Michigan first-time homebuyer assistance programs
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 year-over-year. If you’re a first-time homebuyer in “America’s High Five,” the Michigan State Housing Development Authority can help.
Michigan’s first-time homebuyer programs
MI Home Loan
The Michigan State Housing Development Authority (MSHDA) offers the MI Home Loan, a 30-year fixed-rate mortgage available through participating lenders. It’s underwritten as a conventional, FHA, VA or USDA loan. First-time homebuyers can take advantage of it statewide, and repeat buyers can use it in targeted areas. Participating borrowers may also be eligible for down payment assistance (DPA) through the MI 10K DPA Loan.
Here are some of the requirements to qualify:
- Your income must be below area-specific household income limits
- Home price cannot exceed $224,500 statewide
- You need a minimum credit score of 640 for most homes; 660 for multiple-section manufactured homes
Keep in mind: The current income and home price limits are based on 2023 figures. MSHDA may adjust these for 2024.
To determine your eligibility, use this form to contact a participating lender.
Michigan down payment assistance
MI 10K DPA loan program
The MI 10K DPA loan program is a 0 percent interest loan of up to $10,000 available to those who qualify for a MI Home Loan and who complete a homebuyer education course. The funds can be used for a down payment, closing costs and prepaids/escrow payments. The loan carries no monthly payments. It only must be repaid when the mortgage ends, the home is no longer a primary residence or there’s a change in ownership.
While previously available only in specific zip codes, as of May, 2023, the 10K DPA loan is available statewide.
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 through the MSHDA, you’re out of luck, however — the MCC can’t be combined with these loans.
Detroit homebuyer assistance
The city of Detroit has been on the rebound. Part of that has been the city’s focus on growing local homeownership. There are several programs in the city for homebuyers, including:
- Detroit Neighborhood Initiative: Prospective homebuyers who complete the NACA pre-purchase homebuyer program can qualify for a low-interest, fixed-rate mortgage with no closing costs or down payment.
- Detroit DPA Program: Set to reopen in 2024, Detroit’s DPA Program helps qualifying, lower-income Detroiters buy a home with up to $25,000 going towards their down payment. It comes in the form of a grant that doesn’t need to be repaid.
- Detroit Home Mortgage Program: 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 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.
Contact your city or county’s housing department to see what programs may be available to you.
Other Michigan first-time homebuyer loans
On a national level, there are loans geared toward first-time homebuyers that Michiganders can take advantage of. Some of the loans you can explore include:
- FHA loans: Loans insured by the Federal Housing Administration (FHA) have more lenient financial requirements than other loans. You can get an FHA loan with 3.5 percent down and a credit score as low as 580.
- VA loans: For active-duty military, veterans and surviving spouses, a loan guaranteed by the U.S. Department of Veterans Affairs (VA) is a great option. These loans typically come with lower interest rates and don’t require a down payment.
- USDA loans: Loans guaranteed by the U.S. Department of Agriculture (USDA) also require no down payment, but you’ll need to buy in a designated rural area and meet area-specific requirements.
- HomeReady and Home Possible loans: HomeReady and Home Possible are loan programs created by government-sponsored enterprises Fannie Mae and Freddie Mac. They’re specifically for first-time homebuyers, requiring only 3 percent down and having more flexible income requirements.
Get started
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 information for loan officers to help you through the process.
And don’t forget to read about what other first-time homebuyer loans and programs may be available to you.
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