Massachusetts Home Buyer Guide

Massachusetts first-time home buyers who fall into the low- to moderate-income category will want to consider the "ONE Mortgage" loan program from the Massachusetts Housing Partnership.

The mission of the ONE Mortgage Program is to increase homeownership opportunities for low- and moderate-income first-time home buyers in Massachusetts. The roots of the program date back to 1989, when the Massachusetts Housing Partnership (MHP) and other groups began meeting to find solutions to the issue of racial bias in home lending. 

The result of the collaboration of housing groups was the Soft Second, or "SoftSecond," Loan Program, which had a two-mortgage structure. The SoftSecond's new underwriting standards addressed common obstacles facing lower-income, first-time home buyers, such as high down payments and costly private mortgage insurance. By 2013, the SoftSecond loan program had helped more than 17,000 families purchase their first home, with more than $2.6 billion in private mortgage financing.

To continue Soft Second's success, MHP has transformed the program from a two-mortgage structure to the ONE Mortgage Program. The ONE Mortgage offers lower-income homebuyers the same affordability and financial security as the SoftSecond in a simpler structure.

Fixed Interest Rate

There are nearly 50 lenders that participate in the ONE Mortgage Program. Those lenders offer first-time home buyers a discounted 30-year, fixed-rate mortgage. There are not any points charged by the lender. 

Low Down Payment

ONE Mortgage homebuyers only have to put down a minimum of 3 percent of the purchase price when purchasing a single-family property, condominium or two-family house. Obviously, the borrower must occupy the property. Of the 3 percent, just 1.5 percent is required to be from the borrower's own savings; however, the remaining amount can be a gift or down payment assistance. The remaining amount of the down payment cannot be another loan. Many conventional loans require at least a 5 percent down payment. For the purchase of a three-family home, the ONE Mortgage Program requires a minimum down payment of 5 percent of the purchase price. The homebuyer must have 3 percent of the 5 percent in his or her own savings for a multi-home. 

No Private Mortgage Insurance (PMI)

The ONE Mortgage Program does not require homebuyers to purchase private mortgage insurance (PMI). Not having to obtain costly PMI saves a home buyer hundreds of dollars every month. Conventional loans require PMI until the borrower reaches 20 percent in equity, which can take several years to reach. Presently, FHA loans require PMI for the life of the loan. Without PMI payments every month, home buyers save thousands of dollars over the first several years of the loan alone.  

Interest Subsidy

Income eligible One Mortgage Program first-time home buyers may also qualify for a subsidized monthly payment in the initial years of ownership. The subsidy is automatically applied to the homeowner's monthly mortgage statement by the lender and helps pay a portion of the mortgage payment during the first seven years of homeownership.

First-time Home Buyer Program Eligibility

The following are some of the criteria that households must meet to be eligible for the One Mortgage Program.

1. The borrower must a first-time home buyer, which is defined as someone who has not owned a home in the three years prior to applying for the One Mortgage Program.  

2. The borrower must complete an approved pre-purchase home buyer education workshop. The classes are offered in dozens of locations around the state. Some organizations offer classes online. 

3. Home buyers must meet household income guidelines for the program. The 2020 income limits (as of April 2020) vary by community and household size. Borrowers purchasing within the City of Boston are required to obtain an “Income Eligibility Certificate” from the Massachusetts Affordable Housing Alliance (MAHA) before a MHP reservation is issued. Borrowers whose total household income does not exceed 100 percent of area median income qualify for the One Mortgage Program, and borrowers below 80 percent of the area median income may be eligible for a MHP subsidy. For example, a household of three purchasing in Stoneham, MA may have a household income up to $107,100 in 2020. A one-person household in Quincy can earn up to $83,300. In Suffolk County (Boston), a four-person household can earn $119,000. If the same Suffolk County household of four has a household income below $95,200, they may be eligible for a subsidy, which reduces the monthly mortgage payments for the first seven years of homeownership.

In Worcester County, the income limits depend on the city or town where you are buying a home. For example, a two-person household in the City of Worcester can earn up to $78,560; however, that same two-person household in Southborough can earn up to $89,280. [Note: Income limits typically change yearly, but a qualified lender should be able to provide the lastest limits.] 

4. Borrowers must have less than $75,000 in liquid assets, excluding retirement accounts, such as 401K and 403B accounts, to qualify.

5. As detailed above, home buyers must have a minimum of 3 percent down payment of the purchase price. Of the 3 percent, 1.5 percent is required to be from the borrower's own savings. For the purchase of a three-family home, the minimum down payment requirement is 5 percent, with 3 percent from the home buyer's own savings.

6. The borrowers must meet the credit and underwriting requirements of the participating One Mortgage Program lender they choose.

7. The home buyer must agree to use the home purchased as a primary residence through the term of the loan.

In addition, after closing home buyers must complete a post-purchase homeowner workshop called HomeSafe. Home buyers have one year after the closing on their home to complete the workshop. Topics discussed at the HomeSafe workshop include home maintenance and repairs, insurance, lead paint, budgeting, homeowner discounts, rehab grants, tenant management and other topics of value to homeowners.  

Home buyers can obtain additional information about the One Mortgage Program, such as participating lenders and home buyer class locations, and other Massachusetts first-time home buyer programs from an experienced buyer agent and mortgage professional.