal to the medium income in your area.
MassHousing Down Payment Assistance (MassHousing 100)
MassHousing down payment assistance is available to first-time homebuyers earning their area’s median income or less. The program provides 5 percent of the down payment or up to $15,000 (whichever is smaller) in the form of a 15-year, 2 percent interest loan. If the home is sold or refinanced within 15 years, the loan must be paid in full at that time.
Here are a few of the requirements for the down payment assistance:
- Minimum credit score of 680 for single-family homes
- Debt-to-income ratio of 45 percent or less
- First-time homebuyer class required before closing
- Income limits: Up to $147,420; varies depending on community
Keep in mind that you will still need to cover closing costs, but you could offset some or all of those expenses by having the seller pay for them in exchange for a buyer credit.
Operation Welcome Home
This program is ideal for first-time homebuyers who are service members or veterans, as well as their families. It’s similar to a VA loan, but may be a better option for veterans living in Massachusetts. For example, it’s easier to buy a unit in a small condo through this program than it is with a VA loan. The loan offers affordable financing, flexible underwriting, and closing cost and down payment assistance. Here are a few of the requirements for this loan:
- Loan limits: Up to $484,350 for a one-unit property
- Income limits: As high as $145,530, but varies by area
- Must be a first-time homebuyer, unless buying property in Lynn, Chelsea, Boston, Somerville, Lawrence, Everett, Cambridge, Fall River, or North Adams
- Must complete an approved first-time homebuyer class
Through this loan, you are eligible for a closing cost credit of up to $2,500 and down payment assistance of $12,000 or up to 3 percent of the purchase price (whichever is less).
MassHousing Purchase and Rehabilitation Loan
This loan is a great way to finance a house and its renovation costs in one mortgage. The loan is essentially the same as the MassHousing Mortgage, with the same 97 percent financing, but it also includes financing for renovations. The minimum rehabilitation costs are $7,500, and the loan is not available for condos.
Massachusetts Housing Partnership ONE Mortgage
The Massachusetts Housing Partnership is a nonprofit affordable housing organization. Its ONE Mortgage is ideal for low- to medium-income first-time homebuyers because it’s a discounted, fixed-rate mortgage that doesn’t require private mortgage insurance. Here are the eligibility requirements for the ONE Mortgage:
- Must be a first-time homebuyer
- Complete an approved first-time homebuyer class
- Meet income guidelines and obtain an Income Eligibility Certificate
- Have less than $75,000 in liquid assets
- Minimum credit score of 640 for single family or condo
In addition to a fixed interest rate, low down payment, and no PMI, the program offers subsidized monthly payments for the first seven years of the loan for those who earn less than 80 percent of the Area Median Income (AMI) in their community.
National First-Time Homebuyer Programs to Consider
In addition to the state programs, Massachusetts residents can also take advantage of these national homebuyer programs:
- FHA: Ideal for those with low credit scores or a small amount of savings
- VA: For veterans, service members, and their families
- USDA: Perfect for those interested in property in designated rural areas
- Freddie Mac Home Possible Advantage Mortgage: Offers low down payment, conventional mortgage for first-time homebuyers
- Fannie Mae HomeReady Mortgage: Offers low down payment, conventional mortgage for first-time homebuyers, as well as down payment assistance for low- to moderate-income borrowers
If you’re not eligible for any of the Massachusetts loan programs, one of these national programs might be your answer for scoring a low down payment and unlocking other forms of payment relief.
Best Lenders for MA First-Time Homebuyers
It’s important to note that not all lenders participate in the loan programs mentioned above. If you’re a first-time homebuyer in Massachusetts looking for area experts who will happily talk you through your options, check out radius financial group.
If you happen to be a first-time homebuyer with subprime credit, check out these lenders:
- Quicken Loans
- BNC National Bank
- New American Funding
As always, it’s a good idea to meet with a few different lenders to make sure you’re getting the best interest rate and service quality.
Learn More About Mortgage Preparedness
The home-buying process is much easier when you have the help of expert loan officers on your side. Discover more tips for navigating the first-time home-buying process in our mortgage preparedness e-book.