Massachusetts Mortgage and Refinance Rates

Massachusetts lenders have the power to set mortgage rates themselves. To determine the rates they will charge, lenders consider the following: 

• The prime rate: The prime rate, a reference point banks set for themselves when determining your mortgage rate, is used by most lenders. This rate is largely based on the Federal Reserve’s federal funds rate, an interest rate that banks charge when lending money to each other.
• Inflation: Inflation measures the rising cost of goods and services, which impacts your buying power. During inflation, lenders often consider raising interest rates to protect the value of the dollar. 
• The state of the economy: During periods when the economy is struggling, lenders tend to raise rates. The opposite is also true, with interest rates decreasing as the economy rebounds. 
• The bond market: Mortgage-backed bonds are popular investment opportunities, and their market can affect your mortgage rates. In general, mortgage rates decrease when the cost of bonds is high and increase when they are low.

In Massachusetts, first-time homebuyers can take advantage of multiple mortgage programs that target people who haven’t owned a home in the last three years. These programs are available to residents from Boston to Pittsfield and everywhere in between, as long as they meet certain qualifying criteria. 

MassHousing 

Through MassHousing, residents of Massachusetts can obtain affordable financing and down payment assistance. MassHousing works with 80 approved lenders from around the state. The program provides eligible first-time homebuyers with mortgage financing and down payment assistance up to $30,000. To qualify, you must meet these requirements:

• Have a credit score of at least 640 (up to 700 at certain lenders)
• Earn less than $190,755 annually
• Plan to buy a home as a primary residence
• Plan to buy a single-family home, condo, or 2- to 4-family property
• Plan to buy a home in the state of Massachusetts

Massachusetts Housing Partnership ONE Mortgage 

First-time homebuyers in Massachusetts have access to the Massachusetts Housing Partnership ONE Mortgage program, which offers fixed-rate mortgages to eligible buyers With this mortgage, you can put down as little as 3% of the cost of your new home and avoid paying private mortgage insurance. 

To qualify for ONE Mortgage, you’ll need to:

• Be a first-time homebuyer (or a buyer who hasn’t owned a home in the last 3 years)
• Attend a homebuyer education class
• Meet income limits for the location of your new home
• Make a down payment of 3% to 5% of the purchase price of your new home
• Have a credit score of at least 640 (minimums might differ from lender to lender)
• Be purchasing your home as a primary residence
• Have less than $75,000 in household assets

In Massachusetts, you’ll get the best mortgage rate if you can show lenders that you are not only a qualified borrower, but also trustworthy. To get the best rate, you should:

• Have a low debt-to-income ratio (DTI): Your DTI measures how much debt you have relative to your gross monthly income. If you have a high DTI, lenders will likely see you as a higher risk and, if you’re approved for a mortgage loan, you’ll likely be extended a higher rate. To lower your DTI, work diligently to pay off your debt burden by making large payments and avoid taking on any additional debt.
• Have a high credit score: Your credit score gives lenders a window into what type of borrower you are. To get the best rate, you’ll want to have the best credit score possible. To increase your score, work on lowering your credit utilization, dispute errors on your report, and aggressively pay off any debts you may have in collections.
• Shop for the best rate: Mortgage lenders set their rates based on their own criteria, so you can expect a different rate quote from each lender. By getting rate quotes from multiple lenders, you can directly compare each lender’s rates and fees to get the best deal for you. 
• Use rate locks: When you get pre-approved for a mortgage, you might be extended a rate lock option. If you accept a rate lock, the interest rate your lender quotes you at the time of pre-approval will be honored, preventing your rate from rising should the market change before you close on your loan.
• Have a high down payment: The higher your down payment, the less you’ll need to borrow from a lender. This can improve your loan-to-value ratio, which lenders use when measuring your risk as a borrower and deciding whether they should lend to you.

You can find various loan types in Massachusetts, whether you are a first-time buyer, a veteran, or buying a more expensive home. The right mortgage for you will depend on your financial situation, including how much money you have to put down and your credit score.

Here are some of the top mortgage programs in Massachusetts and what they require:

MassHousing loan

• Best for: Down payment assistance
• Min. credit requirements: 640
• Loan limits: Not reported
• Min. down payment requirements: None

ONE Mortgage

• Best for: Those who need assistance qualifying for a mortgage
• Min. credit requirements: 640
• Loan limits: Not reported
• Min. down payment requirements: 3%

Conventional loan

• Best for: Buyers with good to excellent credit
• Min. credit requirements: Varies by lender
• Loan limits: $766,550 in most counties
• Min. down payment requirements: 3%

FHA loan

• Best for: First-time homebuyers
• Min. credit requirements: 500 with a 10% down payment or 580 with a 3.5% down payment
• Loan limits: Varies by county
• Min. down payment requirements: 3.5%

VA loan

• Best for: Veterans and military service members
• Min. credit requirements: No minimum score, but you’ll need to prove that you can repay the debt
• Loan limits: $766,550 in most counties
• Min. down payment requirements: None

Jumbo loan

• Best for: Those buying higher-priced homes
• Min. credit requirements: Varies by lender
• Loan limits: $766,550, depending on location
• Min. down payment requirements: 10%