Building Wealth through Homeownership: A Comparative Study of MHP’s ONE Mortgage Program and FHA

Jake Interrante, Elliot Schmiedl

This paper compares actual wealth building outcomes in the Massachusetts Housing Partnership’s (MHP) subsidized ONE Mortgage Program to hypothetical outcomes for a borrower who received a comparable Federal Housing Administration (FHA) insured mortgage with the same loan amount. We find that ONE Mortgage loans had much lower monthly payments than the FHA loans, resulting in greater overall benefits to borrowers. Although ONE Mortgage loans delivered slightly lower levels of equity accumulation at time of sale, the net financial outcomes still overwhelmingly favored the ONE Mortgage loans. These findings are concerning given the large market share of FHA loans among low- and moderate-income (LMI) and minority homebuyers in Massachusetts. If these borrowers could have qualified for the ONE Mortgage program but instead received an FHA loan, our analysis suggests that they would have lost out on significant benefits. For the first time, this paper quantifies the scale of that potential loss to Massachusetts’s low- and moderate-income first-time homebuyers.

This paper was originally presented at a national Symposium on Housing Tenure and Financial Security, hosted by the Harvard Joint Center for Housing Studies and Fannie Mae in March 2019. A decade after the start of the foreclosure crisis, the symposium examined the state of homeownership in America, focusing on the evolving relationship between tenure choice, financial security, and residential stability.