First time home buyers in Michigan, like those in many other states, have access to a variety of state first time home buyer programs designed to help them purchase their first home. Most of these programs are administered by the Michigan State Housing Development Agency in collaboration with mortgage lenders. Assistance may come in the form of grants, down payment and closing cost loans, and low-cost mortgages. A visit to the agency's website will give a first time home buyer access to the information they need to get started. As an alternative, a real estate broker or mortgage lender should also have details on the programs available in your area.
Michigan State Housing Development Agency (MSHDA)
The MSHDA is very similar to government entities in other states whose mission is to secure affordable housing for residents. The agency was established by the Michigan State Legislature in 1966 and is self-funded through the sale of bonds and other types of instruments to investors. The agency fulfills its mission by bringing together private and public entities that can together provide the necessary funding needed to ensure affordable housing opportunities in the state. At the current time the agency administers a down payment assistance program, low interest loan program, and federal mortgage credit certificates.
Download Payment Assistance Program
The MSHD down payment assistance program is offered through participating lenders to Michigan's low and moderate income home buyers. The assistance comes in the form of a 0%, non-amortized loan of up to $7,500 which can be applied to closing costs or down payment.
Although this is a loan which is attached as a secondary lien on the property, there is no monthly payment schedule. As long as the loan is satisfied at the time the first mortgage is paid off or refinanced, borrowers will be able to settle it on a dollar for dollar basis. As with many state down payment assistance program, applicants must meet income eligibility requirements, complete a home ownership education program, and contribute at least 1% of the home's purchase price to the down payment.
Home Loan Products
The MSHD partners with participating mortgage lenders to provide four different loan options. Those options include a conventional mortgage as well as FHA, VA, and RD loans. The conventional mortgage option can only be used in a situation where the loan to value ratio (LTV) is 80% or less. That means it is a product that most first time home buyers will probably not be eligible for because it requires a 20% down payment.
The most common loan product used by first time buyers is the FHA loan which offers a 30 year, fixed-rate product and options for down payment assistance, contributions from third parties of up to 6% of the total loan amount, step and buy down options, and options for those with non-traditional credit. Regardless of which of the four loan programs a Michigan first time home buyer avails himself of, he will be required to maintain the purchased home as his primary residence for at least three years. There are also other restrictions that apply, including income eligibility.
Other Programs for First Time Home Buyers
Michigan is similar to most other states in that other programs are available to first time home buyers through various other means. Many of Michigan's cities and counties provide both down payment assistance as well as low interest loan programs, and grants from HUD and nonprofit organizations are also occasionally available. Because these programs are offered on a limited basis your best bet is to check with your mortgage lender or real estate broker to find out what's currently available in your area. The following is a list of programs currently listed by HUD as active in Michigan:
- Berrien County Greater Niles Community Development Corporation Acquisition/Development/Resale Program (ADR)
- Iron Community services Agency/U.P. Community Services, Inc.(DICSA/UPCSI) Home Purchase Program (DPAP)
- Jackson County Jackson Affordable Housing Corporation Down Payment Assistance Program (DAP)
- Lansing Down Payment Assistance (DPA) Program
- Lansing Home Ownership Program for Employees (LHOPE)
- Multi Counties Little Travese Bay Band of Odawa Indians Down Payment/Closing Cost Assistance Program (LTBB)
- Schoolcraft County Homebuyer Assistance Program (HAP)
- Wayne County First Time Home Buyers Program (FTHB)