Michigan First-Time Home Buyer Programs of 2021

By NerdWallet 
Edited by Beth Buczynski
Michigan First-Time Home Buyer Programs

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Need help buying your first home? The Michigan State Housing Development Authority helps with two loan programs, plus a down payment assistance program.

If you haven't owned a home in the last three years, you can qualify as a first-time home buyer. That means that if you owned a home but lost it more than three years ago in the housing crash, you may be able to get a fresh start under these programs.

National first-time home buyer programs

These national loan programs appeal to many first-time home buyers. Offered by most lenders, the loans have low down payment or flexible credit requirements.

Conventional mortgage

Best for:

Low down payments, limited mortgage insurance premiums

What you need to know:

A conventional mortgage is a home loan that isn’t guaranteed or insured by the federal government. Conventional mortgages that conform to the requirements set forth by Fannie Mae and Freddie Mac allow down payments as low as 3% for first-time buyers or lower-income home buyers. Unlike FHA loans, conventional loans allow borrowers to eventually cancel their mortgage insurance or avoid mortgage insurance altogether if they put at least 20% down.

VA loans

Best for:

Military, low down payments

What you need to know:

The U.S. Department of Veterans Affairs helps service members, veterans and surviving spouses buy homes. VA loans are especially generous, providing competitive interest rates, often requiring no down payment or mortgage insurance. Although there is no official minimum credit score, most VA-approved lenders require scores of at least 640.

FHA loans

Best for:

Low credit score, low down payments

What you need to know:

This is the go-to program for many first-time home buyers with lower credit scores. The Federal Housing Administration allows down payments as low as 3.5% for those with credit scores of 580 or higher. The FHA will insure loans for borrowers with scores as low as 500 but requires a 10% down payment for a score that low. Mortgage insurance is required for the life of an FHA loan and cannot be canceled.

USDA loans

Best for:

Low down payments, rural

What you need to know:

A USDA home loan is a zero-down-payment mortgage for eligible rural and suburban home buyers. USDA loans are issued by the U.S. Department of Agriculture through the USDA Rural Development Guaranteed Housing Loan Program. There are income limitations, which vary by region. Applicants with credit scores of 640 or higher receive streamlined processing. Those with scores below that must meet more stringent underwriting standards.

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MSHDA highlights and eligibility requirements

The Michigan State Housing Development Authority offers mortgage programs for both first-time home buyers and repeat buyers. The mortgages feature fixed interest rates and low down payment requirements, and they can be combined with the authority's down payment assistance and mortgage tax credit programs.


  • Alternative credit review is available for some borrowers who have no credit score.

  • The minimum down payment for a conventional loan is 3%, and down payment assistance is available.

  • Available to first-timers as well as repeat home buyers in certain economically disadvantaged target areas.

  • You have your choice of conventional, FHA, VA or USDA loans.


  • Available for credit scores as low as 640.

  • The home has to be your primary residence.

  • There are limits on sales price, income and overall debt-to-income ratio.

  • You must attend a home buyer education course to receive down payment assistance.

  • You have to contribute at least 1% of the loan amount, even with down payment assistance.

MSHDA first-time home buyer loan programs

MI Home Loan

Best for:

Low down payment

What you need to know:

The MI Home Loan is for first-time home buyers (and repeat buyers in targeted areas) with low to moderate incomes. The minimum credit score is 640. All loans under the program are 30-year fixed-rate mortgages. Every adult who intends to live in the home must apply and meet loan qualifications. The loan can be used to buy a manufactured home if the structure meets MSHDA guidelines. It also can be used to buy a single-family house or a condominium.

MI Home Loan Flex

Best for:

Low down payment

What you need to know:

The MI Home Loan Flex program is, true to its name, a little more flexible than the MI Home Loan program in a couple of ways. It’s for first-time and repeat home buyers statewide. And it doesn’t require all adults who intend to live in the home to apply for and qualify for a mortgage.

But the Flex program is also a bit more restrictive. The minimum credit score is 660 (but it doesn’t require every adult in the home to apply), and a home buyer education course is required.

MSHDA Down Payment Assistance

Best for:

Down payment assistance

What you need to know:

The Michigan State Housing Development Authority offers down payment assistance to people who buy their homes under the MI Home Loan and the MI Home Loan Flex programs. It comes in the form of a 0% interest loan with no monthly payments.

The Michigan Down Payment program offers down payment help up to $7,500. The money can be spent on closing costs, prepaid expenses (such as homeowners insurance and property taxes) and the down payment itself. Even with the down payment assistance, you still have to come up with at least 1% of the loan amount yourself.

The down payment assistance must be repaid when the home is sold, the mortgage is refinanced or the home loan is paid off in full.

Mortgage Credit Certificate

Best for:

Tax credits

What you need to know:

The Mortgage Credit Certificate program issues a federal tax credit to first-time home buyers throughout Michigan, and to repeat home buyers in targeted areas. Mortgage borrowers can credit 20% of the annual mortgage interest paid to offset their tax bills. Income limits vary, depending on household size and property location, and the maximum sales price is $224,500.

Summary: 2021 MSHDA first-time home buyer programs

  • MI Home loan with low down payment.

  • MI Home Loan Flex with low down payment for first-time home buyers and repeat buyers.

  • MSHDA Down Payment Assistance offering help for down payment and closing costs.

  • Mortgage Credit Certificate to provide an annual tax credit.

Start out on the Michigan State Housing Development Authority's "Homeownership" page, which has links to information about the state's loan programs, including mortgage credit certificates and home buyer education classes.

If you need down payment assistance, take a look at MSHDA's down payment assistance page.

The authority's website maintains a county-by-county list of loan officers who do MI Home Loans.

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