City of Boston Makes Historic Investments in Programs for Low- and Middle-Income Homebuyers
Building on her commitment to creating affordable housing in Boston, Mayor Michelle Wu today announced a significant investment in creating homeownership opportunities. The Mayor has directed $60 million of American Rescue Plan Act (ARPA) funding to be allocated to the development of income-restricted housing for eligible Boston residents and financial assistance programs to help residents in buying homes. The City will make 150 parcels of land available to developers to build income-restricted homeownership opportunities and will be providing grants that will deliver lower mortgage interest rates and up to $50,000 in direct assistance, including down payment and closing cost assistance, to income-eligible first-time homebuyers. Funding will also be used to launch a homeownership program for qualified Boston Housing Authority residents.
The proposed investments in homeownership are part of the Mayor’s commitment to address housing affordability and stability through the operating budget, the Capital budget, and federal recovery funds to build and acquire new affordable units, upgrade public housing, expand housing stability services, and expand a voucher program.
“Housing is the foundation of a healthy, thriving City,” said Mayor Michelle Wu. “In Boston this is an urgent issue that impacts every neighborhood, every generation, every demographic. We are moving as fast as possible with every single lever that the City has, making land available in partnership with community developers and making the financing possible with increased down payment assistance to ensure every resident has access to affordable homeownership opportunities.”
"Today's announcement is a big win for creating homeownership opportunities in our communities while simultaneously improving neighborhoods through the activation of vacant lots,” said Councilor Brian Worrell. “This initiative is an important investment in addressing our housing shortage and allowing families to realize the dream of homeownership."
“Investments that both create new affordable homes and provide meaningful financial assistance will allow more families to buy in Boston,” said Sheila Dillon, Chief of Housing. “In the upcoming months, we will be working hard with our partners to make sure that Boston residents learn of, and act on, these important opportunities.”
In June, the Boston Planning and Development Agency (BPDA) announced the completion of the Public Land for Public Good: Citywide Land Audit of all city-owned property. This report was the culmination of an effort to comprehensively inventory all City-owned properties, identify vacant and underutilized properties, and set in motion accelerated efforts to best utilize these properties to serve Boston’s communities, particularly through the development of affordable housing. Of those parcels, 150 were designated as suitable for the development of housing. In early 2023, the City will issue a Request for Proposals (RFP) to developers for the first 70 parcels to create homes for residents to own. A portion of the ARPA funds will be used to subsidize the construction of the housing units, making the new homes affordable to moderate-income households.
"The BPDA is working diligently to expand affordable homeownership opportunities for all Bostonians, as a way to bolster equity and inclusion in our housing market," said Chief of Planning Arthur Jemison. "The results of the land audit, in combination with the Mayor's directive to streamline the BPDA’s approval process for affordable housing, will get us there."
In addition to building new homes, the Mayor’s Office of Housing will fund three financial assistance programs that will aid households looking to purchase a home in Boston. The Boston Home Center (BHC) First Time Homebuyer program, the Saving Toward Affordable Sustainable Homeownership (STASH) program, and the ONE+Boston program.
Income-qualified buyers will be eligible for downpayment and closing cost assistance of up to 5% of the purchase price, not to exceed $50,000 through the BHC first-time homebuyer assistance program. The City’s down-payment assistance can be matched with the State’s 5% down-payment program, allowing homeowners to receive a grant of up to 10% of the purchase price of a home.
Down-payment assistance can be used with the ONE+Boston program which provides discounts on interest rates for first-time homebuyers. With the ONE+Boston program, qualified Boston residents who earn between 81% and 100% AMI will receive a half percent (0.5%) discount rate off the reduced interest rate offered through the ONE Mortgage product (currently about 6.625%). Boston residents who earn below 80% AMI will receive up to one percent (1%) off of the current ONE Mortgage rate. The downpayment assistance combined with the discounted mortgage rates through the ONE+Boston program will greatly increase the buying options for qualified residents.
This targeted funding will also enhance the STASH program. The STASH program is the first-in-the-nation matched-savings program for first-generation homebuyers who are earning below the area median income and are buying in the City of Boston. The program, designed and managed by the Massachusetts Affordable Housing Alliance (MAHA) provides first-generation homebuyers with education and counseling on purchasing a home. In addition, first-generation buyers that complete the program and save $2,000 towards a home purchase are eligible to receive a 10-1 match if they buy a home in Boston.
“The additional funding for the STASH program and the ONE+Boston program will be necessary in allowing many first-time and first-generation homebuyers to continue their plans of buying in Boston, even as the market becomes increasingly difficult,” said Symone Crawford, Executive Director, Massachusetts Affordable Housing Alliance, MAHA. “During this time of historically high-interest rates and low inventory, our graduates have had to postpone their home-buying search or look farther away from the city. Mayor Wu’s investment is critical in keeping our homebuyers in Boston.”
To assist Boston’s public housing residents and voucher participants in purchasing their first homes, the Boston Housing Authority (BHA) has created a new program in partnership with the City of Boston. BHA’s First Home Program is providing eligible BHA residents with enhanced down payment assistance of up to $75,000 for a home purchased within the City of Boston. This program is available to all qualifying BHA public housing and Section 8 residents who purchase a home within the City of Boston. BHA has a goal to reach 100 households through this program. Section 8 voucher participants can use their housing subsidy towards their mortgage payments through the Section 8 (HCV) to Homeownership Program, a program the BHA is expanding through this initiative. BHA applicants will receive home buying counseling support from the new BHA Homeownership advisor. BHA residents can learn more about the program at bostonhousing.org/firsthome.
“We have families that really want to purchase their own home, and can support a mortgage, but need to get over the hurdle of upfront down-payment costs,” said Kate Bennett, Administrator and CEO at the BHA. “Providing homeownership opportunities to BHA public housing and Section 8 residents is a huge win—it means long term stability and opportunity for families here in Boston.”
Boston has an overall homeownership rate of 35 percent, considerably less than the statewide homeownership rate of 62 percent. Homeownership rates differ significantly by race and ethnicity, as 44 percent of Boston’s white households are homeowners, compared to 31 percent of Black or African American households, 30 percent of Asian or Pacific Islander households, and 17 percent of Hispanic or Latinx households.
These investments in homeownership build on Mayor Wu’s initiatives to address Boston’s housing affordability, including filing a Home Rule Petition relative to real estate transfer fees and senior property tax relief, signing an Executive Order relative to affirmatively furthering fair housing, convening a Rent Stabilization Advisory Committee to inform future legislative proposals and signing an Executive Order to streamline the approval process for affordable housing
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- Published by: Planning & Development Agency