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Buying a house in Massachusetts can seem like an impossible goal, especially if you’re a first-time home buyer, have low to moderate income or have struggled to save for a down payment.
The good news is there are several mortgage programs, local and national, designed to help first-time home buyers and others achieve their homeownership goals in the Bay State.
National first-time home buyer loans
Available through lenders across the country, these loan programs help first-time home buyers qualify for a mortgage through relaxed down payment and credit requirements.
Conventional mortgage
Best for:
Low down payments, limited mortgage insurance premiums
What you need to know:
A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.
VA loans
Best for:
Military, low down payments
What you need to know:
The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.
FHA loans
Best for:
Low credit score, low down payments
What you need to know:
This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.
USDA loans
Best for:
Low down payments, rural home buyers
What you need to know:
A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.
MassHousing highlights and eligibility requirements
Available through the Massachusetts Housing Finance Agency (a.k.a. MassHousing), these loans and assistance programs may make it easier to buy your first home.
» MORE: Tips for first-time home buyers
Highlights
Down payment assistance of up to $15,000.
Mortgage payment protection available in case of job loss.
Multiple loan options for veterans, active-duty military and their families.
Eligibility
Borrower must meet credit, asset, income and loan limits of program and lender.
Property must be located in Massachusetts and be the borrower’s primary residence.
Borrower must complete a home buyer education course.
Some loans have specific debt-to-income limits.
Massachusetts first-time home buyer programs
MassHousing Mortgage
Best for:
Low down payment, low mortgage insurance
What you need to know:
This 30-year mortgage, offered through the Massachusetts Housing Finance Agency, or MassHousing, features fixed interest rates and low down payment options. Like all loans insured by MassHousing, this mortgage program includes MI Plus Mortgage Insurance: six months of mortgage payment protection — up to $2,000 a month — that may help you keep your home even if you suddenly lose your job.
Purchase and Renovation Loan
Best for:
Home improvements
What you need to know:
If you’re considering a fixer-upper, this mortgage program can combine purchase and renovation costs into one loan.
Operation Welcome Home
Best for:
Military, down payment assistance, closing cost assistance
What you need to know:
This loan program creates an affordable path to homeownership for active duty military members, honorably discharged veterans, members of the Reserves and National Guard, and Gold Star Family members. Though typically reserved for first-time home buyers — those who haven’t owned a home in the past three years — the Operation Welcome Home program is open to repeat buyers in certain cities. Qualified borrowers have access to down payment assistance and up to $2,500 in closing cost assistance, as well as a variety of mortgage insurance options.
Workforce Advantage Mortgage
Best for:
Down payment assistance
What you need to know:
If you’re considering a home in Boston or the Gateway Cities (Attleboro, Barnstable, Brockton, Chelsea, Chicopee, Everett, Fall River, Fitchburg, Haverhill, Holyoke, Lawrence, Leominster, Lowell, Lynn, Malden, Methuen, New Bedford, Peabody, Pittsfield, Quincy, Revere, Salem, Springfield, Taunton, Westfield, and Worcester) the Workforce Advantage loan program may make it more affordable. Used in conjunction with a conventional or FHA 30-year MassHousing mortgage, this program offers down payment assistance and discounted mortgage insurance to qualified borrowers who meet income requirements. Home improvements and energy efficiency upgrades can be included in the total loan amount.
Down Payment Assistance
Best for:
Down payment assistance
What you need to know:
If you qualify for a MassHousing mortgage, you may also be eligible for help making the down payment on your first house. MassHousing will lend up to 5% of the home’s purchase price or $15,000, whichever is less, for a down payment. If you are trying to buy a home in Boston or one of 26 "Gateway Cities" you can qualify if you make up to 135% of the median income. You may have to meet other eligibility requirements.
Down payment assistance is available for single-family homes, condos, duplexes, and three- and four-family homes. Down payment assistance comes in the form of a 15-year loan with 2% interest, and payments are separate from your mortgage. The down payment assistance loan must be repaid in full if you sell or refinance the property before the 15-year term is up.
Summary: 2021 MassHousing first-time home buyer programs
The MassHousing mortgage also features a low down payment but adds up to $2,000 a month in payment protection — helping you to keep your home during a financial setback.
The Purchase and Renovation loan is for fixer-upper financing.
Operation Welcome Home helps military borrowers with up to $2,500 in closing cost assistance.
The Workforce Advantage program helps people purchase a home in certain Massachusetts communities.
Down payment assistance of up to $15,000 or 5% of the home’s purchase price is also available in the form of a 15-year, 2% loan — separate from your mortgage.
Now that you have some basic information about state-sponsored mortgage products, it’s time to delve into each loan program’s requirements so you can choose the right loan for your needs.
To learn more about any of the other first-time home buyer loan programs mentioned above, visit the MassHousing website.
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