Are You a First-Time Home Buyer in Michigan?

Here are the mortgage programs available to first-time homebuyers in your state.

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Saving up for a home in Michigan? You might be closer to homeownership than you think.

The Michigan State Housing Development Authority (MSHDA) helps residents secure affordable, quality housing so the state’s diverse communities can thrive. It has a full complement of mortgage programs, provides assistance with upfront costs and grants long-term tax credits.

But before we look at all of your state-specific options in Michigan, it’s important to check out what’s available to you on a national level from the federal government.

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Nationwide first-time homebuyer programs

To get a “conventional” loan — that is, one sourced directly through the private market — you’ll often need a credit score of at least 620 and a down payment of at least 5% of the purchase price.

More: Use these savings accounts to build up your down payment.

That’s tough enough for first-time buyers, but if your down payment falls under 20%, you’ll also have to pay for pricey mortgage insurance.

Many Americans entering the real estate market for the first time will find it easier to use one of these nonconventional mortgages offered by the federal government.

FHA loans

In 1934, following the Great Depression, the Federal Housing Administration created FHA loans to help more Americans become homeowners. At the time, the U.S. was a nation of mostly renters.

The FHA's Loan Requirements Explained.

A walkthrough of how to meet the FHA's requirements.

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Securing an FHA loan is less difficult than a conventional mortgage. Your credit score typically only has to be 580, and your down payment can be as low as 3.5% of the purchase price. But you may still be expected to pay additional fees for mortgage insurance depending on how much money you put down.

VA loans

Toward the end of the Second World War, Congress passed an act to increase benefits for its many veterans. That act made it possible for the U.S. Department of Veterans Affairs (VA) to guarantee or insure home, farm and business loans made to veterans by lending institutions.

These loans are available to active service members, veterans or surviving military spouses. VA loans don’t require down payments or mortgage insurance, though they do have a significant funding fee.

USDA loans

USDA loans are guaranteed by the United States Department of Agriculture to help lower-income rural and suburban Americans buy a home. Like VA loans, they also don’t require down payments or mortgage insurance.

When you take out one of these loans, you will face an upfront 1% guarantee fee and an annual 0.35% fee. However, these fees usually end up costing less in the long run than the mortgage insurance costs associated with other types of loans.

Sounds enticing, but remember that USDA loans are limited to lower-income Americans. The current income limits in most parts of the U.S. are $86,850 for one- to four-member households and $114,650 for five- to eight-member households, but the thresholds may be higher if you live in a county with a high cost of living. You can find your region’s limit on the USDA’s website.

How to qualify for Michigan down payment assistance

These programs are designed to help low- and moderate-income people become homeowners. To that end, MSHDA has set income limits that vary based on your region and family size, and the maximum allowable purchase price is $224,500.

Qualified applicants will also have to attend homebuyer education classes before closing.

More: Get a free credit score and credit monitoring from Credit Sesame.

MSHDA loans and other first-time homebuyer programs in Michigan

Infographic explaining programs for first-time homebuyers in Michigan

MSHDA’s Homeownership Division works with various partners to help strengthen and sustain Michigan’s communities.

Once you’ve determined you’re eligible for a special program, you’ll apply through one of MSHDA’s participating lenders. That lender will work with you every step of the way to ensure you make the most of the financial assistance on offer.

MI Home Loan

The MI Home Loan offers first-time homebuyers (as well as repeat buyers in targeted areas) affordable fixed-rate mortgages. You’ll also gain access to the Down Payment Assistance Program.

The minimum credit score for this program is 640, but when purchasing a multiple-section manufactured home, it goes up to 660.

Buyers who meet the income and purchase price limits can apply for a mortgage through one of MSHDA’s participating Home lenders.

The Mortgage Underwriting Process Explained

A walkthrough of proven steps to getting a mortgage approval.

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MI Home Loan Flex

This program for both first-time and repeat buyers offers a more flexible, forgiving home loan that can be combined with the Down Payment Assistance Program.

With Flex, not all adults living in the home need to apply. Only qualifying borrowers from the household will face scrutiny of their credit, assets and income — but those borrowers will need a minimum credit score of 660.

Your finances also don’t have to be perfect. To qualify for Flex, borrowers don’t need to pay off all collections and judgments against them.

Homebuyers who meet the income and purchase price requirements can apply through one of MSHDA’s participating Flex lenders.

Michigan Down Payment Assistance Program

This secondary loan for first-time homebuyers can be used alongside either the Home Loan or Home Loan Flex programs. You’ll get access to up to $7,500 at 0% interest to help with the down payment and closing costs associated with buying a home.

Borrowers must still contribute at least 1% of the sales price, but gifts from your friends and family can count toward this contribution.

You can apply for this loan through your participating mortgage lender.

Mortgage Credit Certificate (MCC)

The MCC program provides first-time homebuyers, as well as repeat homebuyers in the state’s targeted areas, with a federal tax credit.

This tax credit is a dollar-for-dollar reduction in the amount of federal tax you owe each year. The credit is equal to 20% of the interest you pay on your mortgage. It’s good for the life of your loan, up to 30 years, as long as the home remains your primary residence.

To qualify, your household’s income will have to fall within the MSHDA’s limits, depending on the size of your family and the region you live in.

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Next steps

Now you have all the information, but it might not be clear what you should do first.

Ideally, before you start the home loan process, you’ll have a good idea of how much you can afford and how your credit score stands.

Don’t know your score? You can get a free look through the site Credit Sesame. If you discover your credit’s not doing so well, you might want to use the services of a credit repair organisation like Self to bring your score up.

Once you’re in a better position, you’ll want to gather all of your critical documents so you can show you have some cash on hand and money flowing in.

Then you can finally go ahead and get pre-approved for a mortgage, check out some listings and start making your dream of owning a home in Michigan come true.

Support for new homebuyers in other states

Arizona Department of Housing (ADOH) Read More
Arkansas Development Finance Authority (ADFA) Read More
California Housing Finance Agency (CalHFA) Read More
Colorado Housing and Finance Agency (CHFA) Read More
Connecticut Housing Finance Authority (CHFA) Read More
Delaware State Housing Authority (DSHA) Read More
Florida Housing Finance Corp. (Florida Housing) Read More
Georgia Dream Read More
Hawaii Housing and Finance Development Corporation (HHFDC) Read More
Idaho Housing and Finance Association Read More
Illinois Housing Development Authority (IHDA) Read More
Indiana Housing and Community Development Authority (IHCDA) Read More
Iowa Finance Authority (IFA) Read More
Kansas Housing Resources Corporation Read More
Kentucky Housing Corporation (KHC) Read More
Louisiana Housing Corporation (LHC) Read More
MassHousing (Massachusetts) Read More
Michigan State Housing Development Authority (MSHDA) Read More
Minnesota Housing Read More
Missouri Housing Development Commission (MHDC) Read More
Montana Board of Housing (MBOH) Read More
Nebraska Investment Finance Authority (NIFA) Read More
Nevada Housing Division Read More
New Mexico Mortgage Finance Authority (MFA) Read More
State of New York Mortgage Agency (SONYMA) Read More
North Carolina Housing Finance Agency (NCHFA) Read More
Ohio Housing Finance Agency (OHFA) Read More
Oklahoma Housing Finance Agency (OHFA) Read More
Oregon Housing and Community Services (OHCS) Read More
Pennsylvania Housing Finance Agency (PHFA) Read More
South Dakota Housing Development Authority (SDHDA) Read More
Tennessee Housing Development Authority (THDA) Read More
Texas Department of Housing and Community Affairs (TDHCA) Read More
Utah Housing Corp Read More
Virginia Housing Read More
Washington State Housing Finance Commission (WSHFC) Read More
Wisconsin Housing and Economic Development Authority (WHEDA) Read More
Wyoming Community Development Authority (WCDA) Read More