The following article appeared in the February 27, 2025, edition of the Canton Citizen newspaper, under the headline, “First-Time Homebuyers: Ways to Save in a Tough Market,” by Senior Vice President of Residential & Consumer Lending Scott Gannon (NMLS #80565).
If you’re an aspiring first-time homebuyer, or know one, you’re well aware of the challenges in today’s housing market – including low inventory, higher interest rates, and rising home prices. It takes creativity and resourcefulness to find affordable options.
A great place for first-time homebuyers to start is with agency loan programs and grants.
Agency loans and grants are offered by organizations like MassHousing, the Federal Home Loan Bank of Boston (FHLB), the Federal Housing Administration (FHA), and federal government-sponsored enterprises Freddie Mac and Fannie Mae. They don’t lend directly to borrowers; instead, they make their products available through approved lenders like Bank of Canton, who in turn offer them to customers.
Many of these programs are geared toward low- to moderate-income households, but some apply to higher-income households as well.
Take Fannie Mae’s HomeReady® mortgage loan. It offers money-saving benefits and flexibility that most conventional mortgages can’t match: a lower down payment requirement, lower interest rate, and more allowable sources of income such as roommates. Parents can even be listed as co-borrowers.
Importantly, HomeReady loans don’t impose loan-level price adjustments (LLPAs) on first-time homebuyers. LLPAs are fees to account for higher-risk borrowing situations, such as higher loan-to-value ratios, lower credit scores, and certain property types like condos or investment properties. LLPAs can significantly increase a loan’s base interest rate, sometimes by 1.00% or more.
With no LLPAs and lots of benefits, Fannie Mae’s HomeReady loan is a great option. It’s available to households making 80% or less of their county’s Area Median Income (AMI). The AMI for Canton is $142,000/year, so income eligibility in Canton for a HomeReady loan is capped at $113,600.
What if your income is higher?
Don’t worry: you might still qualify for Fannie’s standard loan, which also doesn’t impose LLPAs on first-time homebuyers. It’s available to households making up to 120% AMI in high-cost areas like Canton – meaning you can qualify even if your household makes up to $170,400. Loans from the FHA and Veterans Administration similarly don’t have LLPAs.
Avoiding LLPAs is huge. And eligible first-time homebuyers can supplement those savings with down payment assistance programs and closing cost grants, some worth tens of thousands of dollars. Depending on the program, these can be stacked on top of lower-interest agency loans for additional savings.
Lastly, many lenders offer closing cost credits or discounts that can be added to your savings stack.
Agency grants and loans can be complicated. But an experienced mortgage originator should be able to help you determine your options and eligibility once they know your specific circumstances. A good lender will ask the right questions and do the heavy lifting for you.
It pays to have those conversations – your first home might be more affordable than you think.
Scott Gannon (NMLS #80565) is the senior vice president of residential and consumer lending at Bank of Canton. For more information about the HomeReady program, visit https://bit.ly/4hUz9Bo. Details about other programs can be found on their respective agency’s website. Bank of Canton is an Equal Housing Lender. NMLS #408169. Member FDIC. Member DIF. All loans subject to credit approval.