FHA Loan vs. MassHousing (for Massachusetts)

[Christopher Johanson]

Hello all, 

I've discovered there are slight variables regarding different financing options in my area. I'm looking to purchase in Worcester, MA... and ideally I would like to put a small down payment on, say, $250,000 (Triplex - Owner Occupied). 

It has come to my attention that although FHA loans are discussed frequently throughout the forums here, nobody seems to mention the various Homebuyer Assistance programs that are available depending on the state you live in. Here in Massachusetts, there is such thing as a MassHousing loan, which only requires 3% down (compared to FHA's 3.5% down). The rate is slightly higher, at around 5.15% APR, but it doesn't require mortgage insurance like an FHA loan would. So the PITI is actually lower than the comparable case with an FHA loan.

MassHousing loans will also allow you to account for 65% of *market rent* towards your mortgage loan qualification. (If rent grosses $1000/mo, then they will allow you to count $650/mo as "income" to qualify).

Am I missing something, or is it just a great option that HAPPENS to exist because I live here...?

[Sean LeBlanc]

Hi All, 

Sorry for my absence on this thread, getting back into BP.  

@Kemar White you do not need to live in the house for the life of the loan, the guideline states you must INTEND to live in the property for at least 1 year. 

@Alexander George

The reason you can't go rack up rentals by moving into them using FHA loans is there is a rule that in most situations you can only have one FHA loan at a time.

If your goal is to house hack a few properties in a row to build up your portfolio, it can be done, but you need to be strategic with your loan programs. 

Masshousing offers both conventional and FHA programs with varying terms. You could theoretically use an FHA loan for your first property, then a conventional loan for your second. By the time your ready for your third, you may be able to refinance your original FHA loan into a conventional loan, and then you would be eligible to use an FHA again on the third property.

As you can see there is a lot of red tape to navigate, if this is your plan, you need to make sure you are dealing with a lender who understands this strategy. 

Let me know if I can help out in any way.

Thanks!