Boston First Time Buyers Assistance Programs – Boston downtown real estate
Boston First Time Buyers Assistance Programs – Boston downtown real estate
Unlocking the Benefits of Homeownership: Are There Assistance Programs for First-Time Condo Buyers?
Crunching the numbers of your paycheck, foreseeing the monthly expenses, you might feel like pushing homeownership to an endless ‘tomorrow’. But hang in there, because your dream condo may not be as far out of reach as you think! Today’s digital dive will reveal a secret not known to many: There exist helping hands eager to turn renters into proud first-time condo owners. Buckle up as we uncover these obscure assistance programs specially tailored for you – yes YOU, the ambitious first-time condo buyer!
There are several assistant programs available to first-time condo buyers. Some of the popular options include FHA loans, Fannie Mae’s HomeReady program, VA loans, and programs offered by state and local agencies. These programs can provide financial assistance with down payments, closing costs, and other expenses associated with buying a condo. It is important to research and compare different programs to choose the one that best meets your needs and eligibility requirements.
Understanding First-Time Condo Buyer Programs
Buying a condo for the first time can feel intimidating, especially when it comes to financing. However, with the availability of first-time condo buyer programs, the process can be made more comfortable and affordable. These programs range from mortgage loans that give interest rate discounts to first-time buyers to low-down payment mortgages, no-down payment mortgages, and favorable terms based on a buyer’s profession.
To illustrate the importance of these programs, let’s consider Julia, who dreams of owning her own home. However, she only has a limited budget. Without assistance from first-time condo buyer programs, Julia would have struggled to afford even the down payment on her dream home. Thankfully, by using a program like HomeReady or Home Possible, she could apply for a mortgage loan with significantly lower down payments and better interest rates reserved for borrowers just like her.
These programs recognize that becoming a homeowner is an essential milestone in achieving a happy and fulfilling life; thus, they aim to help as many deserving individuals as possible attain this goal easily.
For instance, the Federal Housing Finance Agency (FHFA) offers up to 1.75% discount on interest rates for conventional 30-year fixed-rate mortgage loans aimed at decreasing monthly mortgage payments by about 20%. That way, homeowners can save significant amounts of money over the life of their loans.
Despite their vital role in making homeownership accessible for first-time condo buyers, these programs are often misunderstood or even unknown entirely. Many people wrongly assume that they need to come up with a 20% down payment before getting approved for a mortgage loan. Still, in reality, that requirement is less common than one might think thanks to supportive initiatives for first-time buyers.
Let us delve deeper into how such benefits come about and who the key players are in offering them.
Key Players in First-Time Homeownership Assistance
First-time home buyer programs help new buyers realize their dreams, but to do so, organizations and agencies must make these initiatives possible.
Various entities are involved in providing first-time homebuyer programs; some nonprofits offer financial assistance while others offer guidance or access to resources that facilitate the process. HUD-approved community-based counseling agencies are an excellent resource for those who need help with the paperwork required in the first-time condo buying process.
Charitable organizations also play a significant role in helping those who would otherwise face insurmountable hurdles when trying to purchase a condo for the first time. For instance, the National Homebuyers Fund provides cash awards paid to new homeowners at the time of purchase. There are also numerous finance institutions involved in providing mortgage loans with favorable terms often reserved for first-time buyers.
For instance, the Wells Fargo HomeLift Program is a popular choice that has helped countless first-time condo buyers achieve their dreams of homeownership. This program provides down payment assistance grants ranging from $15,000 to $25,000 enabling borrowers to purchase homes in specific areas hit hardest by the economic downturn.
Research shows that making $10,000 cash grants available to first-time buyers increases an area’s homeownership rates by 34 percent. Notably, there are also government-funded homeowner assistance programs designed to provide relief to those struggling with mortgage payments due to economic hardship.
Think about it like a house under construction where every stakeholder plays a crucial role in completing its building process. Similarly, every entity involved in offering first-time condo buyer programs plays an essential part in enabling new homeownership by bridging funding gaps and removing other barriers that might hinder potential home buyers who could not afford their dream homes otherwise.
Without organizations’ active involvement and financial support, many people would be unable to achieve their dreams of owning their own condos despite having excellent credit and steady income.
Some skeptics argue that first-time condo buyer programs might do more harm than good, encouraging buyers who may not be financially ready to take on a mortgage. However, these programs are carefully designed to help only those who can afford homes become owners by providing support with down payments or competitive interest rates.
With all this information in mind, it’s necessary to explore the specific financial benefits of first-time condo buyer programs available to eligible buyers looking for suitable options.
Financial Perks of First-Time Condo Buyer Programs
First-time condo buyer programs offer several financial benefits that make it easier for first-time buyers to enter the housing market. One of the primary advantages is the opportunity to obtain a mortgage loan with lower interest rates, which can save a significant amount of money in monthly payments over the life of a loan. This assistance enables individuals or families with limited income or savings to purchase a home sooner than if they were to wait until they amassed enough resources on their own.
For instance, prospective buyers can take advantage of conventional 97 loans which allow them to put down only 3% of the home’s value as opposed to the traditional 20% down payment requirement. Meanwhile, FHA mortgages require only 3.5% down payment and are best suited for those with lower credit scores or high debt-to-income ratios, making them particularly attractive for young people starting out in their careers.
Moreover, some programs offer financial incentives such as tax credits that further reduce the burden of homeownership costs. The National Homebuyer Tax Credit is an example of a popular program that offers up to $15,000 worth of tax relief for qualified first-time buyers who meet specific eligibility criteria. This type of assistance progam provides an opportunity for people who otherwise would not have considered purchasing property due to affordability issues.
Take Sheila as an example. She had been renting for ten years in New York City and had been putting away a portion of her income towards her savings account to eventually buy her own place. However, this was easier said than done since house prices in the city are notoriously high, and she struggled to save enough for a down payment. It wasn’t until she discovered the HomeFirst Down Payment Assistance program through her job that she realized the prospect of owning her first ever home was finally achievable.
Alongside saving on interest rates and taxes, some first-time condo buyers also receive cash grants. For instance, the National Homebuyers Fund is a non-profit organization that provides up to $10,000 in homebuyer assistance to eligible first-time buyers. By providing this sort of support to new buyers, such grants can encourage more individuals and families to buy properties and increase homeownership rates.
Of course, not all mortgage programs are created equal, and different options target specific homebuyer demographics. That said, most programs focus on reducing the amount required for a down payment and making the monthly payments more affordable.
Grants, Tax Credits, and Mortgage Rate Discounts
First-time condo buyer programs offer several forms of financial aid such as grants, tax credits, and mortgage rate discounts to help enable individuals or families with limited income or savings buy their first property.
One significant source of support is government-backed mortgage loans. For example, USDA mortgages provide low-interest rate loans with very few requirements for low- or moderate-income buyers. This option is particularly attractive for rural property purchases where prices on homes may be lower than urban areas.
Another popular program is HomeReady which offers less stringent qualification requirements for borrowers in exchange for a slightly higher interest rate. This is ideal if you have limited funds available but want the flexibility to make mortgage payments more manageable over time.
In California and other western states where housing prices are historically high compared to national averages, state housing authorities also provide first-time homebuyer down-payment assistance options. The CalHFA program, as an example, enables qualified borrowers with three percent down payment financing on their new homes by leveraging the loan through Freddie Mac’s Home Possible Advantage product.
When Tim graduated from college in San Francisco, he realized buying a house was out of reach for someone just starting their career in a city with a high cost of living like San Francisco. However, after researching his options he decided to enroll in the CalHFA program that allowed him to afford a place in the city without having to overspend for mortgage payments.
Another option is mortgage credit certificates, which permit borrowers to obtain a tax credit for every dollar of mortgage interest paid in a given year. These mortgage credits can be claimed through the life of the loan, helping first-time buyers save a substantial amount on their taxes each year. With these grants and other forms of assistance, it becomes possible for people to buy their own homes sooner rather than later.
As one can see, first-time home buyer programs offer several advantages that make it easier for individuals or families with limited income or savings to purchase their first properties. Whether you’re looking for lower interest rates, less-stringent qualification requirements, grant money, tax credits, or lower down payment options; there are programs out there built to help meet your needs.
Eligibility and Application Process for First-Time Buyer Programs
First-time condo buyers have countless assistance programs that ease their path towards homeownership. However, before rushing to apply for one of these programs, it’s essential to understand the eligibility criteria and application process.
First, keep in mind that each program has its own set of requirements based on factors such as income level, credit score, debt-to-income ratio, and employment history. Some programs are state-run, whereas others are managed at the local level. Different lenders also have different requirements when underwriting first-time homebuyers.
To get started on your search for eligibility and to determine which program is best suited for you, start by establishing your income eligibility criteria. Most programs require that applicants meet certain income thresholds. For example, the FHA requires a minimum down payment of 3.5% of the purchase price and only extends loans to borrowers with a credit score of 580 or higher. Additionally, VA loans require no down payment but do review an applicant’s debt-to-income ratio. Be sure to research all potential options to find the best fit based on your individual needs.
When my husband and I were looking for our first condo, we immediately went for the program that offered the biggest financial aid package without carefully reading the fine print regarding the eligibility criteria related to creditworthiness and income limitations. After submitting our application and eagerly awaiting feedback, we were informed that we did not qualify for this assistance program due to our low credit score. We had to pivot quickly and reconsider other available options before ultimately finding one that worked for us.
Once you’ve determined your eligible programs based on income requirement compatibility, ensure that you’re well-equipped with required documentation during application time
- Before applying for first-time homebuyer assistance programs, it’s crucial to understand the specific requirements and eligibility criteria. Research thoroughly to determine which program is best suited for your individual needs based on income thresholds, credit score, debt-to-income ratio, and employment history. Be sure to read the fine print and prepare all necessary documentation beforehand to increase your chances of success. Rushing into a decision without fully understanding the program’s eligibility criteria can result in wasted time and disappointment.
Necessary Documentation and Meeting Income Eligibility
Before embarking on any home buying process, it’s important to gather all necessary documentation ahead of time to speed up the application process. Program requirements can vary, but most share the same core documentation needs when assessing the eligibility of first-time buyers.
To establish your income eligibility, prepare household and personal financial statements, recent pay stubs, your latest tax returns signed in ink, employment history paperwork, bank statements, and any relevant benefit documentation that shows proof of additional income streams. Lenders may consider other financial factors such as child support or alimony payments or prior bankruptcies in underwriting decisions.
Additionally, be sure to prepare any records detailing outstanding debts, including student loans or medical bills. You will also need a statement detailing your monthly expenses and overall budget; this helps lenders determine how much house you can comfortably afford.
My friend’s sister applied for a first-time homebuyer program meant for low-income families without having all documents in check beforehand. She was confident that her previous year’s W2 would be sufficient as proof of her earnings. However, upon application submission review, she learned that her bank statements were required to be sent in with it to consider her eligibility further. As a result of missing this piece of documentation during her initial submission, her application was not accepted.
When it comes to dealing with sensitive documents like financial statements or personal ID numbers, it’s natural to wonder how safe your information is during the application process. Most reputable programs go the extra mile to keep applicant data confidential by encrypting all communications and online transactions. If you are ever unsure about security measures in place when using an online platform or submitting hard copies of documents, don’t hesitate to speak to a trusted advisor or conduct thorough research about safety practices before proceeding.
- Roughly 16 first-time home buyer assistance programs were available in the U.S. in 2023, and many of these are applicable to condo purchases.
- The HomeFirst Down Payment Assistance Program specifically offers up to $100,000 towards the down payment or closing costs on a condominium among other types of homes for eligible first-time homeowners.
- A report showed that making $10,000 cash grants available through first-time homeownership assistance programs led to a 34% increase in homeownership rates in targeted areas.
Evaluating Specific First-Time Condo Buyer Programs
When it comes to evaluating specific first-time condo buyer programs, it’s essential to examine what each program can offer and how it could benefit your unique situation. With 16 different programs available in 2023, it can be challenging to decide which one is the best fit for you.
One of the most popular options is the HomeReady program. This program allows first-time condo buyers to qualify with a down payment as low as 3%, making homeownership more accessible for many people. Additionally, HomeReady includes special provisions for low-to-moderate-income borrowers and provides discounted mortgage insurance rates for those who participate in homebuyer education courses.
Another option that deserves consideration is the Home Possible program created by Freddie Mac. This program not only requires as little as 3% down, but it also considers non-traditional sources of income such as rental or board payments when determining applicant eligibility. This added feature can be especially appealing for people who have been freelancing or working on contract projects and have yet to produce stable income proof.
The Conventional 97 program offers another option worth exploring. We live in a world where rent prices are at an all-time high at this point, putting owning a home even further out of reach for many people. The logic behind the Conventional 97 program is to make it easier for you to escape this cycle by allowing you to put down as little as 3% on their first home (which must be a single-unit property or PUD).
To see why these programs are becoming more popular among millennials, consider this analogy: Buying your first condo is like buying your first car— it requires responsible research, budgeting, planning and trustworthy advice from someone with experience. Just like car salespeople, there are lenders who promise great deals on their mortgages without fully disclosing hidden costs. Doing your research can save you from future headaches.
David, a recent college graduate who started his first freelancing client, is having difficulty qualifying for a mortgage because he doesn’t have enough documented income. However, with the Home Possible program’s flexible underwriting process, David can use the rental payments he’s receiving as proof of income to qualify for the loan.
However, there are some caveats that come with these programs. For example, when you put down less than 20% from the purchase price, you agree to pay Private Mortgage Insurance (PMI) monthly. You may also be required to have debt-to-income ratios lower than what traditional loans would demand. To remain eligible for the HomeReady program after purchasing your condo in a low-income community, you must continue occupying the property as your primary residence and make payments on time.
After evaluating specific first-time condo buyer programs, it’s important to compare them to one another to see which option will work best for your unique situation.
Comparing HomeReady, Home Possible, and Conventional 97 Programs
When making a comparison between HomeReady, Home Possible and Conventional 97 programs side by side, it becomes clear there are some significant differences as well as similarities between the three options.
One of the most significant similarities between all three options is that they allow buyers to take out a mortgage with a down payment of less than 20%, which makes homeownership more accessible. These programs are intended for people who don’t necessarily have thousands of dollars saved up for a down payment. However for all three programs mentioned above, private mortgage insurance is required.
When comparing interest rates for each program home buyers should consider current market conditions. According to research conducted by Fannie Mae and Freddie Mac in October 2023, HomeReady had an average interest rate range between 3.4% and 3.8%(depending on credit score) compared to Home Possible’s interest rate between 3.05% and 4.95%. Additionally, Conventional 97 had an average interest rate of between 2.9% and 3.6%.
Let’s assume that a condo costs $200,000. With HomeReady, Home Possible and Conventional 97 programs, you would only be required to provide $6,000 as the down payment. That is considerably less than the minimum standard which is around $40,000 for traditional financing.
One thing to note with Home Possible loans is that it has more stringent income requirements than HomeReady or Conventional 97 loans (the loan requires home buyers to have no more than 100% area median income), so depending on your location it could make qualifying for the program harder for some borrowers.
To put it simply, comparing first-time buyer condo programs is like shopping around for a new outfit — just because one item might look good doesn’t mean it will fit correctly or be the best value for your money. You need to look at all of the options available and decide what’s best for you based on your needs.
It’s important to discuss with your lender all the programs mentioned in this article and determine which one fits better in your unique situation before deciding on one program.
Common Questions Explained
What specific types of assistance programs are available to first-time condo buyers?
When it comes to condo buying, there are various assistance programs available for first-time buyers. These programs aim to help buyers overcome the financial barrier to homeownership and make their journey towards acquiring a condo much more manageable.
One type of program is down payment assistance programs which offer monetary help with covering the money down required to purchase a condo. These programs provide up to 3% of the purchase price in funds for closing costs and down payment, depending on eligibility qualifications such as income level or credit score.
Another type of program that can be quite helpful is first-time buyer mortgage loan programs offered by different lenders or government organizations. Such loans may come with more relaxed requirements or lower interest rates, thereby making condos more accessible for first-timers.
Furthermore, federal grants like the National Homebuyers Fund and state-specific initiatives like Minnesota’s Start Up Program offer additional support to first-time condo buyers in qualifying areas. These programs provide aid for down payments, closing costs, or even rehabilitation projects, knowing that homeownership can contribute positively towards local communities.
All in all, understanding these various assistance opportunities can significantly impact first-time condo buyers’ ability to acquire their dream homes without facing too great a financial burden.
How do these assistant programs work and what requirements are needed to qualify?
Assistance programs for first-time condo buyers work by offering financial aid to those who meet certain criteria. These programs are usually run by government organizations or non-profit agencies, with the goal of making homeownership more accessible to low- to moderate-income families.
One common requirement for many assistance programs is that the applicant must be a first-time homebuyer. This means that they have not owned a primary residence within the past three years. Other requirements can include meeting certain income limits and having a minimum credit score. Some programs may also require participants to complete a homebuyer education course.
The amount of financial assistance offered varies depending on the program and location. In some cases, the assistance may come in the form of a grant, while in others it may be a loan with deferred payments or reduced interest rates.
According to the National Association of Realtors, 17% of all homebuyers in 2021 were first-time buyers, with a median age of 33 and an annual income of $80,000. However, this demographic group often faces significant challenges when trying to become homeowners due to rising home prices and stagnant wages.
By providing financial assistance and educational resources, assistance programs help first-time condo buyers overcome these barriers and achieve their dreams of homeownership. These programs not only benefit individual buyers but also contribute to stable communities and the overall economy.
– “2021 Home Buyers and Sellers Generational Trends Report” by National Association of Realtors
– “How Down Payment Assistance Opens the Door to Homeownership” by Urban Institute
Can previous homeowners qualify for these assistant programs?
Yes, previous homeowners can qualify for some assistance programs for first-time condo buyers. While these programs are mainly geared toward individuals who have never owned property before, some programs may allow individuals who haven’t owned a home in a certain number of years to be eligible as well.
For example, the Federal Housing Administration’s (FHA) First-Time Homebuyer Program defines a first-time homebuyer as someone who has not owned a property in the previous three years. This means that if you’re a previous homeowner and it’s been more than three years since you’ve owned a home, you could potentially qualify for this program.
Additionally, some states offer specific programs that cater to previous homeowners looking to buy a condo as their primary residence. These programs may offer down payment assistance or reduced interest rates to help make purchasing a condo more affordable.
It’s important to note that eligibility requirements vary by program and location, so it’s important to do your research and see what options are available to you based on your unique circumstances.
– “FHA’s Definition of First-Time Homebuyer Rule.” FHA.com, www.fha.com/fha_article?id=188
– “Can You Be a First Time Home Buyer More Than Once?” Sapling, 4 Feb. 2019, www.sapling.com/13601175/can-you-be-a-first-time-home-buyer-more-than-once
– “First-Time Home Buyer Programs by State.” NerdWallet, 4 Jan. 2022, www.nerdwallet.com/article/mortgages/first-time-home-buyer-programs-by-state
Are the application processes for assistant programs for first-time condo buyers difficult?
It depends on the program and its requirements, but in general, the application processes for assistant programs for first-time condo buyers can be quite challenging. For example, according to a report by the Urban Institute, federal assistance programs like FHA loans require borrowers to meet certain credit scores and income limits, as well as provide extensive documentation of their financial history.
Moreover, some assistance programs have limited funding or specific geographic or demographic targeting, which can make it even more challenging for first-time condo buyers to access them. In fact, a 2020 study by the National Association of Realtors found that although 41% of renters want to buy a home in the next five years, only 9% think they will actually qualify for down payment assistance.
However, despite these obstacles, there are ways to navigate the application process for first-time condo buyer assistance programs. Working with a specialized real estate agent or lender who is familiar with these programs can help prospective buyers understand their eligibility and maximize their chances of approval.
In short, while applying for assistance programs for first-time condo buyers may not be easy, it is certainly possible with proper preparation and guidance.
Are there any downsides or potential drawbacks to using assistant programs for first-time condo buyers?
While there are many benefits to using assistance programs for first-time condo buyers, including financial aid and educational resources, there may also be some downsides to consider.
One potential drawback is that these programs often have strict eligibility requirements, which could exclude some individuals who would otherwise benefit from them. For instance, some programs may only offer assistance to those with a certain level of income or credit score, which could prevent low-income or disadvantaged applicants from accessing these resources.
Another potential downside is that assistance programs may come with strings attached. For example, some programs require buyers to occupy the property as their primary residence for a certain period of time or maintain certain conditions in order to qualify for continued support. This could limit an individual’s ability to sell or rent out their property in the future.
Additionally, assistance programs may not always provide enough support to cover the full cost of a condo purchase, leaving buyers with significant debts or financial obligations even after receiving help. And while individuals may hope to build equity by owning a home, they should also be aware that condos can require expensive maintenance costs and unexpected repairs.
Despite these potential downsides, however, using assistant programs can still make owning a condo more accessible and affordable for many first-time buyers. It is important for interested parties to conduct thorough research on the available options and carefully weigh the pros and cons before making a decision.
Like many people forced to work from home after the onset of the Covid-19 pandemic, Lauren Niesz, 26, found the conditions were not necessarily ideal.
Niesz, who rented a townhouse in southern New Jersey, found herself often working from a closet so that her live-in boyfriend’s work calls did not interfere.
Moreover, the couple’s now 2-year-old dog required frequent walks around the neighborhood.
After seeing an online sketch of a brand-new home, Niesz contacted her realtor and put in an offer in September. Last month, they closed on their newly constructed home in Howell, New Jersey, complete with a backyard for their dog.
Much of the couple’s progress in accumulating a down payment happened during the pandemic, according to Niesz, a technical product manager at Comcast.
“We were able to save so much money because we weren’t going anywhere or doing anything,” Niesz said.
A survey from real estate company Redfin found that stimulus checks and the ability to save more money during the pandemic were among the top ways recent first-time homebuyers were able to save for their down payments.
While the rule of thumb is typically to put down 20%, the National Association of Realtors finds most homebuyers put down just 7%, according to Nadia Evangelou, senior economist and director of forecasting at the real estate industry trade association.
That’s as millennials — the generation born between 1981 and 1996 — enter homebuying age while facing market conditions that make it even more difficult to buy their first home.
Home inventory for people who typically qualify as first-time homeowners — with incomes between $75,000 and $100,000 — is at record lows. In 2021, there was one listing for every 65 households in the starter-home category, according to Evangelou. In 2019, there was one listing for every 24 households.
“We see a drastic drop in the options they have,” Evangelou said. “They have fewer homes that are available for them that they can afford to buy.”WATCH NOWVIDEO01:22Mortgage rates hit 4.02%
Still, there are some conditions that could tempt first-time homebuyers into the market now.
Mortgages will likely get more expensive, as the Federal Reserve considers raising interest rates to curb inflation.
Moreover, with rents up significantly from last year, buying a home would eliminate the uncertainty of worrying how much you will have to pay next year, Redfin chief economist Daryl Fairweather said.
“At least when you buy, you get to lock in your monthly mortgage payments,” Fairweather said.
But sealing the deal on a transaction can be more difficult, as first-time homebuyers are more likely to compete with multiple bids on homes, including those from existing homeowners and those willing to pay cash. Just because you ‘qualify’ for that nice big mortgage doesn’t mean you necessarily should take it. Thomas Scanlon FINANCIAL ADVISOR AT RAYMOND JAMES FINANCIAL SERVICES
That’s exactly what Thomas Scanlon, a financial advisor at Raymond James Financial Services in Manchester, Connecticut, said he recently saw with one 30-year-old first-time homebuyer, who was not a client. The prospective buyer was competing for a home that received 16 offers. The winning bid was $30,000 over the asking price and the buyer paid all cash.
Despite the frustrations that come along with trying to buy a first home in today’s market, many times it’s still the best way to grow personal wealth, Scanlon said.
“Long term, you clearly don’t want to wake up after a decade with a cigar box of rent receipts,” Scanlon said.
Experts say it’s more important than ever that first-time homebuyers go into a transaction thoroughly prepared, or what Scanlon calls “eyes wide open.”
Start by doing research as to what homes are listed for and what they actually sell for, and how quickly those transactions are happening, Fairweather said.
A Chicago home is offered for sale on Jan. 20, 2022.Scott Olson | Getty Images
Taking steps to raise your credit score, pay off debts and perhaps earn more money through a side hustle will also put you in a position of increased financial strength, Scanlon said.
Be sure to line up everything you need — including preapproval for a mortgage — before you’re ready to make a bid.
“If you do tour a home and you do like it, you will need to make an offer right away in order to be competitive,” Fairweather said.
However, it’s important to not get so caught up in having a winning offer that you don’t think through all the financial implications.
If you overbid and are not paying all cash, that’s more money you’re borrowing from the bank, Scanlon said.
Resetting your expectations
If you put less than 20% down, you’ll have to pay for private mortgage insurance, or PMI. That could cost around $50 to $100 per month, depending on the size of the home, and will add up over the years, Scanlon said.
However, once you’ve built up about 20% equity in the home, you can have the PMI removed. But the burden will be on you to prove that and go through the necessary steps.
You may also want to reset your expectations for how much you want to spend, particularly after you factor in your mortgage payment with other bills, such as car or student loan payments.
“Just because you ‘qualify’ for that nice big mortgage doesn’t mean you necessarily should take it,” Scanlon said.
Above all, don’t rush into a home purchase now that you may regret later.
“The most important thing is that you buy a home that you can see yourself staying in for the long term, because that means that you’ll have the best chance of building equity,” Fairweather said.
Buying a Boston downtown real estate for sale can seem like an impossible goal, especially if you’re a first-time home Boston condo buyer, with a moderate income or have struggled to save for a down payment.
The good news is there are several mortgage programs, local and national, designed to help first-time home buyers and others achieve their homeownership goals in the Bay State.
The MCC Tax Credit
About the program
- It’s a dollar-for-dollar tax credit that will reduce annual federal income taxes owed for Boston condo owners with a mortgage.
- Credit is given for up to 20% of the mortgage interest paid in that year.
- Only available to first-time home buyers
- The MCC also boosts home buyers’ purchasing power by reducing their debt-to-income ratio (something that lenders like to see as low as possible).
How it works
- Obtain a loan through an MCC Approved Loan Officer
- Take the tax credit every year that you keep the home loan, as long as the home remains your primary residence.
Guild Mortgage 3-2-1 Home Loan Program
About the program
- Offered through Guild Mortgage, a private lender.
- Only available for first-time home buyers who meet income eligibility requirements, but there are no location restrictions.
- As of this writing, Guild advertises that home buyers can qualify with a credit score of 620 or more.
- The 3-2-1 program offers a mortgage at an un-advertised rate (meaning home buyers must inquire with a loan officer to find out the current rate) with a 3% down payment.
- Other incentives include a $1,500 grant toward closing and a $2,000 Home Depot gift card.
How it works
- Home buyers must take out a loan with Guild Mortgage.
- PMI may be required.
- Because interest rates could be at market rate or higher, low-income home buyers may be better off obtaining financing through an FHA loan.
- Paying less up front may mean paying more in the long run.
- Read more at TheTruthAboutMortgage .
About the program
- It’s a “co-investment” with a San Francisco startup called Unison, so there are no eligibility requirements or location restrictions.
- Unison will partner with home buyers to contribute up to half the downpayment on the Boston condo for sale
- Warning – home buyers pay Unison back when they sell the home, plus something around 40% of the home value gained since the time of purchase (some scenarios may entail a much higher or lower percentage).
- Home buyers also pay Unison a 2.5% origination fee, along with normal closing costs associated with buying the home.
- Buyers can avoid paying PMI, and because partnering with Unison is not considered debt, buyers can also improve their debt-to-income ratio.
How it works
- Home buyers must take out a mortgage through one of Unison’s partner lenders.
- If the home gains significantly in value, the amount owed to Unison could be much greater than the amount saved by not paying PMI.
- Since Boston downtown real estate values are going up, not down, over time (long-term trend), investing with Unison might not be the best option for home buyers in this area.
Affordable Boston condos for sale
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