First-time Home Buyers Programs

Learn About Programs to Help Finance a First-time Home Purchase

Purchasing your first home is an important financial decision. Before you decide what your first-time home purchase should look like or where it might be located, you need to decide how to finance your purchase. Fortunately there are many mortgage loan programs designed specifically for first-time home buyers. These programs can help home buyers overcome common loan obstacles such as the down payment, credit requirements and interest rates.

Many Massachusetts’ cities and towns have local first-time homebuyer loan programs that provide funds to assist with purchase price, closing costs and, in some cases, essential repairs. These loans are interest-free and do not require repayment until the home is sold or is no longer the borrower’s primary residence. Income restrictions vary by location, and most local programs require borrowers to personally contribute at least 1.5% of the purchase price.

Some first-time home buyer programs, such as those in Danvers, Gloucester, Lawrence, and Lynn, provide up to $10,000 in assistance for the purchase of homes and condos that have sale prices of up to $362,790. Some cities and towns offer even greater incentives to first-time buyers. Lawrence offers debt forgiveness on all of their first-time buyer assistance loans after five years of primary residence in the home purchased, and Lynn offers up to $5,000 in grant assistance. Other towns, such as North Andover, allow larger loan amounts of up to $30,000.

In addition to local-level programs, the state of Massachusetts also offers various first-time home buyer programs. The Department of Housing and Community Development (DHCD) provides down payment and closing cost assistance to income-eligible, first-time home buyers in participating communities, such as Wakefield, Burlington and Stoneham. The DHCD also assists first-time home buyers who have assets totaling less than $50,000 to purchase available affordable housing units for less than their full-market value.

For first-time buyers who need a mortgage loan, as opposed to partial financial assistance, the state’s MassHousing agency offers 30-year, fixed-rate mortgage loans that have low-downpayment options and flexible income limits. These loans also come with MI Plus, MassHousing’s borrower mortgage payment protection plan (mortgage insurance), for those making downpayments of less than 20 percent. Unlike typical mortgage insurance, which only protects the lender, MI Plus protects the borrower. In the case of job loss, it covers principal and interest up to $2,000 per month for up to six months.

For first-time home buyers who need a more creative option to help with mortgage affordability, the Massachusetts Housing Partnership offers a program called SoftSecond. SoftSecond splits the typical mortgage loan into two loans: a traditional first mortgage and a subsidized second mortgage. Under SoftSecond guidelines, a borrower is expected to contribute 28 to 33 percent of his gross monthly income toward payments on his two loans each month. The borrower makes the full monthly payment on his first loan, and a subsidy is provided toward the second loan’s monthly payment to compensate for the difference between the amount the borrower can afford to contribute and the actual amount of his full monthly payment.

The SoftSecond option carries a 30-year term at fixed interests rates as low as one-quarter (.25) to one-half (.50) percent below market rates and requires a downpayment of as little as three (3) percent. In addition, borrowers are not required to have private mortgage insurance, and SoftSecond lenders do not charge points; however, due to the involvement of a subsidy, borrowers who intend to move within a few years must be prepared to repay the full subsidy used toward their mortgage payments.

First-time home buyers can also benefit from loans insured through the Federal Housing Administration (FHA). FHA-insured mortgage loans have downpayment requirements as low as 3.5 percent and flexible credit requirements. The FHA offers 203(b) fixed-rate loans for standard home purchases, fixed-rate 203(k) loans for borrowers seeking to purchase homes that need repair and adjustable-rate mortgages. Although the FHA sets parameters that their insured lenders must work within, interest rates, credit and income requirements, and loan costs vary among FHA-insured lenders. Borrowers should beware of this and carefully compare terms and conditions among lenders.

Although first-time home buyers have many programs available to help them realize homeownership, it can be difficult to decide which one is best. Choosing the wrong program can cost a new homebuyer thousands of dollars. It is important to seek the help of a real estate professional who knows the most current options and requirements and understands your specific needs. He or she can also put you in touch with a competent and ethical mortgage professional. An exclusive buyer’s agent who represents only you and your financial interests can help explain your financial options and negotiate a good price for the purchase of your new home.

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Our coverage area includes: Barnstable County, Bristol County, Essex County, Middlesex County, Norfolk County, Plymouth County, Suffolk County, and Worcester County in Massachusetts. Rockingham County, and Hillsborough County in New Hampshire. The following are just some of the Massachusetts cities and towns where we provide real estate buyer agent services: Acton, Abington, Amesbury, Andover, Ashland, Ayer, Avon, Barnstable, Bellingham, Belmont, Berlin, Beverly, Billerica, Bolton, Bolyston, Boston (including, East Boston, Charlestown, North End, South Boston, Dorchester, West Roxbury, Roxbury, Roslindale, Jamaica Plain, Chinatown, South End, West End, Back Bay, Allston, Brighton and Beacon Hill), Bourne, Boxborough, Boxford, Bradford, Braintree, Bridgewater, Brockton, Brookline, Burlington, Cambridge, Canton, Carlisle, Carver, Chelmsford, Chelsea, Cohasset, Concord, Danvers, Dedham, Dover, Dracut, Dunstable, Duxbury, Essex, Everett, Fall River, Falmouth Fitchburg, Foxborough, Framingham, Georgetown, Gloucester, Grafton, Groton, Groveland, Hamilton, Hanson, Harvard, Haverhill, Hingham, Holbrook, Holliston, Hopedale, Hudson, Hull, Ipswich, Lakeville, Lawrence, Leominister, Lexington, Lincoln, Littleton, Lowell, Lunenburg, Lynn, Lynnfield, Malden, Manchester, Marblehead, Marlborough, Marshfield, Mashpee, Maynard, Medfield, Medford, Medway, Melrose, Mendon, Merrimac, Methuen, Middleton, Millbury, Millis, Milton, Nahant, Natick, Needham, New Bedford, Newbury, Newburyport, Newton, North Andover, Northborough, Northbridge, North Reading, Northbridge, Norfolk, Norton, Norwood, Norwell, Peabody, Pembroke, Pepperell, Plainville, Plymouth, Quincy, Randolph, Reading, Revere, Rockland, Rockport, Rowley, Salem, Salisbury, Sandwich, Saugus, Scituate, Sharon, Shirley, Shrewsbury, Somerville, Southborough, Stoneham, Stoughton, Stow, Swampscott, Taunton, Tewksbury, Topsfield, Townsend, Tyngsborough, Upton, Uxbridge, Wakefield, Walpole, Waltham, Wareham, Watertown, Wellesley, Wenham, Westborough, West Boylston, West Bridgewater, Westford, West Newbury, Weston, Westwood, Westport, Weymouth, Whitman, Wilmington, Winchester, Winthrop, Woburn and Worcester, Wrentham, Yarmouth. The following are just some of the New Hampshire cities and towns where we provide real estate buyer agent services: Atkinson, Brentwood, Derry, Dover, Durham, East Kingston, Epping, Exeter, Greenland, Hampstead, Hampton, Hampton Falls, Hollis, Hudson, Kingston, Londonderry, Manchester, Nashua, New Castle, Newmarket, Newton, North Hampton, Pelham, Plaistow, Portsmouth, Raymond, Rye, Salem, Seabrook, Stratham and Windham.