Your Massachusetts Home Is Under Contract but Has Not Closed
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
A signed contract tells you the price. In Massachusetts it does not yet tell you what the sale leaves you with, and that gap is where move-up plans go wrong.
Where underwriting draws the line
A contract is a promise; funding is an event. The departing residence's payment comes out of your debt-to-income ratio when the file can show the sale is done or documented to the point the guideline accepts, and not before.
If your purchase closes before your sale funds, you are qualifying while holding two payments regardless of how solid the contract looks.
The number your plan runs on
With a contract in hand it is tempting to treat the price as settled money. Work it through instead: price, less payoff, less any second taken for the down payment, less ordinary costs of sale.
Then the Massachusetts step. A gain above the federal exclusion lands in that year's taxable income, and mass.gov sets the 2026 surtax threshold at income exceeding $1,107,750, with 4% above it. That liability shows up at tax time, not on the settlement statement, which is exactly why it gets forgotten. See the net proceeds page and the surtax page.
What to have ready
- The fully executed contract on the departing home.
- The closing disclosure or settlement statement once it exists.
- Current statements on the departing mortgage, taxes, insurance and any association dues.
- Evidence of reserves, which is usually what carries a file through an overlap.
Your agent and your closing attorney handle the contract and its dates. We work on what the money has to do around it.
Which structure fits
| Structure | Fit when under contract |
|---|---|
| Carry both, recast after | Strong. Net proceeds become the recast principal reduction, and nothing depends on an investor accepting an offset |
| Borrow against departing equity | Workable. The second is repaid from net proceeds at that closing |
| Keep it and rent it | Generally unavailable once committed to a buyer |
If you are buying above the conforming limit
Massachusetts runs three tiers: $1,249,125 on the islands, $962,550 in the Boston metro, $832,750 elsewhere. Above the applicable limit some jumbo investors will not release a departing payment until the sale funds, which makes reserves the central conversation. See the three tiers page, the structures page, and if your home is listed rather than under contract, listed but not sold.
Frequently asked questions
Does a signed contract on my current home remove that payment from my ratio?
Not on its own. Underwriting treats a contract as a promise and funding as the event. The departing residence's full PITIA generally stays in your debt-to-income ratio until the file documents the sale, which in practice means the executed contract plus the closing disclosure or settlement statement.
Is the contract price the number my Massachusetts plan should use?
No, net proceeds is, and in Massachusetts that includes a tax question that arrives after closing. A gain above the federal exclusion lands in that year's taxable income, and mass.gov puts the 2026 surtax threshold at income exceeding $1,107,750.
What if my Massachusetts purchase closes before my sale funds?
Then you are qualifying while holding both payments, and the answer is a structure rather than a timing hope. Carrying both payments and recasting the new loan after the sale is the most predictable route.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. The Massachusetts surtax threshold is set by the Commonwealth and indexed annually, and whether a home sale reaches it depends entirely on your facts; your CPA, your closing attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.