With downtown energy in Detroit’s comeback story, wine country relaxation in Traverse City and peace in the Upper Peninsula in Marquette, there are plenty of reasons to plant roots in Michigan. Home values in the state have followed suit with the national trend, with the median sale price up nearly 15 percent year-over-year, according to real estate brokerage Redfin. If you’re a first-time homebuyer in “America’s High Five,” the Michigan State Housing Development Authority can help.
Michigan first-time homebuyer loan programs
The Michigan State Housing Development Authority (MSHDA) has two primary 30-year, fixed-rate mortgage programs that help ease the financial burden for first-time homebuyers:
- MI Home Loan
- MI Home Loan Flex
Both options apply to conventional, FHA, VA and USDA loans. The biggest difference between the two is that the Flex option does not require all of those who plan to live in the home to apply. If your spouse has subpar credit, for example, the Flex option can help you avoid potential issues with approval. The Flex option also carries no restrictions on the size of the lot you’re purchasing; the standard MI Home Loan has a maximum of two acres, in most cases.
To take advantage of either of these options, this doesn’t technically have to be your “first” time owning a home. Instead, the state defines a first-time homebuyer as someone who has not owned a home in the last three years.
- 3 percent down payment (down payment assistance available)
- 640 minimum credit score for MI Home Loan; 660 minimum credit score for MI Home Loan Flex or MI Home Loan for a manufactured home
- Must meet MSHDA income limits
- Must complete homebuyer education course if pairing with down payment assistance
- Must be no more than $224,500
- Must be a single-family home or condominium; can also be a multiple-section manufactured home for MI Home Loan
- Must be no more than two acres (with some exceptions up to five acres) for MI Home Loan; no restriction for MI Home Loan Flex
Michigan down payment assistance
Michigan Down Payment (MDP)
The Michigan Down Payment (MDP) program is designed to make the initial sticker shock of buying a home more manageable with $7,500 of assistance to cover the down payment. There is also up to $10,000 in assistance available in specific zip codes. It’s important to note that these are not grants or forgivable loans; they’re second mortgages with no interest or monthly payments. You’ll need to pay back the MDP amount when the home sold, or when you refinance or pay off the first mortgage in full.
- Must be borrowing MI Home Loan or MI Home Loan Flex
- Must have less than $20,000 in cash assets
- Must have 1 percent of home’s purchase price available
- Must complete homebuyer education course
Other Michigan homebuyer assistance programs
Mortgage credit certificate (MCC)
While buying a home can be expensive, you can save some money when it’s time to file your taxes via a mortgage credit certificate (MCC). In Michigan, the credit equals 20 percent of your annual mortgage interest, capped at $2,000 a year. You’ll need to pay a $400 fee for the MCC, and your lender might charge an additional $100 on top of that, but the upfront cost can be worth it if you use the credit every year for the full 30 years of your mortgage.
If you’re taking out an MI Home Loan or MI Home Loan Flex through the MSHDA, you’re out of luck, however — the MCC can’t be combined with these loans.
Local homebuyer assistance programs
First-time homebuyers in Michigan might also be able to find help through local housing initiatives. In Grand Rapids, for example, homebuyers with $10,000 or less in cash assets might qualify for $7,500 to help with closing costs, the down payment and prepaid expenses through the city’s Homebuyer Assistance Fund. In Detroit, some lenders such as TCF and Huntington Bank participate in the Detroit Home Mortgage program, which can waive certain closing costs and offer small grants to qualifying buyers.
Other first-time homebuyer loan programs
In addition to Michigan state and local mortgage programs, you can use Bankrate’s guide to first-time homebuyer programs to find out if you qualify for other nationally-available forms of assistance.
For other Michigan homeownership programs, including by city, visit HUD.gov.
Ready to make owning a home in Michigan a reality? After you’ve taken time to understand the options available to you, it’s time to think about finding the right mortgage lender. You can use the MSHDA’s search portal to find a list of banks, credit unions and other lenders in each of the counties in the state, along with contact info for loan officers to help you through the process.
Compare Michigan mortgage rates, loan terms and requirements from a range of different lenders to make sure you find the best option for your situation.