First-time homebuyers in Massachusetts

Eligible residents will work with an approved lender to find a home within the purchase price limits.

Once you’ve been approved for your loan, MassHousing will buy it from the lender and service your loan, meaning they will be responsible for processing your monthly payments, managing escrow accounts and handling tax and insurance payments.

MassHousing offers both conventional and FHA loan financing.

More: How the mortgage underwriting process works

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MassHousing mortgage

MassHousing’s standard mortgage program provides financing for single-family homes, condos and two-, three- and four-family homes at competitive interest rates, which are fixed for the life of the loan.

The home must be used as the primary residence.

In addition, MassHousing’s mortgage loans are only available to those who earn less than $179,955 per year.

Additional homebuyer benefit

Included in all of MassHousing’s loans is MI Plus, which helps borrowers pay their mortgage if they lose their job. Included at no additional cost, this insurance will cover the principal and interest portion of your mortgage (up to $2,000 a month) for up to six months. After you’ve had the mortgage for six months, it can be used for any six-month period during the first 10 years of your loan.

Purchase and Renovate loan

This program offers loans to help homebuyers who want to buy a home that needs repairs or updates before the owners can move in. It provides financing for both the purchase of the home and its renovation costs, which you’ll pay in a single monthly installment.

This program also offers current homeowners the option to refinance and renovate.

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Operation Welcome Home loan

For veterans and service members who are looking to buy their first home in Massachusetts, an Operation Welcome Home loan may be the answer. Operation Welcome Home provides affordable financing options for National Guard and Reserves members, active-duty and veteran military members as well as Gold Star families.

Eligible homebuyers are offered up to $2,500 in closing cost assistance, which can also be combined with MassHousing’s down payment assistance program.

This program is reserved for first-time homebuyers purchasing a one- to four-family property (including condos), unless you’re buying a home in Boston, Chelsea, Cambridge, Everett, Fall River, Lawrence, Lynn, North Adams or Somerville.

Additionally, your annual household income must fall at or under the average median income for your county.

More: VA home loans

Workforce Advantage program

The Workforce Advantage program is the result of a $2.5 million grant from the state.

It offers an affordable fixed-rate mortgage, plus you can receive a down payment assistance loan of up to 3% of the home’s purchase price (or $15,000, whichever is less). That loan comes with a 0% interest rate, and you won’t need to repay it until you sell, move, refinance or pay off your mortgage.

It’s available to homebuyers who make no more than 80% of their area’s median income and purchase a single-family home, condo or two-family property in Boston or one of the Commonwealth’s 26 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 or Worcester).

More: Home affordability calculator

Down payment assistance programs

To help with the substantial upfront cost of buying a home, MassHousing provides first-timers with down payment assistance of up to 10% of the purchase price (or up to either $50,000 or $30,000, depending on the community you are buying in). That assistance comes in the form of a 15-year loan with a fixed interest rate of 2%.

If you sell or refinance your home prior to the end of the 15-year term, you’ll have to pay the loan back in full then.

The down payment assistance program is available to first-time homebuyers in Boston and the state’s 26 gateway cities who earn up to 135% of their area’s median income. If you live in another area of the state, you can qualify so long as you don’t earn more than your area’s median.

The program includes single-family homes, condominium units and up to four-family properties.

Who qualifies for first-time homebuyer programs in MA?

MassHousing’s programs are designed to help lower- to moderate-income Massachusetts residents achieve the dream of homeownership. The income limits for MassHousing assistance range by region. Homebuyers will also be required to take a homebuyer education course.

More: Get a free credit score and credit monitoring from Credit Sesame.

Nationwide first-time homebuyer programs

When assessing your application for a “conventional” mortgage, lenders in the private market will usually expect to see a credit score of at least 620 and a down payment of at least 5% of the overall purchase price.

If you’re coming up a little short in either respect — as many first-time buyers do — you should look into one of the following nonconventional mortgages, which you can source through the federal government.

FHA loans

In 1934, the Federal Housing Administration created FHA loans to encourage Americans to buy homes. At the time, about 60% of Americans rented instead of buying.

FHA lenders will grant you a loan with a credit score as low as 580 and a minimum down payment of just 3.5%, making these loans accessible to more Americans. But depending on how much money you put down, you will face long-lasting fees to cover mortgage insurance. Try putting down 10% if you can, and 20% is even better.

VA loans

VA loans were created toward the end of the Second World War to help veterans buy homes of their own. An act passed by Congress in 1944 made it possible for the U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.

To qualify for one of these loans, you must be an active service member, veteran or a surviving military spouse. You won’t have any down payment or mortgage insurance obligations, but you will have to pay a sizable funding fee.

USDA loans

USDA loans, which are guaranteed by the United States Department of Agriculture, also don’t require down payments or mortgage insurance. These loans are targeted to lower-income rural and suburban Americans.

Borrowers will find they’re charged an upfront 1% guarantee fee and an annual 0.35% fee. But if you do the math, the sum of those fees tends to be less in the long run than the mortgage insurance associated with other types of loans.

That said, you may make too much money to qualify for a USDA loan. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a steeper-than-average cost of living. You can find your region’s limit on the USDA’s website.

Next steps to buying your first home

Now that you know all your options, you may be asking yourself: “What next?”

A great first move would be to take a look at your credit score and see how you measure up to your ideal loan’s requirements. You can get a free score through the site Credit Sesame.

Was your score disappointing? That’s OK; you have plenty of options. An organization like Self credit repair can help you bring your score up.

When you’re in good shape, don’t forget to gather the important documents you’ll need to prove you’ve got money in the bank and money floating in.

Then you can finally think about getting pre-approved for a mortgage and start shopping for your new digs.

First-Time Homebuyer Programs by State
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