Michigan First-Time Homebuyer Programs

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Updated on Thursday, February 21, 2019

Michigan is a stunning state full of forests, scenic trails, golf courses and parks. If you plan to buy your first home in “the Mitten State,” know that there are several programs that can help you out. Two of the programs are for first-time homebuyers with low to moderate incomes who may not be able to afford typical monthly mortgage payments otherwise.

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There is also a forgivable loan that is available in 61 zip codes across 10 Michigan counties with high rates of foreclosures, short sales and bank-owned properties. A federal tax credit for first-time homeowners in Michigan is available as well.

In February 2019, we researched first-time homebuyer programs in Michigan to make it easier for you to turn your dream of homeownership into a reality. We’ll go over them in this guide.

Michigan first-time homebuyer programs

First-time homebuyer programs in Michigan are available through the Michigan State Housing Development Authority (MSHDA). MSHDA’s mission is to provide housing to citizens throughout the state through socially conscious lending programs.

In addition to being a resource for first-time homebuyers, MSHDA helps homeowners in need by providing foreclosure prevention counseling. The organization also offers home improvement loans for homeowners with qualified incomes.

MI Home Loan

The MI Home Loan program offers 30-year fixed-rate mortgages from experienced participating lenders. Interest rates are lower than those of other programs. Intended for first-time homebuyers with low to moderate incomes, the MI Home Loan program also provides down payment assistance of up to $7,500.

Features

The MI Home Loan offers

  • Up to $7,500 in cash assistance for a down payment, closing costs and prepaid expenses.
  • Competitive interest rate.
  • Choice of a 30-year conventional, FHA, VA, or USDA Rural Development (RD) mortgage.

Eligibility

In order to participate in this program, every adult member of the household must co-apply (except for adult children who are verified full-time students). Applicants must

  • Be a first-time homebuyer who has not owned a home in the previous three years. Or be a repeat homebuyer in a targeted area.
  • Have a minimum credit score of 640, or 660 for a multiple-section manufactured home.
  • Purchase a home that is $224,500 or less.
  • Purchase a home as a principal residence that is a single-family unit, condominium or multiple-section manufactured home with a maximum of two acres.
  • Be within the household income limits, which are based on family size and the location of the home.
  • Complete a homebuyer education class.

How it works

If you’re interested in applying for the MI Home Hoan, you must contact one of the participating lenders throughout the state to begin the process. Once you get in touch with a lender, you can expect to work directly with them to determine whether or not you are eligible. If you meet the eligibility requirements, the lender will help you through the application process.

MI Home Loan Flex

The MI Home Loan Flex is a bit more flexible than the standard MI Home Loan. While income requirements are the same, they do not apply to every adult in the household. Only the applicant’s income is used. In addition, collections and judgements do not necessarily have to have been paid off.

Features

The MI Home Loan Flex program offers

  • Four percent of the purchase price (up to $7,500) in cash assistance for a down payment, closing costs and prepaid expenses.
  • Thirty-year fixed-rate mortgage with a competitive interest rate.
  • Option of a conventional, FHA, VA or RD loan.

Eligibility

In order to participate in this program, you must

  • Be a homebuyer in the state of Michigan.
  • Have a minimum credit score of 660.
  • Purchase a home that is $224,500 or less and is a principal residence that is a single-family unit, multi-section manufactured home or condominium.
  • Be within the household income limits, which are based on family size and the location of the home.
  • Complete a homebuyer education class.

How it works

To apply for the MI Home Loan Flex, you must reach out to one of the participating lenders. You can expect to work directly with them to determine whether you qualify for this program and receive guidance throughout the application process if you do.

Step Forward Down Payment Assistance (DPA)

The Step Forward DPA loan is a forgivable loan that is available in 61 zip codes across 10 Michigan counties. It was launched in October 2018 to promote homeownership in areas with high rates of foreclosures, short sales and bank-owned properties.

The program has $20 million in funds that are distributed on a first-come, first-served basis to help with down payments. While no monthly payments are required with this program, the loan must be repaid before the home is sold, refinanced or completely paid off.

Features

The Step Forward DPA loan

  • Is a forgivable loan for $15,000 that is to be used with the MI Home Loan program.
  • Can be used for a down payment, closing costs or prepaids/escrows. Any remaining balance must be used toward the principal balance of the MI Home Loan.
  • Has a 0% interest rate.
  • Is forgiven at a rate of 20% per year and is fully discharged after the fifth year if you still own the home and live in it as your primary residence.
  • Has no monthly payment requirements.

Eligibility

In order to participate in this program, you must

  • Be a homebuyer in the state of Michigan and utilize the MI Home Loan.
  • Have a minimum credit score of 640, or 660 for a manufactured home.
  • Purchase a home that is $224,500 or less.
  • Be within the household income limits, which are based on family size and location.
  • Complete a homebuyer education class.

How it works

To apply for the Step Forward DPA loan, you must reach out to one of the participating lenders. They’ll help you determine whether you’re eligible and walk you through the application process if you are.

Mortgage Credit Certificate (MCC)

First-time homebuyers in Michigan may file for the Mortgage Credit Certificate, or MCC. The MCC gives you the opportunity to claim 20% of your annual mortgage interest as a tax credit. This can be paired with an MI Home Loan and help significantly offset your federal tax liability.

Features

The MCC offers

  • A 20% tax credit every year for the life of the original mortgage, which may be up to 30 years.

Eligibility

In order to participate in this program, you must

  • Be a first-time homebuyer in the state of Michigan or a repeat homebuyer in a targeted area.
  • Purchase a home that is $224,500 or less.
  • Be within the household income limits, which are based on family size and location.

How it works

To apply for the MCC, you must contact one of the MCC lenders. They’ll help you determine eligibility and guide you through the process of applying for this tax credit in the event you are eligible.

National first-time homebuyer programs

If your goal is to buy a home in Michigan, understand that you’re not limited to first-time homebuyer programs in the state. There are also several national first-time homebuyer programs that you may benefit from. For more information about these national programs, check out LendingTree’s guide to first-time homebuyer programs.

The information in this article is accurate as of the date of publishing.

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