Massachusetts Home Buyer Guide

Massachusetts first-time home buyers now have an additional loan option when considering mortgages to purchase a single-family, condominium or multi-family home. 

MassHousing, a self-sustaining agency that does not use taxpayer money, announced on its blog May 20, 2014 a new lender-paid mortgage insurance (LMPI) program that increases a borrower's home-buying power. 

Through the program, the lender pays the full mortgage insurance premium for the borrower at the time of closing, which is good for the life of the loan. This cost is offset by a higher interest rate on the mortgage, compared to a loan with borrower-paid MI (BPMI). Even with the higher rate, the LPMI loan generally results in a lower monthly payment for the borrower for the first several years of the loan.

MassHousing's LMPI loan not only potentially saves home buyers thousands of dollars in mortgage insurance premiums, but it also provides the MI Plus unemployment benefit protection, which provides for the payment of all or a portion of a borrower's monthly principal and interest payment, if they lose their job. MI Plus helps a homeowner pay their mortgage, up to $2,000 per month, in case of a job loss for up to six months. There isn't any added cost for MI Plus protection.

The LPMI program is best suited for home buyers who expect to sell their home, refinance or pay off their mortgage within 10 to 15 years. Because the higher interest rate of a lender-paid mortgage insurance loan remains in place until the loan is refinanced or paid off, and because borrower-paid mortgage insurance can be cancelled once the loan-to-value reaches 80 percent, the borrower-paid mortgage insurance loan is a better choice for home buyers who intend to keep their mortgage beyond 15 years.

MassHousing supports affordable homeownership for Massachusetts residents with modest incomes. Although all MassHousing loan programs have income limits, many home buyers are surprised by how much income they can earn and still qualify.

MassHousing was created by an act of the Massachusetts Legislature in 1966 as an independent public authority, and it made its first loan in 1970.

MassHousing has several mortgage programs, which have different features, eligibility requirements and benefits to borrowers seeking their first home loan. Borrowers must complete a first-time home buyer class prior to closing.

MassHousing partners with community banks, credit unions and mortgage companies. Not all lenders can provide MassHousing loan products.

As part of the rollout of the LPMI loan program, MassHousing has expired its RightRate Mortgage program, which provided lower interest rates, but also had lower income limits.