Do you imagine your first home near peaceful nature, family-friendly suburbs or action-packed city life? No matter your vision, you can potentially achieve the space of your dreams with Michigan down payment assistance (DPA) programs.
The Michigan State Housing Development Authority (MSHDA) offers DPA loans to make safe housing more affordable for first-time home buyers. Learn how to reduce upfront expenses associated with buying a house, such as the down payment, closing fees and moving costs, when making your homeownership dreams a reality.
Benefits of MSHDA Loans for First-Time Homebuyers
If you’re a low- or middle-income homebuyer, you may be eligible to receive a DPA loan of up to $10,000 from the MSHDA. Established in 1966, the federal agency aims to make homebuying more accessible throughout Michigan.
Whether you’re tired of renting or want to settle down, this down payment assistance offers a way to reach your next chapter in life. MSHDA’s funding provides qualifying homebuyers with:
- No interest accrued: Have peace of mind with a “silent” second loan that doesn’t accrue interest over time. The DPA loan is due when the home is refinanced, paid off or sold.
- Compatibility with many mortgagees: Enjoy the versatility of choosing from many mortgagee types. The DPA funding pairs well with most conventional, United States Department of Veterans Affairs (VA), Federal Housing Administration (FHA) and U.S. Department of Agriculture (USDA) mortgagees.
- Lower monthly mortgage insurance: Use the funds to create a larger down payment, which can lower your mortgage insurance expenses required by lenders. A down payment of 20% or more of the property’s value may eliminate the need for monthly mortgage insurance.
The Michigan Down Payment Assistance Requirements
The MSHDA program is a popular choice for first-time homebuyers in Michigan. To qualify, you must:
- Meet the criteria of a first-time homebuyer: Indicate you have never purchased a home or meet specific criteria related to the type of property you previously owned. Previous homeowners who have not owned a home for the past three years may qualify for the DPA program.
- Take a homeownership education course: Understand your housing needs and household budget. Homeownership education allows you to make informed decisions and confidently move forward with the homebuying process.
- Have the minimum credit score: Demonstrate you are a responsible borrower and can be trusted to repay loans. All people living in the home who are at least 18 must qualify for the loan with a credit score of 640 or higher, although some exceptions may apply per situation.
- Meet the debt-to-income ratio: Show you make more than you owe with a debt-to-income ratio of at least 45%. Your income must fall within certain limits, depending on your family size and the area where you want to live.
- Choose a fairly priced home: Select a single-family home or condo priced below $224,500 and indicate that the property will be your primary residence. Homebuyers must make an upfront investment in the property that equals at least 1% of the purchase price.
How to Apply for the MSHDA Down Payment Assistance
Ready to apply for down payment assistance with a first-time homebuyer’s loan from MSHDA? Follow these steps:
1. Complete an Educational Course
Although you can take a course at any time before you buy a home, it’s a good idea to learn helpful information early on. Knowing what to expect when budgeting for a home, shopping, working with a lender and closing the deal can make the experience easier and more convenient. At the end of the class, you’ll receive a certificate that’s valid for 12 months.
2. Schedule a Meeting With a Loan Officer
The professionals at Homesite Mortgage have the knowledge and experience to offer guidance throughout your homebuying process. Schedule a meeting to discuss your goals and eligibility for down payment assistance. We can provide more information about saving opportunities and answer your questions.
3. Submit Your Mortgage Application
Our loan officers can provide an overview of mortgage types and help you choose the best option for your needs. We help you determine how much home you can afford and identify the documents needed for the application process. Enjoy a seamless experience applying in person or online with us.
4. Get Connected With a Realtor
We work quickly to review your application. Eligible applicants will receive a pre-approval letter with a maximum purchase price. You can use this document to start shopping for homes with a realtor.
5. Apply for Down Payment Assistance
Our helpful mortgage loans may qualify you to apply for down payment assistance. We can walk you through the steps of applying for funding with a home that meets the program’s criteria. Enjoy receiving up to $10,000 from MSHDA.
Discuss Funding Opportunities for Your Homebuying Journey
Homesite Mortgage is a trusted lender in Michigan. Our professionals have the knowledge and experience to guide you throughout the homebuying process and help you afford a house that fits your lifestyle.
To get started, contact our team or submit a pre-approval loan application today. Feel free to visit our online resource center and use our mortgage tools to learn more and complete research.