Best First Time Home Buyer Programs in Michigan

Owning a home is a dream for many but to turn that into reality is a stressful task. It may be difficult to come up with down payments and closing costs, along with a number of other expenses. Especially for a new home buyer, the process can be tedious and draining. Luckily there are many programs available for first time home buyers to make the journey seamless. 

Are you a first time home buyer in Michigan? Take advantage of some of the best first time home buyer programs offered by the state to make homeownership more affordable.

Best First Time Home Buyer Programs in Michigan

• MI Home Loan
• MI Home Loan Flex
• Mortgage Credit Certificate

Best National First Time Home Buyer Programs

• Best National FHA Lender: Rocket Mortgage® by Quicken Loans®
• Best National VA Lender: Veterans United
• Best National USDA Lender: Fairway Independent Mortgage

First Time Home Buyer Programs in Michigan

Michigan Housing Development Authority (MSHDA) offer numerous first time home buyer programs to make homeownership dream a reality. Right from down payment and closing cost assistance to tax credits and interest rates, these programs can help lighten your financial burden. Each program vary by state and certain eligibility requirements are to be met. To check your eligibility, you can visit the MSHDA’s website.

MI Home Loan

Known for its lower mortgage rates, MI loans are available statewide for home buyers with low to moderate income. This program offers loan with down payment assistance up to $7,500 and a 30-year fixed mortgage rate. First time home buyers can use this loan to purchase a single family home, condominium or a manufactured home that meets the MSHDA requirements.

Eligibility Requirements

• You must have a credit score of 640.
• For multiple-section manufactured homes, a credit score of 660 is required.
• Home buyer education is required for the down payment assistance.
• All adults in the household are required to apply and credit qualify (Does not apply to dependents 18 years of age and older who are full-time students).
• Household income limits apply depending on property location and family size.
• Maximum sales price of $224,500.

MI Home Loan Flex

MI Home Loan Flex provides more flexible mortgage programs for first time home buyers statewide. You can take advantage of the program’s low down payment options to save tons of money while buying your first home. This program does not require you to pay off collections and judgments – your lender will follow with the Automated Underwriting System Findings (AUSF).

Eligibility Requirements

• A credit score of 660 is required.
• Household income limits will vary depending on the family size and location.
• Doesn’t require all adults in the home to apply and qualify for the mortgage.
• The down payment assistance offered for the loan is 4% of the purchase price that shouldn’t exceed $7500.
• Maximum sales price statewide is $224,500.

Mortgage Credit Certificate

The Mortgage Credit Certificate program (MCC) provides a federal tax credit to first-time home buyers throughout the state. Tax credit helps reduce your tax liability dollar for dollar and is allowable every year for the life of the mortgage that is up to 30 years. If you qualify, you can credit 20% of your annual mortgage interest that has been paid against your year-end tax liability. 

Eligibility Requirements

• Maximum sales price statewide is $224,500.
• Household Income limits may vary, depending on the size of household and property location.

You can contact an experienced participating lender to see if you qualify for any of the above MSHDA programs. 

Best National First Time Home Buyer Programs

Along with state-level programs, there are a number of national loan programs available in Michigan. We have rounded up some of the best first time home buyer programs. Let’s have a look at them below.

FHA Loans

The Federal Housing Administration’s Program (FHA) has helped millions of US citizens become new homeowners. These loans are offered by private lenders but insured by the FHA. It is the go-to program for first-time home buyers with low credit scores. The FHA loans offer down payments as low as 3.5% for borrowers with credit scores of 580 or higher. It also insures loan for those with credit scores as low as 500, but a 10% down payment is required. 

Eligibility Requirements:

• A credit score of at least 500.
• Your property must be your primary residence.
• Debt-to-income ratio of 50% or lesser.
• A down payment of 3.5%, if your credit score is 580 or higher.
• 10% down payment for a credit score between 500-579.

Rocket Mortgage® by Quicken Loans® is the nation’s largest mortgage lender, serving millions of customers. With their streamlined application process, you can apply for a loan online and may be able to get instant approval.

This platform lets you work at your own pace, and along the way if help is needed, you can talk to their experts by chat, email or phone. Rocket Mortgage® offers more lenient qualifying requirements and low down payment options. Ranked highest in the country for customer satisfaction, Rocket Mortgage® is the most reliable FHA lender according to Benzinga's rankings.

VA Loans

A VA loan is a low-cost mortgage available to service members, veterans and surviving spouses through the U.S. Department of Veterans Affairs. VA loans usually don’t require a down payment or mortgage insurance. They have more relaxed credit requirements than those for a conventional loan, but you still need decent credit and sufficient income to buy a home. If you qualify for a VA loan, you can buy your new home at better interest rates than you would find with other types of loans.

Eligibility Requirements:

• You must have a Certificate of Eligibility (COE) approved by a VA lender.
• You must have 90 consecutive days of service during war time.
• You must have 181 consecutive days of service during peace time.
• You must have 6 years of service in the Reserves or National Guard.
• Spouse of veteran who died in the line of duty or due to service-related disability.
• Spouse of service member if you are not remarried.

Best National VA Lender: Veterans United

Veterans United holds the top spot for VA purchase lending and is the nation’s largest VA lender. They employ highly trained specialists who are former service members, so you can be assured that you’re getting the most out of your mortgage. It is easier to qualify for and requires no down payment, making it an ideal choice for veterans and service members. Veterans United also offer an excellent selection of other conventional and government loans.

USDA Loans

A USDA loan program is a zero-down-payment loan that makes home buying more affordable for people living in eligible rural and suburban areas. These loans are issued by the U.S. Department of Agriculture making them more accessible than other loan programs. USDA loans usually don’t require any down payment, and if there is, it’s very small. They are generally low interest loans and given to homebuyers with lower incomes. 

Eligibility Requirements:

• You must have a U.S. citizenship or permanent residency.
• You must have a stable and dependable income.
• Property must be in the rural qualifying area.
• You must have an adjusted income that is equal to or less than 115% of the median income area.
• Property must serve as the primary residence.
• A credit score of 640 is required.

Best National USDA Lender: Fairway Independent Mortgage

Fairway Independent Mortgage offers first-time home borrowers a wide variety of loan products with adjustable mortgage rates. Their online mortgage platform provides a simplified loan application process and fast turnaround time. Fairway Independent Mortgage offers highly personalized service through every step of the loan process.

Choosing the Right Mortgage Lender

There are numerous options available to new home buyers of any profession, including loan programs for self-employed too. Shopping for the right mortgage is more than just about rates. You need to research your options before you finalize. Speak to a few lenders - compare their loan types, benefits and terms, etc. Considering all the factors and choosing the right mortgage will save you thousands in the long run.

Frequently Asked Questions