Given the costs and the competition, entering the Boston area’s housing market can seem next to impossible.
First, those costs. The median sales price for a house in the region was $605,000 as of January 2020, and the median sales price for a condo was $577,500, according to the Greater Boston Association of Realtors. The figures were much higher, too, in Boston and downtown Boston, respectively.
These hefty costs—driven by historically low supply and perennially high demand—lead, of course, to high down payments. The median down payment for a home in the region was $76,500 as of the tail end of 2019, according to a report from listings and research site Realtor.com. And that’s the median, which means that half of the area’s down payments ran north of $76,500 at the end of 2019.
Luckily, there are various programs that first-time homebuyers can seize on to mitigate these high barriers to entry. None necessarily guarantees a hold on Greater Boston’s property ladder, but each offers help getting there.
This program for low- and moderate-income borrowers is offered through the Massachusetts Housing Partnership, a nonprofit affordable-housing organization. The program’s key features include a discounted 30-year, fixed interest rate on the mortgage and a down payment that’s as low as 3 percent of the purchase price (including for two-families). Eligible borrowers might also get subsidies for paying the interest on the mortgage for the first few years.
MassHousing, a quasi-public agency, offers this straightforward program that can provide qualified borrowers with mortgages that have lower interest rates and that require lower-than-normal down payments. MassHousing loans also carry mortgage payment protections. And MassHousing itself services the loans, which means that borrowers can come directly to the agency with questions or problems.
MassHousing rehabilitation option
Say your first home purchase is a fixer-upper. MassHousing offers a lending option through participating lenders and rehab agencies that provides low- and no-down payment avenues for qualified borrowers looking to fix up a one- to four-family home (or to help finance the rehab of a borrower’s existing home). The minimum rehabilitation amount is $10,000.
Down payment assistance program
MassHousing also facilitates a straight-ahead program for providing down payment assistance for up to 5 percent of the purchase price of a one- to four-family home or a condo (or $15,000, whichever is less). It applies to qualified first-time buyers in Boston and 26 so-called gateway cities across Massachusetts.
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Speaking of Boston and those 26 gateway cities, this program aids first-time homebuyers who earn up to 80 percent of the area median income where they’re looking to buy. It applies to condos and single-families, and can include discounted mortgage insurance as well as down payment assistance of up to 3 percent of the purchase price (or, again, $15,000, whichever is less).
Operation Welcome Home
This is a MassHousing program for active-duty military personnel, veterans, Gold Star families, and members of the National Guard and Reserves. First-time homebuyers can use it, but Operation Welcome Home is also open in many cases to the aforementioned if it’s beyond their first home. It includes up to $2,500 for closing costs and possible down payment assistance too.
Neighborhood Development in Boston
Boston’s Neighborhood Development agency can provide help to eligible first-time buyers, including those with household assets totaling no more than $75,000, excluding 401k, retirement, and savings accounts. The aid can come in the form of no-interest loans with deferred payments due at the end of a buyer’s primary residence, or at the time of a sale or a title transfer.
This is a federal program through Fannie Mae that can provide up to 3 percent of the closing costs for first-time homebuyers looking to purchase a specific foreclosed property. Users must first complete an online course.