What to know about buying a house in Massachusetts

Buying your first home is bound to be stressful. But, if you’re a Massachusetts first-time home buyer, you can expect a great deal of support.

The Bay State has plenty of assistance for first-time buyers: from homeownership counseling and educational courses, to down payment assistance grants or loans that could help you buy a home much sooner than you dreamed possible. Here’s how to get started

In this article (Skip to …)

• MA home buyer overview
• Home loan options
• MA home buyer programs
• First-time buyer grants
• Buying in MA’s cities
• Resources
• MA mortgage rates

• Conventional 97 — From Freddie Mac or Fannie Mae. 3% down payment and 620 minimum credit score. You can usually stop paying mortgage insurance after a few years
• FHA loan — Backed by the Federal Housing Administration. 3.5% down and a 580 minimum credit score. But you’re on the hook for mortgage insurance until you refinance to a different type of mortgage, move home, or pay off your loan
• VA loan — Only for veterans and service members, reservists, and National Guard. Zero down payment is required. Minimum credit score varies by lender but often 620. No ongoing mortgage insurance after closing. These are arguably the best mortgages available, so apply if you’re eligible
• USDA loan — For those on low-to-moderate incomes buying in designated rural areas. Zero down payment required. Credit score requirements vary by lender but often 640. Low mortgage insurance rates
• Massachusetts state’s ONE Mortgage program — May include competitive interest rates and can be used with down payment assistance. More information below

Depending on the mortgage loan you choose, you could potentially get into your new house with minimal cash out of pocket.

These programs even let you use gifted money or down payment assistance (DPA) to cover the down payment and closing costs.

If you’re not sure which program to choose for your first mortgage loan, your lender can help you find the right match based on your finances and home buying goals.

MassHousing is a great starting point for any Massachusetts first-time home buyer.

This organization provides links to information and home buyer education courses — both statewide and local — on its Housing Consumer Education Centers webpage. Most first-time buyer mortgages require you to attend such a course before you are eligible to apply.

For example, you will need to complete a homebuyer education course if you want to apply for MassHousing’s ONE Mortgage.

This loan program, available through participating lenders, can give you a mortgage with a competitive fixed rate and a 3% down payment. And you’re allowed to use down payment assistance (DPA) money toward that out-of-pocket cost.

But maybe the best news is that MassHousing Mortgages have no private mortgage insurance and offer “extra assistance” to help lower your mortgage payments.

Indeed, the website says, “With these features, ONE Mortgage can lower your monthly payments by hundreds of dollars every month compared to other 30-year mortgages.”

Eligibility requirements include being a first-time homeowner with a minimum credit score of 640. In addition, your total assets must be less than $75,000 and your household income must be below local income limits.

You can see local income caps here and explore other requirements on the program’s website.

MassHousing has its own down payment assistance programs. But its website provides very little information about these. So they might be grants, forgivable loans, or repayable loans.

MassHousing invites you to “Call us at 888-843-6432 to speak with our homebuying experts,” if you have any questions. Start by asking what type of down payment assistance is on offer and whether you qualify.

What MassHousing tell you is how much help you might receive. Across most of Massachusetts, you can get up to 5% of your purchase price, capped at $15,000.

If you’re buying in one of the Commonwealth’s 26 “Gateway Cities,” that cap increases to $25,000 — though it’s still capped at 5% of your home purchase price.

Those Gateway Cities include:

• 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

See below if you’re looking for home buying assistance in Boston.

The Boston Home Center can lend you up to $30,000 in down payment assistance for a single-family home. These loans charge no interest and you don’t have to make monthly payments. But you have to repay it in full when you “refinance, or at the transfer of title, sale, or when you no longer keep the home as your primary residence.”

See the website for a list of eligibility criteria. But one is that your income cannot exceed 135% of the area median income. For a family of four living in Boston that is $101,050, according to the website.

Worcester first-time home buyers

The median list price in Worcester in July 2021 was $350,000, according to Realtor.com. That was up 16.7% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

• $10,500 for 3% down payment
• $70,000 for 20% down payment

The City of Worcester’s Housing and Neighborhood Grants program lets you download a handy PDF concerning its down payment assistance offering. You should read that for all the information you need.

It seems that you can get up to $5,000 in help to cover the “affordability gap,” providing you’re eligible. There are caps on household income and assets.

This assistance takes the form of a forgivable second mortgage. And that means you don’t make monthly payments or pay interest. But you’ll have to repay the loan, plus interest, if “the property is sold or transferred in full or part, (including refinances) during the first three (3) years of ownership, or upon a default under the conditional agreement (for example the borrower’s failure to occupy the home as their primary residence).”

As long as you don’t sell, refinance, or move within 3 years, you won’t owe a cent on that loan.

Springfield first-time home buyers

The median list price in Springfield in July 2021 was $229,900, according to Realtor.com. That was up 17.9% year-over-year.

If you want to buy a home at that median price, your down payment options might fall between:

• $6,900 for 3% down payment
• $45,980 for 20% down payment

The City of Springfield’s down payment assistance program offers up to $4,000 in financial help. You can put that toward your down payment or some of your closing costs.

As with Worcester’s program, this takes the form of a forgivable second mortgage. So there are no monthly payments nor any interest charges.

But, in Springfield’s case, the loan is forgiven over five years at a rate of 20% each year. If you sell, refinance or move out during those five years, you’ll have to repay the outstanding portion. For example, 80% after the end of Year 1 or 20% after Year 4. After Year 5, you owe nothing.

Click the link above to read the full legal version of that summary, plus other conditions and eligibility criteria. But you’ll need to be in a low-income or moderate-income household to qualify.

• MassHousing — provides affordable mortgage financing to low- and moderate-income homebuyers
• Massachusetts Department of Housing and Community Development — mortgage, down payment and closing cost information for first-time homebuyers
• Massachusetts Housing Consumer Education Centers — find a center nearest you that offers homebuyer classes
• Massachusetts Housing Partnership — ONE Mortgage Program for first-time homebuyers
• Habitat for Humanity — through volunteer labor, builds and rehabilitates houses for families in need
• U.S. Department of Agriculture Rural Housing — homebuyer programs in rural communities

You can see a list of programs by city and town on HUD’s website here.

You can see today’s live mortgage rates in Massachusetts here.

When you’re ready to start the home buying process, make sure you get personalized rate quotes from at least three mortgage lenders.

Don’t just look at advertised rates online; actually apply for preapproval and compare the interest rates and fees you’re offered. That’s the only way to know you’re getting the best deal possible on your new home loan.

Verify your new rate (Aug 23rd, 2021)