Massachusetts is one expensive state. Its capital, Boston, has one of the highest costs of living, according to Smart Asset. Take, for example, its home prices. In 2018, a single-family home cost around $460,000. That’s over $50,000 more extravagant than a similar house in New York.
The monthly mortgage payment isn’t the most affordable, either. During the same period, a buyer would end up spending $2,125 monthly. That’s only a few dollars away from the average monthly mortgage in Los Angeles. The City of Angels has more expensive houses than Boston or New York.
Costs, however, are just one of the considerations when moving to Boston. High-quality healthcare, coastal living, and excellent education can trump the necessary expenses. Plus, you can take advantage of a mortgage in Boston called USDA Rural Development Loan.
USDA Loan—What Is It?
The USDA Rural Development Loan is a mortgage program by the government agency, Department of Agriculture, for borrowers who prefer to live in suburban or rural areas.
In this situation, the USDA acts similarly to Freddie Mac or Fannie Mae. It doesn’t lend you the money, but it guarantees or secures your mortgage. This appeals to many existing and future Bostonians since over 45% of the state is rural. You also don’t need to be a farmer or homesteader to qualify.
It also has many attractive features. First, you don’t have to pay a down payment. It is also open to both repeat and first-time homebuyers. Most of all, it has lower long-term mortgage interest rates. This makes housing more affordable.
You can also choose your preferred home. It can be a sing-detached house, a property in a masterplan community, or even a condominium unit.
Qualifying for the Mortgage
This USDA-backed loan program is for families with low to moderate income. These individuals struggle securing a conventional loan for the following reasons:
- High income requirement
- High down payment (at least 20% of the home value)
- Expensive long-term mortgage interest rate
The loan, though, isn’t dole out and has specific qualification requirements. These include:
- Citizenship – You have to be either a permanent resident or a citizen of the United States.
- Stable income – The program expects you not to miss any monthly repayment, especially within the first 12 months.
- Credit score – The program doesn’t have a minimum credit score, but you are more likely to succeed if it’s 640. That means your score should be fair to excellent.
- Credit history – Your credit report must be outstanding. It’s still possible to qualify if you have missed payments in certain situations, though. An example is a payment delay due to a health crisis or emergency.
The program is also particular with income limits, depending on household size and county. In general, homes with one to four members will have a combined income of at least $86,850. For those with five to eight members, the income limit is $114,650.
If you intend to buy a rural property in Boston, the income limit is $147,050 for a household with one to four members. It’s almost $200,000 for five- to eight-member houses.
Boston is expensive, especially its housing. It doesn’t mean you can no longer afford it. Programs such as USDA Rural Development Loans can help you achieve your Massachusetts dream.