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Michigan First Time Home Buyer Loans

Get a Mortgage Loan to Buy Your First Home in Michigan
Loan Program Options - Down Payment Assistance - Fast Loan Approvals

Michigan First Time Home Buyer – 2019 Loan Programs

Are you looking to purchase your first home? Our first time home buyer programs might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Michigan First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  The FHA loan limits in Michigan are either $314,827 or $316,250 depending on the county.  For conforming loans, which are used for conventional and VA loans, the limits are $484,350 for every county.  If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

Michigan Down Payment Assistance Programs

Michigan has a few truly excellent home buying incentives which allow you to receive funds to use for your down payment.  The most popular of these down payment assistance programs are:

MSHDA MI Home Loan / MI Home Loan Flex

The Michigan State Housing Development Authority (MSHDA) offers the MI Home Loan and MI Home Loan Flex programs.  These programs offer up to $7,500 in funds to use for your down payment and/or closing costs.  This is a no interest loan which does not require any monthly payments.  It is only required to be paid off once you either sell your home or refinance.

Program Requirements

  • You must contribute 1% towards the down payment.
  • The minimum credit score required is 640.
  • Your total household income must fall within the income limits.
  • The maximum sales price is $224,500.
  • Complete a home buyer education course.
  • You must either be a first time home buyer, or if you are a repeat buyer, you must purchase a home in a targeted area.

To learn more about the MI Down Payment, please visit the MSHDA website.

You can also learn about your eligibility using the Mortgage Eligibility Tool provided by the MSHDA.

MSHDA Step Forward DPA

The Michigan State Housing Development Authority just launched the Step Forward Down Payment Assistance Program.  This program offers up to $15,000 in assistance to first time home buyer in Michigan.  It is restricted to 61 zip codes, so be sure and check the location restrictions closely.  The assistance comes in the form of a 0% interest rate five-year loan.  You are not required to make any monthly payments on the funds received, and instead the amount is forgiven 20% each year that you occupy the property.   After 5 years, the lien is discharged (assuming you continued to reside at the property for all 5 years).

Program Requirements

  • The minimum credit score required is 640.
  • Your total household income must fall within the income limits.
  • The maximum sales price is $224,500.
  • Complete a home buyer education course.
  • You can not have more than $10,000 in liquid cash assets.
  • You must meet the income limits (ranging from $67,300-$130,340), depending on how many people are in your household.

To learn more about this program, visit the MSHDA website.

In addition to these state programs, there are several regional down payment assistance programs, which you can view on the Michigan Homeownership Assistance section of the HUD website.

The best way to find out what assistance may be available to you is to speak with a loan specialist.  They can also help you get pre-approved, find out how much you can borrow, what your payment will be, and all other pertinent information.  To learn about what down payment assistance is available to you, and to get pre-approved for a home loan, request a free consultation today.

Michigan First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 35% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions 

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment.  Conventional loans typically require either 3% or 5%.  If you receive down payment assistance, you may not need any money for your down payment.

What is the maximum loan amount that I can qualify for?
The amount that you will be allowed to borrow will depend mostly on your income, as well as the particular type of loan you are interested in. There are maximum loan limits for each type of mortgage program which are set at the county level. Conforming loan limits are the maximum loan amounts allowed for conventional mortgages.  FHA loans have their own loan limits.  This is not necessarily how much you can borrow though, but the maximum amount allowed in your location.  The amount that you can personal qualify for will be based upon your income, and how much debt you have.  For most loans, your monthly mortgage payment, along with your monthly debts may not exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Do you have first time home buyer loans for bad credit?
Yes, we offer mortgage options for borrowers with bad credit. This includes FHA loans for bad credit, which you can possibly be approved with a credit score as low as 500. However, a 580 credit score is required for the 3.5% down payment. If your credit score is between 500-579, then you will need to put 10% down.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS, and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments, and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

 

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