Would-be buyers making 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, though aid will vary based on their community’s home prices. People making between 100 and 135 percent of the AMI could receive up to $35,000.
“By helping with things like closing costs, we’re helping people keep money in their pocket, so that when they purchase they’re not buying a new home with zero dollars in their savings account,” said Elliot Schmiedl, the director of homeownership at the Massachusetts Housing Partnership, one of two quasi-state agencies that will handle the funding. “So this program isn’t just about achieving homeownership, but it’s also about helping folks sustain it, so that they don’t end up in a property that they can’t afford down the road.”
MHP and MassHousing will dole out the assistance to qualified applicants through their discounted mortgage products. The agencies have already been offering mortgage assistance in smaller amounts but the ARPA funding will allow them to reach hundreds, if not thousands, more would-be buyers, said Schmiedl.
The program, announced last week, represents an unusually large step toward boosting homeownership in a state that has some of the most expensive housing in the United States and where even middle-income buyers struggle to afford a home. Harvard’s Joint Center for Housing Studies estimated earlier this year that families in Greater Boston need to earn a combined $181,254 to afford the area’s median-priced house.
That was before mortgage interest rates surged to their highest since 2002 — with the average 30-year fixed-rate mortgage topping 7 percent this week, according to Freddie Mac — meaning someone who closes on a home in Massachusetts today would in many cases shoulder a monthly payment more than $1,000 higher than people who purchased a home for the same price a year ago.
That makes the rollout of the program particularly timely, as mortgage payments are a leading barrier to purchasing a home. Lower-income residents also struggle to come up with enough money to cover a down payment. Often, said Schmiedl, a grant like MassDREAMS is the boost people need to buy a home, and by targeting Gateway Cities, they’ll boost communities that have relatively high populations of renters.
“It was a bit of a coincidence” that the program started out just as mortgage rates soared, he said, “but it means that we’re going to start giving out this help at just the right time. The bottom line is, if people can’t afford the average mortgage payment, they can’t afford to buy a house.”
And the program may also, in theory at least, help relieve some of the pressure on the state’s housing market. By giving more people the means to purchase a home, more stock will be freed up in the red-hot rental market.
“The fact that many of our residents can’t afford to buy a house impacts all corners of the housing market,” said Schmiedl. “We’re hoping this will help a broad group of people.”
Read More: Buying a house in Mass. is expensive. Now the state is offering some people $50,000 to help.