Prospective buyers earning less than 100 percent of the area median income: $140,200 for a family of four in Boston, for example, will be eligible for up to $50,000 in assistance, although the assistance will vary based on home prices in your community. People earning between 100 and 135 percent of AMI could receive up to $35,000.
“By helping with things like closing costs, we’re helping people keep money in their pocket so when they buy they’re not buying a new home with zero dollars in their savings account,” said Elliot Schmiedl, director of home ownership. at the Massachusetts Housing Partnership, one of two quasi-state agencies that will handle the funding. “So this program is not just about achieving homeownership, but also about helping people maintain it, so they don’t end up in a property they can’t afford in the future.”
MHP and MassHousing will dole out assistance to qualified applicants through their discount mortgage products. Agencies have already been offering mortgage assistance in smaller amounts, but ARPA funding will allow them to reach hundreds, if not thousands, of potential buyers, Schmiedl said.
The program, announced last week, represents an unusually large step in boosting homeownership in a state that has some of the most expensive homes. in the United States and where even middle-income buyers struggle to afford a house. The Harvard Joint Center for Housing Studies estimated earlier this year that families in the greater Boston area need to earn $181,254 combined to pay for area median price home.
That was before mortgage interest rates rose to their highest level since 2002, with the average 30-year fixed-rate mortgage topping 7 percent this week, according to Freddie Mac, meaning someone closing a house in Massachusetts today, in many cases, would pay more than $1,000 more per month than people who bought a house for the same price A year ago.
That makes the implementation of the program particularly timely, since mortgage payments are one of the main barriers to buying a home. Low-income residents also have difficulty raising enough money to cover a down payment. Often, Schmiedl said, a grant like MassDREAMS is the jumpstart people need to buy a home, and by targeting the Gateway Cities, they will jumpstart communities that have a relatively high population of renters.
“It was a bit of a coincidence” that the program started just as mortgage rates were skyrocketing, he said, “but it means we’re going to start providing this help at just the right time. The bottom line is that if people can’t afford the average mortgage payment, they can’t buy a home.”
And the program can also, at least in theory, help ease some of the pressure on the state’s housing market. Giving more people the means to buy a home will unlock more shares in the hot rental market.
“The fact that many of our residents cannot afford to buy a home impacts every corner of the housing market,” Schmiedl said. “Hopefully this will help a broad group of people.”