A mortgage pre-approval or pre-qualification is required to be submitted with the application.
All applicants must provide a pre-approval from a conventional lender. This should be the first step in determining what you will be able to afford when it comes to purchasing a home. Applications maybe rejected if submitted without a pre-approval or an unacceptable pre-approval with FHA or VA financing. The pre-approval must state the following:
- DOWN PAYMENT – Must be at least 3% of the purchase price, at least half of which must come from the buyer’s funds unless the Eligible Subsidy Program permits a smaller down payment.
- LOAN AMOUNT – Mortgage loan must be a 30-year fully amortizing mortgage for not more than 97% of the purchase price with a fixed interest rate that is not more than 2 percentage points above the current MassHousing interest rate (www.masshousing.com).
- MONTHLY HOUSING COST – Monthly housing costs (inclusive of principal, interest, property taxes, hazard insurance, private mortgage insurance and condominium or homeowner association fees) shall not exceed 38% of monthly income for a household earning 80% of area median income, adjusted for household size
- FHA & VA LOANS – These types of loans are not acceptable. The affordable homes will have a deed restriction known as a Deed Rider. The purpose of the deed restriction is to make certain the home stays affordable in perpetuity and survives foreclosure. Therefore, FHA and VA will not accept this Deed Restriction.
Delphic has nurtured a relationship with several lenders who are familiar with the Deed Rider and the 40B program. Several of these lenders offer the following:
- USDA 100%
- Mass Housing down payment and closing cost assistance programs
- Federal Home Loan Bank grants of up to $15,000 (Builder Equity Program)
For a List of Lenders Please Click Here
Do I need to attend homebuyer education classes?
All financing programs offered by MassHousing and MassHousing Partnership and/or your lender may require the borrower to complete a pre-homebuyer education course. A schedule of upcoming first-time homebuyer workshops is also posted on CHAPA’s website
What Type of Loan do I need?
- Mortgage amount cannot exceed 97% of the purchase price.
- Mortgage loan must be 30-fixed rate.
- The loan has a current fair market interest rate of no more than 2 percentage points above the current Mass Housing rate.
- The Buyer may pay no more than 2 points
- Some exceptions may apply
- FHA and VA do not typically accept the deed rider
- USDA Financing on Condo Projects may not be available
How do I apply for a mortgage?
We strongly recommend that applicants apply for a mortgage with banks that are familiar with the Deed Rider and guidelines for affordable housing programs. FHA and VA loans are not accepted.
There are many lenders and mortgage brokers that are familiar with the qualifying process to purchase the affordable homes.
There are many programs available for First Time Home Buyers including those offered by MassHousing. We suggest you or your lender refer to the MassHousing website.
There are programs being offered by the MassHousing Partnership (MHP) such as the MHP One Mortgage Program which is offered to buyers typically at a rate less than a lenders typical best rate to a conventional buyer.
How much money do I need?
Households should demonstrate availability of sufficient funds for a down payment, closing costs and pre-paid items. Applicants should inquire with their lender as to what closing costs will be. Closing costs can include but may not be limited to fees for Loan Origination, Appraisal, Credit Reports, Inspection, Document Preparation, Attorney and Title Insurance. Pre-Paid items can include interest that accrues from the date of settlement to the first monthly payment. Pre-Paid items can also include insurances such as Hazard, Flood, and Mortgage Insurance.
Down payment required is 3% of the purchase price, of which 1.5% must come from the buyers own funds. The remaining 1.5% can come from a gift or a grant.
For down payment and closing costs assistance programs, please refer to: