Can you buy an apartment in Cambridge if you have no way of doing so
April 6, 2023 5:07 AM   Subscribe

Our Cambridge, Mass landlord of 2 years is retiring and selling the apartment. If this happens we will be out on our ear in a trice and it will be super destructive to our family for a bunch of reasons. He feels very bad that the entirety of our stay has been plagued with contractors barging in and out, and giant holes in the drywall, and the water being turned off for like a week at a time, a bunch of times. He is offering my small family the opportunity to buy the place, at a little discount, even.

I work full time, my wife cannot right now, and there are 2 teenage boys. Credit is like low 600s and there are no savings because rent and food and medical add up to more than my paycheck of 85K. When we got the ominous email, I immediately set up an interview for part time work. I have some fantasy about asking for a break on the rent for a few months but I have not asked yet.

Is there any way a government schlub can put his hands on a loan for an ungodly amount of money, 300K to 500K (I don't even know) just for 6 or 7 years - enough time to put both boys through high school. The boys' schooling and special ed and mental health are the whole reason for staying inside Cambridge limits. We might have some months before stuff has to happen.
posted by anonymous to Work & Money (17 answers total) 4 users marked this as a favorite
I don't know about Cambridge but my city has downpayment assistance grants for something like $10k that I think partially came about through a settlement when Wells Fargo was caught doing a lot of discriminatory lending practices. I think I've also seen some assistance for government employees.

When I got an FHA loan ages ago the downpayment was only 3.5% or something like that, and I was able to roll many of the closing costs into the loan.
posted by sepviva at 5:34 AM on April 6, 2023 [4 favorites]

I believe there are federal first-time-homebuyer loans that include the down payment as part of the loan and have some favorable terms.
posted by entropone at 5:50 AM on April 6, 2023 [5 favorites]

The City of Cambridge website has a page of homebuyer resources that might have something useful.
posted by cadge at 6:00 AM on April 6, 2023 [4 favorites]

I would strongly recommend you take a first-time homebuyer class, or reach out to organizations in Cambridge that put them on. I live next door to you in Somerville and Somerville Community Corp does this here; it looks like CDD in Cambridge, on the page that cadge linked, is the equivalent. There are numerous down payment assistance programs in Massachusetts that you may be eligible for, and also loan programs with lower rates subsidized by the state if you meet the requirements.

There are a lot of resources out there that people don't know about for low- and middle-income homebuyers, and these organizations exist precisely to help you take advantage of them. Not saying it's going to be easy, but it might not be as daunting as you think at first glance.
posted by Kosh at 6:25 AM on April 6, 2023 [8 favorites]

It looks like your income would qualify you for Homebridge, for example, which could cover up to 50% of the purchase price of the home. There are other restrictions besides income. Talk to the CDD and sign up for a first-time homebuyer course ASAP!

I think you would also qualify for affordable rental housing in Cambridge so you may want to get on that list as well in case things don't work out with purchasing your current apartment. There's an info session that covers both rental and homebuying assistance in Cambridge coming up on April 24th - sign up!
posted by mskyle at 6:41 AM on April 6, 2023 [7 favorites]

At a 600 credit score you can get an FHA loan allowing you to put down only 3.5%.
posted by aramaic at 7:04 AM on April 6, 2023 [5 favorites]

I bought a condo last year with the assistance of Bank of America. I’ll post the link in a second. As part of a settlement for their misdeeds in 2008 selling defective mortgage-backed securities, they were made to establish a fund to assist middle-income homebuyers with down payment and closing costs. I believe it’s up to $10,000 for each? As a first-time homebuyer planning to buy a primary residence (not an investment property), you get a mortgage with 3% down. For my $130,000 purchase, the grant covered all of that. Then you can have the seller cover some closing costs as part of your offer. I offered $130,000 with the buyer paying $4,000 in closing costs, so my net cost was $126,000. The grant covered the rest of the closing costs. I paid $250 at closing. I also laid out about $2,000 of my own money as part of the process (earnest money $950, inspection $650, credit check, etc.) Google Bank of America down payment assistance. Feel free to memail me if you’d like t to talk further!
posted by 8603 at 8:12 AM on April 6, 2023 [2 favorites]

It sounds like you have a government job. If you have been contributing to a 457 or other government employee retirement account, you can access those funds without penalty, though you will eventually have to pay them back. I don't have all the details but your account administrator should be able to assist you.
posted by agatha_magatha at 8:19 AM on April 6, 2023 [5 favorites]

Also, I am not an expert on FHA loans, but I know there are criteria that the home and the complex have to meet. Since you are on friendly terms with the LL, maybe you can work with him to make this property compliant so you can get an FHA loan.

To echo what the above commenters are saying, make sure you look for city, state, and federal resources, as they exist on all levels. With your income and family size you are exactly the demographic that these programs want to help. As a side note, some of the down payment assistance grants take a long time to process. You’ll want to warn your LL about this.
posted by 8603 at 8:26 AM on April 6, 2023

The actual reality is that around 90% of home loans (even FHA ones) go to people with credit scores higher than 750. A score of 600 doesn't automatically disqualify you, but you are in the running for tiny pot of money and competing against a large number of people.

Example: Fred Chart - current large bank 50th percentile credit score for purchasing a home is 787 (out of 800).

So you definitely need to hit every program you can imagine, you need to do what you can to improve your credit score, and you need to rub some dice for luck.
posted by The_Vegetables at 8:48 AM on April 6, 2023 [2 favorites]

Do you have a lease. What's the amount you want to borrow? Is the mortgage payment less than the rent you've been paying? Visit your credit union, ask them about all possible mortgage options. Visit a mortgage office, ask them. Call your state and federal legislators'offices; they can be a treasure trove of resources. Do you have family or friends friends with money? Maybe someone could co-sign. Talk to the tenants' rights organization; your landlord may have some obligations. Do *all* the things.

Did the landlord give you rent credit for days your apt. was barely usable?
posted by theora55 at 8:50 AM on April 6, 2023 [3 favorites]

there are no savings because rent and food and medical add up to more than my paycheck of 85K

I think you need to reconsider if you should buy this condo in the first place. I say this as someone who has owned in Cambridge, knows the taxes, knows the repair costs, etc. If you're struggling to live within your income, I worry that you're unlikely to be in a position to deal with the problems that arise - and need to be paid for - as a homeowner.

Downpayment assistance programs are fabulous things, but they only get you over the first hurdle.
posted by NotMyselfRightNow at 8:58 AM on April 6, 2023 [15 favorites]

Cambridge has so much more than just downpayment assistance programs for people in OP's income range, though! And the OP might actually be in a good position where the current landlord is specifically interested in selling to them and they wouldn't be bidding against cash buyers. Homebridge or similar might make this totally possible. Cambridge property taxes are incredibly low on lower-priced owner-occupied homes due to the low overall tax rate and the residential exemption.

The amount of maintenance the apartment has needed while OP has lived there is worrying, though - that would be OP's responsibility now.
posted by mskyle at 10:56 AM on April 6, 2023 [2 favorites]

He feels very bad that the entirety of our stay has been plagued with contractors barging in and out, and giant holes in the drywall, and the water being turned off for like a week at a time, a bunch of times. He is offering my small family the opportunity to buy the place, at a little discount, even.

Sounds like this place is a bottomless pit for money, and he's looking for some sucker to take his loser property off his hands. You ought to be getting a big discount, even.
posted by Harvey Kilobit at 11:55 AM on April 6, 2023 [3 favorites]

I don't suppose he would be willing to carry a contract for x-number of years until you would be in a position to qualify for a mortgage? Could you be able to attain financial security in the amount of time he would be willing to consider?

I don't know anything about buying or selling houses. I have heard of owner carried contracts.
posted by BlueHorse at 10:04 PM on April 6, 2023

Would the owner consider loaning you the money and holding the mortgage?
Get It Inspected.
posted by theora55 at 6:55 AM on April 7, 2023

« Older Looking for a movie - unusual revenge on friend...   |   Meeting and eating spot maybe near Hartford, CT? Newer »
This thread is closed to new comments.