Subsidies for down payments?

The following describes a plan in Massachusetts and is a quote from a Boston Globe article.

Frankly, I’m not sure what to think. My first reaction is that we are setting ourselves up for the next Great Recession and mortgage crisis? Pushing subprime lending and home ownership was the root cause of the 2008 crisis.

As stated, this program eliminates any down payment from the individual and adds an additional repayment burden to individuals who presumable could not save for a down payment.

The program essentially provides low-interest loans to cover some or all of the down-payment costs for first-time home buyers, to a limit of $15,000, or 5 percent of a home’s purchase price. (The old threshold was $12,000, or 3 percent of the total price.) MassHousing raised the income eligibility to 135 percent of the area median income for purchases in Boston and in so-called Gateway Cities. For buyers in Eastern Massachusetts cities such as Everett, Lowell and Salem, households earning up to $147,000 could apply. (The eligibility cap remains at 100 percent of area median income for other cities and towns.) MassHousing also now allows purchases of two-, three- and four-family homes in the program.

Does this make sense? Why the quest for home ownership? Why encourage unaffordable spending as public policy?

I submit that if a person can not accumulate sufficient savings (especially with an income up to $147,000) for even a modest down payment, they cannot afford a house.

If a loan is needed for a down payment how can there be any funds for taxes, insurance, home maintenance and repairs?


  1. None of this makes any sense. You pointed out many problems and I do believe that it will result in a local housing bubble. What what really worries me is the last line: “MassHousing also now allows purchases of two-, three- and four-family homes in the program”. If they cannot afford the downpayment, they cannot afford the maintenance. It would also seem to me that these same people who get these 4 family properties will become slumlords or raise the rents which will result in rent control and lack of housing investment. Four family homes are investment properties so why can’t they afford the downpayment?


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