Credit scores, APRs and FHA loans — oh my! Being a first-time home buyer can be overwhelming, confusing and incredibly stressful. Are you getting ready to buy your first home in Maryland? Before you start comparing properties and shopping for lenders, make sure you check out our comprehensive guide for first-time buyers in the Bay State.
Best Lenders for First-Time Home Buyers in MA:
- Best Overall in MA: Rocket Mortgage®
- Best for Low Credit Score: Keller Mortgage
- Best for VA Loans: Veterans United
- Best for Self-Employed: CrossCountry Mortgage
- Best for Custom Mortgage Solutions: Flagstar
The Housing Market in MA: An Overview
Understanding your local housing market can help you set a budget for your house hunt and understand what type of competition you’ll face. Let’s take a look at the Massachusetts housing market at a glance.
Total households: 2,443,580
Median list price: $424,900
3 most expensive cities in Massachusetts to buy a house:
3 Most affordable cities in Massachusetts to buy a house:
- Palmer Town
- Agawam Town
Preparing for a Mortgage
A mortgage loan is a loan that you use to buy a property. You can get a mortgage from a bank, a credit union or an online lending service. Here are the basic steps you’ll follow when you get ready to take on a mortgage loan.
- Decide which type of loan you want. As a first-time buyer, you can take advantage of a few different types of government-backed mortgage loans. These loans can help you buy a home with more debt, a lower income or a lower credit score. You can also use a conventional mortgage loan to buy your first home. We’ll go over the different types of mortgages in a later section.
- Make sure you qualify for a mortgage. Each mortgage lender has credit and income-to-debt standards you must meet to qualify for a loan. If you want a government-backed loan, you may need to meet additional requirements. Research lenders in your area and make sure you qualify for the type of loan that you need.
- Gather your financial paperwork. Your lender will want to see proof of your income, assets, debt and credit when you apply for a mortgage. The specific documents you’ll need will depend on your lender’s process. Most of the time, you’ll need your last 2 W-2s, your last 2 bank statements and your most recent tax return. You might need to provide more documentation if you’re self-employed.
- Apply for preapproval. Once you have all your paperwork together, apply for a mortgage pre-approval. A pre-approval is a letter from a lender that tells you how much money you can use to take out a home loan. Getting preapproved before you shop lets you set a realistic budget and tells sellers that you’re serious about buying a home.
Lenders only want to loan out money if they know you’ll be able to pay it back. Every lender has its own standards for lending. For example, lenders can set their own minimum credit score required to get a loan. Let’s take a look at a few Massachusetts lenders’ minimum credit requirements.
Lenders for first-time buyers have more mortgage options available to their loan holders. Let’s take a look at a few loan types you can get as a first-time home buyer in Massachusetts.
- Conventional: Conventional loans are the most common type of mortgage loan. Conventional loans typically have higher standards than other types of loans but also have lower interest rates. You can use a conventional loan to buy any type of property as long as you meet your lender’s standards.
- FHA: FHA loans are government-backed loans with insurance from the Federal Housing Administration. FHA loans have lower credit score requirements and you can get an FHA loan with lower income or more debt. You must meet income standards to qualify for an FHA loan, and the home you buy must be your full-time residence.
- USDA: USDA loans are government-backed loans for people who want to buy a house in a rural or suburban area. You must meet income requirements specific to your county to qualify for a USDA loan. Your home must also be in a qualified rural area and act as your primary residence.
- VA: VA loans are government-backed loans for veterans, members of the armed forces and qualified surviving spouses. A VA loan can allow you to buy a home with $0 down — though it must be your primary residence. You must meet service requirements before you can get a VA loan.
- Jumbo: Jumbo loans are high-value mortgage loans that exceed the investment limit set by Fannie Mae and Freddie Mac. You might need a jumbo loan if you want to buy a very expensive property. Jumbo loans are riskier for lenders, so they come with higher credit and income standards.
First-Time Home Buyer Programs in Massachusetts
You can take advantage of these state and federal programs as a first-time buyer in Massachusetts if you want to make homeownership more affordable.
- MassHousing Mortgage: MassHousing Mortgage offers a variety of state-sponsored programs that you can use to make buying a home easier. MassHousing mortgage loans can allow you to finance up to 97% of your home value. Loans also include MI Plus protection, which helps you pay your mortgage loan for up to 6 months if you lose your job. You might even qualify for down payment assistance if you live in a low-income household.
- My Mass Mortgage. Overwhelmed by the home-buying process? My Mass Mortgage is a simple, comprehensive and free resource that first-time buyers can use to learn everything they need to know before they buy a home. You can find courses on everything from loan types to managing your monthly payments online.
- HomePath Ready Buyer™ Program. Fannie Mae’s HomePath Ready Buyer™ program can allow you to buy a foreclosed property with as little as 3% down. You can also apply for up to 3% of your loan’s value through the program as well. The program is only open to first time buyers who complete a home buyer’s education course and intend to live in the home full time. Though Fannie sells the homes in as-is condition, you may be able to find an undervalued gem at an affordable price.
Current Mortgage Rates in MA
Your monthly mortgage payment includes 2 main parts: principal and interest. Interest is a percentage of the loan value you pay to your lender in exchange for giving you a loan. Your credit score, the bond market, your debt, your home’s location and the overall state of the U.S. economy are just a few of the many factors that influence mortgage interest rates.
Interest rates change on a daily basis. We update our mortgage tables frequently to reflect the ever-changing interest market. If you’re thinking about buying a home, you should check interest rates regularly to make sure you’re getting a low percentage before you lock in. You can also get a purchase quote from lenders you’re interested in before you apply to find the lowest rate.
Let’s take a look at today’s mortgage rates in Massachusetts.
|7/1 ARM (adjustable rate)
|5/1 ARM (adjustable rate)
Closing a Mortgage
When you close on a mortgage loan, you take control of your new home. You’ll attend a meeting called a closing along with your real estate agent, lender and seller. At closing, you’ll pay your down payment and any closing costs you owe. Your seller will sign over the rights to your new property. As soon as you walk away from the closing table, you’re officially a homeowner.
The closing process involves a variety of behind-the-scenes steps that your lender will usually handle. This includes getting an appraisal for your home, drawing up your loan and checking your financial records to make sure you’re able to manage your payments. The amount of time it will take to close on a loan depends on your lender.
5 Best Mortgage Lenders in MA for First-Time Buyers
Now that you know what to expect when you apply for a mortgage, let’s take a look at some of the best mortgage companies offering loans in Massachusetts.
1. Best Overall: Rocket Mortgage®
Rocket Mortgage® understands that buying a home for the first time is confusing — so they’ve taken tons of steps to simplify the preapproval process. A product of Quicken Loans®, Rocket Mortgage® allows most users to get preapproved for their loan online in as little as 30 minutes. To get started with Rocket Mortgage®, all you need to do is enter your name, email address and a little income information online.
You’ll then have access to current interest rates, more information on loan types and direction to the next steps in the approval process. Rocket Mortgage® offers a comprehensive set of loans, and you can get an FHA loan with a credit score as low as 500 points if you have a 10% down payment. With plenty of loan products, a simple step-by-step approval process and tons of information for first time buyers, Rocket Mortgage® is our top choice for mortgage lenders.
2. Best for Low Credit Score: Keller Mortgage
If you have a lower credit score, the types of loans you may qualify for can be limited. In our review, Keller Mortgage offered some of the lowest credit qualification standards in the state. You can secure a conventional loan with a score as low as 600 points, which is 20 points lower than most other lenders.
Keller Mortgage also offers FHA loans, which have looser credit requirements than conventional mortgages. You can get an FHA loan with as little as 3.5%, and you may even qualify for closing cost assistance through Keller Mortgage’s ZeroPlus Program.
3. Best for VA Loans: Veterans United
If you’re a member of the armed forces or a veteran, you can typically save money when you buy a home with a VA loan. Veterans United is an online VA lender focusing on making the VA loan application process simple and streamlined.
Their team offers VA loans, conventional loans, USDA loans and FHA loans. If you aren’t sure if a VA loan is right for you or if you qualify, Veterans United’s team of retired military personnel-turned-loan officers can help you decide. They also offer assistance in getting all the paperwork you need to secure a VA loan, and they even offer credit counseling services. If you think a VA loan might be right for you, be sure to consider Veterans United.
4. Best for Self-Employed: CrossCountry Mortgage
Qualifying for a mortgage loan as a business owner, freelancer or other types of self-employed individual can be tough. Most mortgage lenders want to see that you have consistent, documented income before they’ll issue you a loan. If you’re self-employed, your income likely varies wildly by year, season or even month.
CrossCountry Mortgage’s Asset Qualifier home loan program makes it easier for self-employed men and women to get a loan. With an Asset Qualifier loan, you can use the sum of your assets in order to qualify for your loan instead of only your annual net income. This can be hugely beneficial for business owners who have invested a large amount of money into their assets but whose income fluctuates frequently. You can get a loan for up to $6 million with an Asset Qualifier loan, and you can even qualify with a score as low as 580.
5. Best for Custom Mortgage Solutions: Flagstar
If you’re a professional just beginning your career, your income and debt right now might not be in line with your future earning potential. For example, if you’ve just graduated from law school, you might have a large amount of debt that’s preventing you from buying a home — even if your income is now much higher than in previous years.
Flagstar is a unique mortgage lender offering professional ARM loans specifically for those who have just graduated from a professional league of study. These loans begin with low-interest rates as you begin your career and gradually adjust to market rates as you become more experienced and begin to earn more money. You can quickly apply for pre-approval or get a refinance quote online, and many professionals qualify for loans with low or no down payment. This flexible mortgage can be a great option if you’re a young professional just getting started in your career.
Preparing To Buy Your First Home
Getting ready to buy your first home can be stressful. Don’t be afraid to leave yourself plenty of time to compare lenders, raise your credit score and find the perfect property before you start comparing homes. Though it can be tempting to hop into the house hunt right away, you’ll be more c if you do your homework beforehand — and you’ll be ready to make a strong offer when you finally find the right home for you.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.