FHA Loans in Massachusetts

What an FHA loan is and who it fits in Massachusetts

FHA does not lend money. It insures loans made by approved lenders, and that insurance is why a lender will accept 3.5 percent down and a credit score in the 500s or low 600s. You pay for it through a mortgage insurance premium (MIP), described below. The loan itself is a normal 30-year or 15-year fixed-rate mortgage from one of the wholesale lenders I compare.

In Massachusetts, FHA fits the buyer with limited savings and decent but not perfect credit who is buying a primary residence: a condo in Quincy, a single-family in Framingham, or a three-decker in Worcester where you live in one unit and rent the other two. It also fits buyers over the income limits for MassHousing and ONE Mortgage, the two state programs on the Massachusetts first-time buyer page.

FHA loan requirements in Massachusetts

FHA sets the floor and each lender adds its own overlays. The federal rules are:

• Down payment: 3.5 percent with a credit score of 580 or higher; 10 percent with a score from 500 to 579. Many lenders set their own minimum around 620, which is one of the things I shop.
• Debt-to-income ratio (DTI), your monthly debts divided by gross monthly income: automated underwriting often approves ratios in the mid 40s to around 50 percent with compensating factors.
• Funds: the entire down payment and closing costs can come from a family gift, a seller can pay up to 6 percent of the price toward closing costs, and local down payment grants can be layered under the loan.
• Occupancy: the home must be your primary residence, and you move in within 60 days of closing. No second homes or investment properties.
• Property: one to four units, an FHA appraisal that checks safety and soundness as well as value, homeowners insurance, and flood insurance in a FEMA flood zone.

Non-occupant co-borrowers are allowed, which often means a parent on the loan for a child buying a first condo.

FHA loan limits in Massachusetts for 2026

HUD sets each county’s limit at 115 percent of the county median sale price, between a national floor and a ceiling. Massachusetts spans the whole range: the four western counties sit at the floor, the Boston metro counties and Barnstable sit well above it, and Dukes and Nantucket sit at the ceiling. The limits below apply to FHA case numbers assigned on or after January 1, 2026.

Bristol County, which includes New Bedford and Fall River, takes its limit from the Providence metro area, which is why it sits above Worcester County. A three-family in Worcester or Springfield fits inside the three-unit limit; one in Lowell or Quincy, in the Boston metro counties, has far more room.

Condos and two- to four-family homes under FHA

Condos must be in an FHA-approved project, or qualify for FHA’s single-unit approval, which lets a lender approve one unit in an unapproved building when the project meets tests on owner occupancy, reserves, commercial space and delinquencies. You can look any building up on HUD’s condo approval list. Many Quincy and Framingham associations let their approvals lapse; the unit is still reachable, but the approval work starts the day you go under contract.

Two- to four-family homes are where FHA earns its place in Massachusetts. You can buy with 3.5 percent down as long as you live in one unit, and the lender counts a portion of the rent from the other units toward your income, using the appraiser’s rent schedule even if the units are vacant. On three- and four-unit homes FHA applies a self-sufficiency test: the rent from all units, after a vacancy factor, has to cover the full mortgage payment including taxes and insurance. Two-family homes skip that test, which is why a two-family in Springfield is often easier to finance than a three-family next door.

FHA also offers the 203(k) renovation loan, which rolls repair costs into the mortgage. On a tired three-decker in New Bedford or Lowell it can finance a new roof or heating system, at the price of a longer closing.

Older houses, lead paint and Title 5 under an FHA appraisal

Massachusetts has some of the oldest housing in the country, and the FHA appraisal looks at condition, not just value. On any home built before 1978, the appraiser must note chipping, peeling or flaking paint, inside or out, and it has to be corrected before closing. That is a federal FHA rule, separate from the Massachusetts Lead Law, which requires a new owner to delead or bring the home under interim control within 90 days of taking title if a child under six will live there. The seller must give you the state’s lead paint notification before the purchase and sale agreement, and you have at least ten days for a lead inspection. FHA does not require deleading; it requires the paint to be intact.

If the house is on septic, Massachusetts Title 5 requires an inspection within two years before the sale regardless of the lender. The FHA appraiser also has to see that the system works; a known failing system has to be repaired before FHA will fund, or the repair escrowed where the lender allows it. The Massachusetts mortgage broker page covers both rules in more detail.

FHA mortgage insurance, in words

Every FHA loan carries two premiums. The upfront mortgage insurance premium is a percentage of the loan amount charged at closing and almost always financed into the loan, so you do not write a check for it but you do pay interest on it. The annual premium is a percentage of the balance, divided by twelve and added to each monthly payment; its rate depends on the loan term, the loan amount and the down payment.

How long you pay it is the part people miss. With less than 10 percent down, which is almost every FHA purchase, the monthly premium stays for the life of the loan. With 10 percent or more down it drops after eleven years. The way out is a refinance into a conventional loan once you have 20 percent equity, which in the Boston metro counties often comes sooner than borrowers expect. I show every FHA borrower the conventional alternative on the same day.

How an FHA loan works in Massachusetts, step by step

FHA versus MassHousing and conventional

If you are a first-time buyer within the income limits, MassHousing’s loans and the ONE Mortgage program usually beat a plain FHA loan, because they add down payment assistance or remove mortgage insurance, and MassHousing has an FHA version of its own loan, so the two are not always either-or. With a score in the mid 600s or below, or a DTI near the top, FHA usually wins on approval and payment. With a score in the 700s and at least 5 percent down, a conventional loan usually wins, because its mortgage insurance is cheaper for strong credit and ends at 20 percent equity. On a three- or four-family, FHA’s 3.5 percent down is hard to beat if the rents pass the test.

Veterans should look at VA first: no down payment, no monthly mortgage insurance, and no VA loan limit with full entitlement. Ready to see your numbers? Get pre-approved with Massachusetts selected, and I will run FHA, conventional and the state programs on one sheet.