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Michigan First-Time Home Buyer Programs of 2018

May 23, 2018
Finding the Right Mortgage, Mortgages
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.

MSHDA highlights and eligibility requirements


  • Available for credit scores as low as 640
  • Alternative credit review is available for some borrowers who have no credit score
  • The minimum down payment is 3% and down payment assistance is available
  • Available to first-timers as well as repeat home buyers in economically disadvantaged target areas such as the cities of Detroit, Grand Rapids, Flint and Dearborn (here’s a list of target areas)
  • You have your choice of conventional, FHA, VA or USDA loans


  • The home has to be your primary residence
  • The 2018 sale price limit is $224,500
  • There are income limits that vary by location
  • Overall debt-to-income ratio of 45% or less
  • You must attend a home buyer education course if you receive down payment assistance
  • You have to contribute at least 1% of the loan amount, even with down payment assistance

» MORE: 25 tips for first-time home buyers

Michigan home buyer assistance programs


The MI Home Loan is for first-time home buyers (and repeat buyers in targeted areas) with low to moderate incomes. The loan has a favorable interest rate, thanks to a bond program that subsidizes it. 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, except for full-time students whose parents live in the home.

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.


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
  • It doesn’t require all adults who intend to live in the home to apply for and qualify for a mortgage

The Flex program is a bit more restrictive in a few ways:

  • The minimum credit score is 660 (but it doesn’t require every adult in the home to apply)
  • Not all Flex loan types can be used to buy a manufactured home
  • With a conventional Flex loan, the minimum down payment on a condo is 5%

Flex loans have the same income requirements as those in the MI Home Loan program, so it’s for home buyers with low to moderate incomes.

A home buyer education course is required if you borrow more than 95% of the home’s value, whether or not you accept down payment assistance.

Because this loan program is not subsidized by a state bond program, interest rates are higher than those under the MI Home Loan program.


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 loan with no monthly payments.

The Michigan Down Payment program offers down payment help up to $7,500. (Under the MI Home Loan Flex program, the limit is $7,500, or 4% of the purchase price, whichever is less.) 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. It has a 0% interest rate.

» MORE: Best Michigan mortgage lenders

Mortgage Credit Certificate program

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. Qualified 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.

Your next step

Start out on the Michigan State Housing Development Authority’s “Am I Eligible for a MSHDA Mortgage?” 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 state agency keeps this county-by-county list of loan officers who do MI Home Loans and another list of loan officers who do MI Home Loan Flex mortgages.

National first-time home buyer programs to consider

Michigan’s first-time home buyer loans are a mix of conventional, VA, USDA and FHA loans. However, you can get those loans without the state’s help, if you wish.

Conventional loans are plain-vanilla mortgages that are guaranteed by Fannie Mae or Freddie Mac if the loans conform to their standards. Some of these loan programs allow down payments as little as 3%.

VA loans don’t require a down payment and are available to qualified active-duty service members, military veterans and certain spouses.

USDA loans, guaranteed by the Department of Agriculture, allow zero-down loans in qualified rural areas. The home doesn’t have to be on a farm or orchard — it just has to be in what the USDA deems a rural area.

FHA-insured loans allow down payments as low as 3.5% and are available to borrowers with low credit scores. Borrowers have to pay monthly mortgage insurance for the life of the loan.

» MORE: FHA loan requirements in plain English

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