MassHousing is a not for profit public agency in Massachusetts that offers home loans. They do not rely on taxpayer funds and are self-supporting. Home buyers should consider a MassHousing financing program as it can be more beneficial than an FHA loan. It can be used for a new purchase or refinance of a single family, condo, or multi-family (2, 3, or 4 family) that a buyer plans to use as a primary residence. Below is additional information on MassHousing loans for MA home buyers.
MassHousing Mortgage Amounts and Limits
Under MassHousing, loan amounts up to 97% of the purchase price are allowed on single family properties and condos, and up to 95% on multi-family buildings. FannieMae financing limits also apply and can be reviewed at the Fannie Mae website. For single family and condo purchases, Buyers are not required to make any contribution from their own funds. This allows borrowers to obtain the funds for the closing as a gift from a family member or as credits from a member of the transaction (i.e. the seller). Multi-family properties require buyers to contribute 3% of their own money, verified through bank statements or other financial documentation. The rest of the the down payment and closing costs can be received as gifts or concessions. Lastly, there are income limits which differ by county and property type.
Mortgage Insurance Considerations
Mortgage Insurance Introduction
Mortgage insurance is generally included on financing for more than 80% of the sale price. It is often charged as a large up-front premium paid at closing and monthly amounts (calculated on a percentage of the loan amount). When this article was written, the FHA mortgage insurance premium was 1.35% of the mortgage. On a $200,000 property with 3.5% down payment, the amount would be $3,500 up-front and $220.93/month on a FHA mortgage.
MassHousing Program with NO Mortgage Insurance
Interest rates on MassHousing loans are often a little bit higher than FHA, however, the mortgage insurance rates are more favorable. MassHousing actually provides mortgage alternatives with or without mortgage insurance. The program with mortgage insurance requires no up-front amount and a lower monthly rate. When this blog was prepared, the premium was 0.60%. For the same $200,000 home described above, the monthly amount is $97 (as opposed to $220/mo through FHA). A home buyer using MassHousing would have a lower payment over FHA even after taking into account a slightly higher interest rate. The savings are even greater with the MassHousing no mortgage insurance program.
Advantages of MassHousing Loans For MA Home Buyers
MassHousing programs are an economical option for home buyers in Massachusetts who qualify. Similar to FHA, it offers low down payments but with less expensive mortgage insurance costs. It can be used to purchase or refinance single family, condo, and multi-family residences (with up to 4 units). Interest rates remain the same for a 30-year repayment period, ensuring unchanging payment amounts for borrowers. The MassHousing Loans For MA Home Buyers in this blog are offered as an introduction and is based on facts available at the time this article was written. Terms and other information may be altered by MassHousing at any time. As one of the local providers of MassHousing loans, I would appreciate the opportunity to assist with your mortgage needs. Contact me, Christopher Graves, by phone at 978-376-5389 or email at christopher.graves@spm1.com
