Massachusetts has been ranked as one of the best states to live in the country but also one of the most expensive, which means it’s crucial for those looking for a home in the “Bay State” to find the right home financing package.
That’s why many Bay Staters find the Massachusetts FHA loan program so appealing. With an FHA Loan, buyers have the opportunity to save significantly when it comes time to close on a home. Continue reading to see if an FHA loan in Massachusetts is the right choice for you.
Why Consider an FHA Loan in Massachusetts?
Clearly, living in Massachusetts can be expensive. Residents have figured out how to save money on down payments with FHA loans, and as of April 2019, the total value of FHA loans in Massachusetts was $198 million! No matter where you want to live in Massachusetts, an FHA loan is a reliable mortgage option.
Benefits of using an FHA Loan in MA
- FHA loans are great for first-time homebuyers, especially those who can’t or don’t want to make a large down payment.
- FHA mortgage rates are typically lower than conventional mortgage rates.
- FHA down payment and credit score requirements are typically lower than conventional loans
- Sellers can contribute up to 6% of the purchase price or appraised value (whichever is less) towards the buyers’ closing costs.
- FHA loans are assumable.
FHA Loan Limits in Massachusetts
Knowing how much you can borrow is important when house hunting. Maximum loan limits are adjusted every year, and can change depending on which county you live in. This is done to accommodate those who live in areas with higher cost of real estate. The baseline limit in Massachusetts is $472,030, but can be as high as $1,089,300 in Dukes County. See the link below for the full list of FHA loan limits in Massachusetts for 2023.
Are You Eligible for an FHA Loan in MA?
You may be eligible for an FHA loan, if you:
- Have 2 years of steady employment, preferably with the same employer.
- Have had steady income (or increasing income) in the past two years.
- Have had less than two 30-day periods of late payments on your credit report.
- Have declared bankruptcy no less than two years ago and have maintained good credit since.
- Have not been a party in a foreclosure for at least three years and have maintained good credit since.
- Anticipate your mortgage payment will be equal to or less than 30% of your gross income.
What Do You Need to Apply for an FHA Loan in MA?
Buyers must be able to provide the following information and documents as requested by lenders:
- The addresses of all your residences over the past two years.
- The names of your employers over the past two years.
- W2's for the past two years and current paycheck stubs.
- Your current gross monthly salary.
- Your Social Security Number.
- Names, addresses, and account numbers with balances on all checking and savings accounts.
- Addresses and loan information of any other real estate you owned.
- Self-employed individuals will need to provide personal tax returns for the past two years and a current income statement and balance sheet for the business.
- Students will need to provide evidence of enrollment. If you have student loans, you need to provide verification information.
Note: Facts and figures sourced from the latest statistics available at the time of this writing including data from the United States Department of Labor, United States Census Bureau and the United States Department of Housing and Urban Development.