Mounzer Aylouche
MassHousing launched our expansive down payment assistance program early last year on the belief that down payment requirements can create artificial barriers to homeownership, and that by removing those barriers, we could empower first-time homebuyers, expand homeownership opportunities and create new pathways to long-term wealth-building.
After more than 18 months in the market, we know that down payment assistance works. When we meet buyers where they are and equip them with the support and tools they need to succeed, we can achieve strong outcomes, for families and communities alike.
Based on the successes we have seen, MassHousing has expanded the agency’s down payment assistance program. MassHousing’s new, enhanced down payment assistance program increases consumer buying power, raises program income limits in targeted communities and broadens the program to include more property types. Together, these changes will make sustainable homeownership possible for more homebuyers, in more communities, across Massachusetts.
MassHousing launched down payment assistance in March 2018, because the agency saw first-time homebuyers struggling to attain homeownership while navigating high rents, student loan debt, and a tight housing market. Our down payment assistance program empowers homebuyers and removes barriers to homeownership by allowing creditworthy, income-eligible first-time homebuyers to finance some or all of their down payment with a 15-year fixed-interest rate second mortgage.
In the program’s first 18 months, MassHousing’s down payment assistance has allowed 1,650 households to purchase their first home. MassHousing’s down payment assistance program has been an especially powerful tool in addressing the state’s racial homeownership gap. One-third of down payment assistance loans have gone to buyers of color – a rate that is more than twice the statewide average for minority home purchase lending.
In a market characterized by high home prices and low inventory of homes for sale, we are succeeding in connecting buyers to homeownership opportunities and creating wealth, in every region of the commonwealth. Down payment assistance is driving strong, mission-driven lending in a difficult market.
A Response to Difficult Market
Still, we know the current environment is challenging to many first-time homebuyers. Statewide median home prices have risen 17 percent since down payment assistance launched early last spring. The inventory of homes for sale remains tight. The development market struggles to produce new starter homes. And changes to Fannie Mae and Freddie Mac pricing have made mortgages significantly more expensive for middle-income households.
In response, MassHousing is expanding our down payment assistance program, to make sustainable homeownership possible for more buyers, in more communities across the state.
Down payment assistance loans will now cover up to $15,000, or 5 percent of a purchase price. Combining a 5 percent down payment assistance loan with a first mortgage covering 95 percent of the purchase price will result in smoother approvals in automated underwriting engines and lower mortgage insurance rates.
MassHousing is also expanding down payment assistance to more property types, including two-, three- and four-family homes.
And the agency is raising income eligibility to 135 percent of the area median income (AMI) for purchases in the city of Boston, and in Gateway Cities. Households making up to $147,420 can now access down payment assistance when purchasing a home in eastern Massachusetts cities like Everett, Lowell, Salem, Revere, Lynn and Brockton; in Worcester, a household can now earn up to $128,655 and still qualify for down payment assistance. Outside of Boston and the 26 Gateway Cities, income eligibility remains at 100 percent of AMI.
Many middle-income buyers who work near Boston currently have difficulty finding homes for sale at attainable prices anywhere near their workplace. Previously, expanding a home search further from the Boston core, where prices remain more accessible, had put buyers over-income for down payment assistance. Now, higher income limits in targeted communities will deliver greater choices to working families.
As an agency, MassHousing is committed to sustainable homeownership. That means putting buyers in the best position to succeed for the long-term. That is why we are working to significantly boost buying power of middle-income first-time homebuyers – because we understand the importance of sustainable homeownership, to the buyers we serve.
Mounzer Aylouche is vice president of homeownership programs at MassHousing.
