Despite the high costs of buying a home in Michigan, the state offers a number of programs that can help make your dreams a reality. These programs are designed to alleviate closing costs, allowing you to put more money down and lower your monthly payments. In short, these programs reduce barriers for first-time homebuyers.
Michigan Down Payment Assistance Programs
Benefits of Down Payment Assistance Programs
in Michigan
By using an assistance program, you can put more down on your home, lowering your monthly payment and saving you thousands in interest over time. Additionally, if you put down 20% or more of the purchase price, you can avoid private mortgage insurance, further reducing your expenses.
Homebuyers who take advantage of these programs can also enjoy lower year-end taxes, as the loans do not count toward gross income. This means you can save more for property taxes and avoid some of the stress of tax season.
Why Apply for a Michigan Down Payment Assistance Program with F5 Mortgage?
At F5 Mortgage, our loan officers specialize in helping homebuyers find the right mortgage products for their needs, offering personalized assistance throughout the process.
Our streamlined application process reduces the hassle of applying for assistance, and we always strive to find the best terms possible for your loan. Because we understand how big of an investment a home purchase is, we work hard to reduce your fees at every turn, ensuring all homebuyers can afford a beautiful home.
Down Payment Assistance Programs in Michigan
In Michigan, a variety of programs are available across the state, but each program has a different set of requirements. The program you apply for will depend on where you live, how much money you earn, and the size of the loan you need.
MI Home Loans
The Michigan State Housing Development Authority (MSHDA) provides a fixed-rate mortgage product available through participating lenders. In certain areas, anyone can access these funds, but in other parts of the state, applicants must be first-time homebuyers.
MSHDA loans also have a sales price limit of $224,500 statewide, and recipients must have a minimum credit score of 640. In addition to its main program, the MSHDA offers a specialized program for veterans seeking to purchase a home.
Mortgage Credit Certificates (MCC)
Though technically not down payment assistance, mortgage credit certificates make homeownership more accessible to lower-income buyers by providing a dollar-for-dollar tax credit based on a percentage of the mortgage interest paid each year.
With this option, recipients earn a tax credit of up to 20% of their yearly interest. The offer is applicable throughout the lifetime of the loan, up to 30 years. Depending on where you live, limitations apply based on family size and property location.
MI 10K DPA Loan Program
The Michigan 10K DPA Loan Program is permanently affixed to all homebuyers in specific areas, which includes a 0% interest rate and no monthly payments.
However, applicants must complete a home-buying education course to secure this loan type. You must put at least 1% of the home’s total price down with your own money, but the rest of the money required upfront can be borrowed from this program.
The 10K program is available in 236 targeted areas throughout the state, primarily in more rural areas, and it must be used with the MSHDA program. If you live somewhere other than the qualifying areas, you can still access the $7,500 loan program, which is available throughout the state.
This is a 0% interest, non-amortized loan that must only be repaid if you sell, refinance, or transfer the home, or when you pay off your primary home loan.
Down Payment Assistance Programs by Location
City of Lansing DPA Program
If you are buying a home within Lansing city limits, you may receive up to $14,999 if you qualify for the City of Lansing Down Payment Assistance Program. To qualify, you must not have owned a home within the last three years, and you will need to complete a homebuyer education course before you can receive your loan.
City of East Lansing Down Payment Assistance Program
This program offers up to $30,000 to qualifying buyers purchasing within East Lansing. As with the Lansing program, borrowers must complete a home-buying education course and meet certain income requirements. Buyers must also pay at least 1% of the purchase price of the home.
Detroit Down Payment Assistance Program
The Detroit Down Payment Assistance Program offers $25,000 grants to home buyers, and these grants do not need to be repaid. To be approved, you will need to complete a home-buying education course. Additionally, you may choose to take advantage of one-on-one financial counseling through the Detroit Financial Empowerment Center.
Who Qualifies for Down Payment Assistance in Michigan?
Each of the programs mentioned above features different requirements based on location and family size. All are available to first-time homebuyers, while repeat homebuyers may qualify when purchasing property in rural areas.
Statewide, your home must be worth no more than $224,500 to secure this type of assistance.
In some cases, a homebuyer’s occupation may influence their eligibility for financial assistance. For example, Teacher Next Door provides up to $10,681 in assistance for public service professionals in Michigan, including teachers, nurses, and first responders.
How to Apply for Down Payment Assistance in Michigan
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Learn about the process of buying a home
To access most assistance programs in Michigan, hopeful homebuyers must complete a certified home-buying education program. Even if the program you plan on applying for doesn’t require this, it’s still a good idea to prepare yourself for the process by educating yourself about what it takes to purchase a home. You’ll also need to work with a participating lender if you want to enroll in the Michigan State Housing Development (MSHDA) program.
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Ensure you meet the qualifications
Before applying, you will need to make sure you meet the qualifications, such as income limits and credit score requirements.
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Gather your financial documents
When starting the home buying process, you will need to provide extensive documentation of your finances, employment, and homeownership history (if applicable). To prepare for the process, gather all documents you’re likely to need, including bank statements, pay stubs, existing mortgage information, employment history, debt records, etc.
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Complete an educational course
Most of the programs throughout Michigan require that you work with an educational counselor to access funds. These are to ensure that you are familiar with all the requirements of homeownership and will be able to pay your mortgage on time. You can speak to the local Housing and Urban Development department to find a list of approved counselors.
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Speak with a mortgage lender
The mortgage specialists at F5 Mortgage can assist you with preparing your mortgage application and applying for your chosen program.
We will also help answer any questions you have along the way and ensure you feel fully prepared to work with a realtor to find and purchase your dream home.
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Provide 1% down
The $7,500 and the $10k DPA both require that you provide 1% of your own funds to secure these zero-interest loans. It’s possible to use gift funds, but you must document this with a gift letter.
Prepare for Your Mortgage Application
When buying a home, it’s important to monitor your credit carefully. Your credit report will be one of the first things a lender looks up, so you should ensure your report is accurate before starting your application process. If there are steps you can take to improve your credit score prior to applying, consider doing so.
Familiarize yourself with what you can afford before you begin the application process. Even if your credit score would enable you to take on a higher amount of debt, it’s best to stick to a price range that feels comfortable and affordable.
Once you’ve decided on your price range, gather up your documentation, such as bank statements, credit reports, and proof of identity. When it comes to applying for a mortgage, more is better. Include anything you think could be helpful, and your loan officer will sift through your documentation to put your application together with the necessary components.
FAQs About Michigan Down Payment Assistance
How can I buy a house in Michigan with no down payment?
If you can’t afford to put money down on a house in Michigan, you have several options. For example, if you are a veteran, VA mortgages for no money down on a home mortgage. Alternatively, if you’re open to living in a rural area, USDA mortgages provide options for home loans without down payment requirements. Loans are also a great way to cover some of your upfront expenses and are available throughout the state.
What is the first home buyer loan in Michigan?
The MI Home Loan is available to first-time borrowers; repeat borrowers who live in certain areas of the state may also be able to access this program. Household financial limits vary depending on what type of home you are buying and where you live.
The home you are purchasing must be worth less than $224,500, and you need at least a 640 FICO score to apply. You must put down at least 3%, but there are several programs available to help you afford this. To access these funds, you must pay at least 1% of your own funds, though you can use gift funds if necessary.
An MI Home Loan is available only through participating lenders. Before underwriting is completed, you must undergo an education course.
Does Michigan offer down payment assistance?
Yes. Michigan offers several programs to help homebuyers with upfront costs, including specialized options for veterans, first responders, nurses, and teachers.
However, most options are available to everyone, as long as you earn below a certain income threshold and take a home-buying education course. That includes the $7,500 program, which is available throughout the state, and the $10k grant, which is available in specific areas of the state.
How does Michigan DPA work?
The program provides a 0% interest loan of $7,500 to be used for upfront expenses. You must use at least 1% of your own funds, and you need to take an educational course through a HUD-approved counselor.
Buyers seeking their first mortgage in 236 ZIP codes throughout the State of Michigan can also access up to $10,000 toward upfront costs in the form of a second home loan. This option has a 0% interest rate Applicants must make below a certain threshold, purchase a home worth less than $224,500, and live in one of the qualifying ZIP codes.
What is the $7,500 first-time home buyer loan in Michigan?
This program is available throughout the state and provides a zero-interest $7,500 loan that only has to be paid back when you sell your home, refinance, transfer the title, or pay off your mortgage. To use this product, you must have an MSHDA mortgage, and you must also complete a homeowners education program through an approved counselor.
How do I qualify for MSHDA?
All first-time homeowners in Michigan are eligible for MSHDA mortgages, though repeat buyers are only eligible in certain rural areas. You must purchase a home below the sales price threshold and complete education to demonstrate financial responsibility. MSHDA only works with select vetted lenders, so you will be limited to working with these lenders to receive an MSHDA mortgage.
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Down Payment Assistance Programs
in Other States We Serve
California
Qualifying buyers can access a variety of down payment assistance programs, such as the California Dream for All assistance program.
Florida
The Florida Assist program and the Florida Homeownership Loan Program make it possible for anyone to own a property in the Sunshine State.
Texas
The Texas State Affordable Housing Corporation offers both grants and loans depending on your specific needs, including the “Home Sweet Texas” program.
