In a higher-cost state like Massachusetts, coming up with a down payment is one of the biggest hurdles for first-time homebuyers.
Until recently, down payment assistance programs were few and far between. But today, MassHousing - known to many as the state’s affordable housing bank – offers down payment assistance across all of Massachusetts.
So far, since launching the program in March of 2018, MassHousing’s DPA has helped 1,335 buyers – and counting -- close the deal.
First, for Realtors who may not be familiar with the Agency, here is the MassHousing 101: MassHousing was created by the legislature to make home ownership affordable to buyers who may be underserved by the conventional market. It raises funds through the capital markets and lends to low- and moderate-income buyers.
MassHousing has business relationships with more than 100 lenders across the state, who originate and close loans on the Agency’s behalf. MassHousing then buys and services the loans. MassHousing, because of its public mission, offers many features and benefits that can help make a home mortgage loan more affordable than some conventional loans. The down payment assistance program is a great example.
To be eligible for the DPA program, borrowers must be first-time buyers. Their incomes can’t exceed 100% of the area median income. By way of example, in Attleboro that is $80,600; Boston, $107,700; in Springfield, $73,900 and in Worcester, $85,800. Single-family homes, condos and planned unit developments are eligible.
If the buyer meets income limits and other eligibility criteria (i.e. debt-to-income, credit etc.), they can obtain a 97% LTV first mortgage loan and a DPA loan for up to 3% of the purchase price, up to a maximum of $12,000.
The DPA loan is a 15-year, amortizing fixed-rate loan at 1%. For example, a borrower who receives a $10,000 DPA loan would make 180 payments of $59.85 with an APR of 1.015%. Repayment of the down payment assistance is also due upon sale or refinance of the property prior to the end of the 15-year term.
Nearly half of MassHousing’s DPA loans so far have gone to buyers in the so-called Gateway Cities* as well as Boston. The average DPA loan amount has been $7,148 and the average buyer’s income has been $68,600.
The lack of inventory and rapidly rising home prices are well-known in the Massachusetts Realtor community. All too often, Realtors meet enthusiastic young people who want to put down roots and purchase their first home. But with increasing frequency, Realtors are the ones to tell those eager buyers that despite years of saving, they still don’t have enough for a down payment.
With MassHousing’s Down Payment Assistance program, Realtors can deliver some good news that helps first time buyers jump the down payment hurdle and get the home they’ve been dreaming of. And more good news is coming. An expanded MassHousing DPA program is in the works and will be announced soon.
*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.