How to Buy a House in Massachusetts: 6 Steps

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Updated: October 10, 2024

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Purchasing a house represents a major financial decision, often involving significant long-term commitments. In Massachusetts, the average home value is $635,183, which is notably higher than the national average of $362,481. This discrepancy may impact affordability for potential homeowners in the state.

Understanding down payment assistance programs, mortgage types and state-specific regulations can ensure a smooth journey toward homeownership in the Bay State. MoneyGeek has compiled essential pointers to help you navigate the homebuying process in Massachusetts, from saving the down payment and choosing the ideal location to finding the best financing option for your particular needs and credit history.

Key Takeaways

The average home value in Massachusetts is $635,183, which is significantly higher than the national average of $362,481.

To buy a home in Massachusetts, start by finding an ideal location, explore mortgage options, prepare to meet lenders' requirements, and close on the loan.

MassHousing offers down payment assistance programs such as Down Payment Assistance Option 1 and Down Payment Assistance Option 2 to help Bay Staters achieve homeownership faster.

Step 1: Prepare to Buy a House in Massachusetts

In the second quarter of 2024, the homeowner vacancy rate in Massachusetts was 0.3%, according to the U.S. Census Bureau. The homeowner vacancy rate measures the percentage of homes that are vacant and available for sale. This metric provides insight into the housing market's supply and demand dynamics.

With a homeowner vacancy rate of 0.3% in Massachusetts during this period, there is not enough inventory on the market to satisfy homebuyer demand. A stable vacancy rate, which offers homebuyers some choice and flexibility, is typically around 2%. This low rate suggests that the housing market is highly competitive, with limited options for prospective buyers. For homebuyers, this means being prepared to act quickly when a property becomes available and possibly facing higher prices due to the demand exceeding supply.

Before buying a house in Massachusetts, it's important to review your financial and credit history. A strong financial profile increases your chances of getting approved when applying for a mortgage. Lenders assess your creditworthiness and financial stability, so ensuring your credit score is in good shape and you have a solid down payment can make the homebuying process smoother.

Check Your Credit Score

Your credit score plays a pivotal role in determining the mortgage loans and interest rates you qualify for. A higher score increases the likelihood of securing a reasonable rate. As of Q3 2023, the average credit score in Massachusetts is 732, according to Experian.

If your credit score is considered poor, which FICO defines as below 580, you can still purchase a home, though securing a mortgage may be challenging. Check the table below to see which mortgage type is ideal for you based on the minimum credit score requirements.

Mortgage Type
Description
Minimum Credit Score

Conventional Loan

Conventional loans are standard loans not insured by the government, typically offering competitive rates.

620

Jumbo Loan

Jumbo loans exceed conforming loan limits, making them suitable for high-value properties.

700

FHA Loan

FHA loans are designed for low-to-moderate income borrowers, often with lower down payment requirements.

500–580, depending on the down payment

VA Loan

VA loans offer veterans and active military members favorable terms and no down payment options.

None given, but may require at least 620

USDA Loan

USDA loans are aimed at rural property buyers, often with no down payment required.

580

Source: Experian

Review Your Debt-to-Income (DTI) Ratio

Your debt-to-income ratio (DTI) is a critical factor lenders use to determine how much of your monthly income goes towards debt payments. This helps them evaluate the amount of mortgage debt you can responsibly take on. In Massachusetts, the average mortgage debt was $303,009 in the third quarter of 2023, according to Experian. This figure underscores the additional financial responsibility potential homebuyers face.

Monthly debt payments included in your DTI calculation are mortgages, credit cards, auto loans, student loans and other personal debts. Use our debt-to-income ratio calculator below to see your front-end DTI, which considers housing expenses and back-end DTI, which includes all debts. This tool can help you assess your total monthly debt payments and better understand your financial standing.

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Debt-to-Income Ratio Calculator

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Determine How Much You Can Afford

Buying a house is a major financial commitment and it's easy to fall into the trap of purchasing beyond your means. To avoid this mistake, consider using the 28% rule as a guideline. This rule suggests that you should not spend more than 28% of your monthly income on your mortgage payment. By adhering to this principle, you can maintain financial stability and avoid the stress of unmanageable debt.

In Massachusetts, the median annual income as of April 2024 is $60,690, according to the U.S. Bureau of Labor Statistics. This equates to a gross monthly income of $5,058 before taxes. Applying the 28% rule, a homebuyer should aim for a monthly mortgage payment of no more than $1,416. This example illustrates how the rule can help you set realistic expectations and make informed decisions about your home purchase.

Use our mortgage calculator below to get a ballpark figure of your monthly mortgage payment in Massachusetts.

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Updated: Oct 15, 2024

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BUDGET FOR ADDITIONAL HOMEOWNERSHIP COSTS

When planning your budget for buying a house, it's important to consider expenses beyond your mortgage payment. Property taxes and homeowners insurance are key components of these additional costs. Factoring these into your budget will give you a more accurate picture of your monthly and annual housing expenses.

In Massachusetts, residents pay a property tax rate of 1.14% on owner-occupied properties, according to Tax Foundation data. Additionally, the average cost of homeowners insurance in Massachusetts is $2,008 annually. These figures highlight the importance of accounting for these expenses when planning your home purchase.

Step 2: Save for a Down Payment in Massachusetts

A down payment is the initial amount paid when purchasing a house, often set at 20% of the home's price. This standard can pose a significant challenge for many homebuyers. For example, the average home value in Massachusetts is $635,183, making a 20% down payment $127,037. For homes priced above average, such as $650,000, the 20% down payment would be $130,000.

Fortunately, saving 20% for a down payment is not a requirement. Many mortgage options allow for lower down payments. Government-backed loans, such as VA loans, require no down payment, while FHA loans require only 3.5%.

Remember, if you put down less than 20%, your lender may require you to take out private mortgage insurance. You can use our PMI calculator to estimate your monthly premium based on your credit score and down payment.

Private Mortgage Insurance Calculator

Calculate your monthly private mortgage insurance (PMI) premium in Massachusetts based on your credit score and down payment.

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Explore Down Payment Assistance Programs

Massachusetts offers several down payment assistance programs designed to make homeownership more accessible. These programs can significantly reduce the financial burden of buying a home, allowing more individuals to achieve their dream of owning property. Prospective homebuyers should explore these opportunities to understand how they can benefit from them.
Check out the table below for the available down payment assistance programs in Massachusetts offered by MassHousing.

Program
What It Offers

Down Payment Assistance Option 1

This program provides an interest-free deferred payment second mortgage loan up to $30,000 for down payment costs. No payments are required until the property is sold, refinanced, or the first mortgage is paid off.

Down Payment Assistance Option 2

This option offers a 15-year amortizing second mortgage loan up to $25,000 with a fixed interest rate of 2%.

Step 3: Find the Right Location in Massachusetts

Finding the right location in Massachusetts involves balancing financial and lifestyle considerations. Start by evaluating the average house price in potential areas and consider how close you'll be to family, friends and work or school. Access to public transportation, parks, restaurants and shopping centers can also influence your decision, offering convenience and enhancing your quality of life.

While location amenities are important, understanding the cost of living is crucial. According to the Missouri Economic Research and Information Center (MERIC), Massachusetts has a cost of living index of 144.3 in the first quarter of 2024, which is significantly higher than the national average of 100. Consider the following expenses when choosing your new home location:

  • Food
  • Healthcare
  • Clothing
  • Utilities
  • Education
  • Transportation
  • Entertainment

Check out the table below for average home values in various Massachusetts cities based on recent data. You can also use our cost of living calculator to estimate expenses in different locations.

City
Average Home Value

Boston, MA

$758,099

Cambridge, MA

$1,017,327

Lowell, MA

$468,619

Springfield, MA

$282,136

Worcester, MA

$423,402

Source: Zillow

Work With a Real Estate Agent

Working with a real estate agent can greatly speed up your house hunt in Massachusetts. They provide the advice you need, manage the paperwork and give you access to an expanded list of property options you might not find on your own. Additionally, they can recommend other service providers like title companies and inspectors to assist in purchasing your home.

When finding a real estate agent, it's essential to do your due diligence and interview those who have experience in the neighborhoods you're interested in. Consider the following tips:

  • Find someone compatible with your needs and personality
  • Verify the agent's credentials, training and licensure
  • Ensure they have in-depth knowledge of the area
  • Shop around for agents and compare their rates

You can also use the license holder search tool from the Massachusetts Division of Occupational Licensure to find or verify real estate agents in Massachusetts.

Step 4: Shop for the Best Financing Options in Massachusetts

In Massachusetts, navigating the homebuying process involves selecting the best mortgage you can afford. Options include conventional loans, jumbo loans, FHA loans, VA loans and USDA loans. You also have the flexibility to choose from 10-year, 15-year, 20-year, or 30-year terms and decide between a fixed-rate mortgage or an adjustable-rate mortgage (ARM). Choosing the right financing option not only boosts your chances of approval but can also save you money over time.

Know the Current Mortgage Rates

Interest rates on a mortgage can fluctuate daily due to various factors such as the type of mortgage, the lender and the current state of the economy. While the interest rate is a key component of a mortgage, the APR (annual percentage rate) provides a more comprehensive picture. The APR includes the interest rate along with any additional fees or costs associated with the loan, offering a true representation of the borrowing cost.

As of October 2024, the APR for a 30-year fixed conforming loan in Massachusetts stands at 5.96%, while the APR for a 30-year fixed rate FHA loan is 7.69%. For those looking to explore further, the table below provides current mortgage rates in Massachusetts by mortgage type.

Data filtered by:Results filtered by:
Loan Type:
Loan Type:30-Year Fixed
5.88%APR5.96%
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FHA LOAN VS. CONVENTIONAL LOAN

When shopping for a mortgage in Massachusetts, you typically choose between government and conventional mortgage programs. FHA loans, a government option, often require a lower down payment and are more accessible for those with lower credit scores. In contrast, conventional loans are not government-backed and usually require higher credit scores and larger down payments.

Use our FHA loan vs. conventional loan calculator to compare options and determine the best one for you. Enter details such as your home price, down payment, term length, credit score and interest rate to see which loan fits your needs.

Get Pre-Approved

Obtaining a mortgage pre-approval in Massachusetts is a key step in the home-buying process. It allows you to understand your borrowing capacity, making it easier to focus on homes within your budget. Lenders typically issue a mortgage pre-approval letter, which signals to sellers that you are a serious buyer with the financial backing to make an offer. This letter is usually valid for 60 to 90 days, giving you ample time to search for your ideal home.

To get pre-approved, you need to submit several documents, including:

  • Proof of income
  • Employment verification
  • Credit history
  • Bank statements
  • Tax returns

Understanding the distinction between mortgage pre-approval and prequalification is also important. Pre-approval involves a thorough examination of your financial situation, while prequalification is a more informal assessment based on self-reported information. This makes pre-approval a more reliable indicator of your ability to secure a mortgage.

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HOW TO CHOOSE THE RIGHT LENDER

There are plenty of lenders in the mortgage market, each with varying eligibility requirements, interest rates and fees. It's essential to do your homework before making a decision. For instance, banks typically offer a wide range of products and have established reputations, but they may have stricter requirements. In contrast, credit unions often provide more personalized service and competitive rates, though their product offerings might be limited.

When choosing the right lender, consider the following tips:

  • Ensure the lender offers the type of loan you want. If you're seeking an FHA loan, confirm that the lender is FHA-approved.
  • Compare the lender's sample rates with today's mortgage rates in Massachusetts.
  • Understand the lender's underwriting process and whether you can apply online, by mail, or in person.
  • Check reviews to assess the quality of customer service offered by the lender.

Step 5: Conduct a Home Inspection in Massachusetts

Home inspections are highly recommended in the homebuying process in Massachusetts. They help identify potential issues that may not be visible during a casual walkthrough. Inspectors typically examine various parts of the house, including the roof, foundation, plumbing, electrical systems and HVAC. The inspection report provides a detailed account of the home's condition, highlighting any repairs that may be necessary. This information can be crucial for buyers to make informed decisions about their purchase.

For example, an inspection might reveal significant issues, such as a damaged roof or faulty electrical wiring. These findings can affect the home's appraisal, potentially lowering its value. In such cases, buyers might reconsider their offer, especially if the cost of repairs is substantial. The inspection results can lead to negotiations with the seller or even prompt the buyer to rescind their offer if the property does not meet their expectations.

State-Specific Inspections

Home inspections in Massachusetts are regulated by the Board of Registration of Home Inspectors, which functions under the Massachusetts Division of Occupational Licensure. Home inspectors are required to provide clients with a report detailing the physical conditions of the home's systems and components that are readily accessible and observable. This ensures that homebuyers receive a comprehensive overview of the property's condition.

When looking for a home inspector in Massachusetts, ensure they are licensed. It's wise to find out what other clients have said by checking online reviews and asking for references. This can provide insight into the inspector's reliability and professionalism. You can also use the Division of Occupational Licensure's ePlace portal to find or verify licensed home inspectors in the state. Taking these steps can help you make an informed decision and avoid potential issues during your home buying process.

Go Through Appraisal

Home appraisals play a pivotal role in the homebuying process in Massachusetts. They provide an unbiased estimate of a property's market value, which is crucial for both buyers and lenders. Knowing the accurate value helps buyers avoid overpaying and ensures lenders do not issue loans that exceed the property's worth. According to the 2023 Appraisal Survey from the National Association of Realtors (NAR), the median appraisal cost in 2023 was $500.


While both inspections and appraisals are integral to the homebuying process, they serve different purposes. A home appraisal focuses on determining the property's market value, whereas a home inspection evaluates the condition of the property. Lenders require appraisals to ensure the property's value aligns with the loan amount, safeguarding their investment. Understanding these differences helps buyers navigate the process more effectively.

Step 6: Close on Your House in Massachusetts

Closing is the final step in buying a house in Massachusetts, marking the transfer of ownership and when you receive the keys to your new home. Your lender must provide you with a closing disclosure document three days before the official closing. This document outlines your loan terms, projected monthly payments and closing costs. Plan a final walk-through of the property with your real estate agent near closing day to ensure it remains in the expected condition.

Sign All Documents

On closing day, you will review and complete several documents that finalize your home purchase. These include:

  • Final loan application: This document finalizes the terms and conditions of your mortgage loan, including the loan amount, interest rate and repayment terms. It ensures that both you and the lender agree to the finalized terms.
  • Deed transfer: This legal document transfers ownership of the property from the seller to you. It ensures you become the official owner of your new home.
  • Promissory mortgage note: This is a written promise to repay the mortgage loan under specified terms, outlining the amount borrowed, interest rate and payment schedule. It serves as a legal commitment to your lender.
  • Homeowners insurance: A policy that protects your home and belongings from damage or loss. In Massachusetts, homeowners insurance in Massachusetts can cover risks like fire, theft and liability, offering peace of mind as you settle into your new home.

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CONSIDER HIRING A REAL ESTATE LAWYER

Hiring a real estate lawyer is a common practice when purchasing a house, even if not legally required in Massachusetts. A real estate lawyer specializes in handling the legal aspects of property transactions. They review and prepare documents, negotiate terms and ensure compliance with state laws. Hiring a lawyer can provide peace of mind by helping to navigate complex legal processes and avoid potential pitfalls.

The cost of hiring a real estate lawyer typically ranges from $700 to $1,250. This cost varies depending on factors such as the complexity of the sale, the location of the property, the type of property and the specific needs of the homebuyer. Understanding these variables can help you budget effectively when planning to purchase a home.

Pay Closing Costs

Closing costs are the various fees and expenses you pay when finalizing a home purchase. The closing costs in Massachusetts average $6,223 according to NAR. These costs include several different fees:

  • Appraisal fee: This fee pays for a professional appraisal of the property's value.
  • Title search and insurance fee: This covers the cost of researching the property's title history and purchasing title insurance.
  • Escrow deposit: This is an initial deposit into an escrow account for property taxes and insurance.
  • Prepaid costs: These are upfront payments for future expenses like homeowner's insurance and property taxes.
  • Other closing costs: These can include a variety of fees such as loan origination fees, recording fees and attorney fees.

Massachusetts Homebuying Details: What You Should Know

While the general steps to navigate the homebuying process have been outlined, Massachusetts has specific regulations and practices that require attention. Understanding these state-specific elements ensures a smoother transaction and helps avoid potential complications.

1
Smoke inspection is required

Massachusetts law requires that sellers obtain a certificate from the local fire department confirming that the property meets state regulations for smoke and carbon monoxide detectors. This certification must be presented before the closing, and it is the seller’s responsibility to ensure compliance.

2
A real estate attorney is required at closing

Massachusetts requires the involvement and presence of a real estate attorney at closing. Attorneys typically conduct the title search, prepare the property deed and handle the closing process.

3
Dual agency is allowed

Dual agency is legal in Massachusetts, but it requires explicit consent from both the buyer and the seller. In dual agency scenarios, the agent must provide a balanced service without favoring either party and fully disclosing all information that could influence decisions on either side.

If you are a first-time homebuyer, learning about the different first-time homebuyer programs in Massachusetts can help you achieve homeownership faster.

FAQ About Buying a House in Massachusetts

Buying a house in Massachusetts is a long-term financial commitment. We answered some frequently asked questions about buying a house in Massachusetts to kickstart your homebuyer journey.

How much does it cost to buy a house in Massachusetts?
What are the requirements to buy a house in Massachusetts?
What credit score do I need to buy a house in Massachusetts?
How much income do I need to buy a house in Massachusetts?
Is buying a house in Massachusetts a good idea?

Experts' Tips on Buying a House in Massachusetts

  1. What are some key factors to consider when buying a house in Massachusetts?
  2. Are there any programs available to help first-time home buyers in Massachusetts?
Jeffrey Zabel
Jeffrey ZabelProfessor of Economics and Director of the MS Program in Data Analytics at Tufts University
Dan Simcock
Dan SimcockDirector of Communications at Lapointe Insurance

About Zachary Romeo, CBCA


Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.


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