MassHousing is a not for profit public agency in Massachusetts that offers mortgages. They do not use taxpayer funds and are a self-supporting agency. Home buyers may want to evaluate a MassHousing loan as it may be more beneficial than an FHA loan. It can be applied towards a new purchase or refinance of a single family, condo, or multi-family (with up to 4 units) that will be used as a primary residence. Below is more information on MassHousing loans for Philadelphia real estate buyers.
MassHousing Mortgage Amounts and Limits
Under MassHousing, mortgage amounts up to 97% of the sale price are accepted on single family properties and condos, and up to 95% on multi-family buildings. FannieMae loan limits also apply and can be found on the Fannie Mae website. For single family and condo purchases, no buyer contribution is mandated. This means that buyers can obtain the necessary funds for the closing from a family member as a gift or via credits from a member of the transaction (i.e. the seller). Multi-family purchases require home buyers to use 3% of of their own money, verified through bank statements or other financial documentation. The remainder of the funds needed to close may be received as gifts or concessions. Lastly, there are income limits which range by city and the type of property.
Mortgage Insurance Premiums
What is Mortgage Insurance
Mortgage insurance is typically required on loans for more than 80% of the sale price. It is usually billed as a large up-front premium due at closing and monthly payments (calculated on a percentage of the loan). When this article was prepared, the FHA mortgage insurance rate was 1.15% of the mortgage. On a $200,000 home with 3% down payment, the cost would be $1,930 up-front and $186/month.
MassHousing Alternative with NO Mortgage Insurance
Interest rates on MassHousing loans are often slightly higher than FHA, however, the mortgage insurance amounts are lower. MassHousing actually provides financing options with or without mortgage insurance. The program with mortgage insurance has no up-front amount and a lower monthly rate. When this blog was written, the premium was 0.60%. For the same $200,000 home mentioned above, the monthly amount would be $97 (as opposed to $186 through FHA). A home buyer using MassHousing would have a lower payment over FHA even after taking into account a slightly higher interest rate. The difference is even greater with the MassHousing no mortgage insurance alternative.
Advantages of MassHousing Loans For Philadelphia Real Estate Buyers
MassHousing programs are a cost effective option for real estate buyers in Massachusetts who qualify. Similar to FHA, it offers low down payments but with less expensive mortgage insurance premiums. It can be used on single family, condo, and multi-family residences (with up to 4 units). Interest rates will not change during the 30-year repayment period, ensuring unchanging mortgage payments for borrowers. The MassHousing Loans For Philadelphia Real Estate Buyers above is provided as an introduction and is based on information available at the time this article was prepared. Criteria and other information may be altered by MassHousing after this publication. For a list of local providers of for Philadelphia real estate buyers, contact Diana Escobar-Wachter with Access Abstract Corporation, at 610-461-2910 or wachterd@accessabstract.com.
