Welcome back, future Michigan homeowners!

In our last post, we talked about the exciting journey of buying your first home in our great state. Now, let’s dive into something super important: how you’re actually going to pay for it! This is where mortgages come in. Don’t let the word scare you; it just means a loan specifically for buying a house. And here in Michigan, there are several different types of mortgages that might be a good fit for you as a first-time buyer.

Think of a mortgage as partnering with a lender (like a bank or a mortgage company) who gives you the money to buy your house. You then pay them back over time, usually with monthly payments that include interest (a small fee for borrowing the money). Understanding the different types of mortgages available in Michigan will help you choose the one that best fits your situation and your dreams.

Here are a few common types of mortgages you might hear about:

1. Conventional Loans: These are mortgages that aren’t backed by the government. They often require a good credit score, 620 or above, and a down payment (the money you pay upfront) that’s usually a percentage of the home’s price. In the case of conventional loans, the minimum down payment for first-time buyers is 3% of the purchase price.  For first-time buyers with solid credit and some savings, a conventional loan can be a great option.

2. FHA Loans: These loans are insured by the Federal Housing Administration (FHA), which makes them a bit easier to qualify for than conventional loans. They often have lower down payment requirements, 3.5% and can be a good choice if you’re still building your savings or have a slightly lower credit score, 580 minimum. FHA loans are very popular with first-time homebuyers across the country, including right here in Michigan.

3. VA Loans: If you or your spouse are a veteran, active-duty military member, or an eligible surviving spouse, you might qualify for a VA loan. These loans are backed by the Department of Veterans Affairs and often come with fantastic benefits, like no down payment and no private mortgage insurance. It’s a way for our country to thank those who have served, and it can be a huge help for first-time homebuyers in Michigan who are eligible.

4. USDA Loans: If you’re looking to buy a home in a more rural area of Michigan, you might be eligible for a USDA loan. These loans are backed by the U.S. Department of Agriculture and are designed to help people buy homes in eligible rural areas. Sometimes, they even offer no down payment options! Michigan has many beautiful rural communities that could qualify.

5. MSHDA Loans (Michigan State Housing Development Authority): This is where things get really interesting for first-time buyers in Michigan! MSHDA offers several programs specifically designed to help people buy their first home. These programs often include:

• MI Home Loan: This program can help first-time homebuyers statewide (and repeat buyers in certain areas) with a fixed-rate mortgage. It often requires a minimum credit score of 640. You might also be eligible for down payment assistance through this program.
• MSHDA First-Generation Down Payment Assistance: Launched in early 2025, this pilot program offers a deferred loan of up to $25,000 for eligible first-generation homebuyers! A first-generation homebuyer is generally defined as someone whose parents did not own a home in the last three years, and the buyer themselves has not owned a home in the last three years. This loan can be used for down payment, closing costs, and prepaid expenses. It’s a 0% interest loan with no monthly payments and is repaid after 30 years or if you sell, refinance, or transfer the home. There are income and purchase price limits, and a minimum credit score of 640 is required. This program must be combined with a MI Home Loan (conventional, FHA, or USDA) and requires completing a homebuyer education course.
• MI 10K DPA Loan: This program offers a down payment assistance loan of up to $10,000 statewide to eligible homebuyers who also qualify for a MI Home Loan. It’s a 0% interest loan with no monthly payments, helping with upfront costs and has all the same qualification requirements as their other loans; 640 minimum credit score, homebuyer education course is required, income and sales price limits apply.

Which one is right for you? It depends on your individual circumstances, like your credit score, how much money you have for a down payment, and whether you qualify for any special programs like VA or MSHDA.

The best way to figure out which mortgage is the right fit for you in Michigan is to talk to a mortgage lender – like me! We can look at your financial situation, explain all your options in detail, and help you get pre-approved for a loan. Getting pre-approved is like getting a ticket to the home-buying game; it shows sellers you’re serious and know how much you can afford.

Understanding your mortgage options is a big step towards owning your first home in Michigan. Don’t feel overwhelmed! Take your time, ask questions, and explore what’s available to you. In our next post, we’ll talk about the crucial step of getting pre-approved for a mortgage and why it’s so important in Michigan’s housing market. Stay tuned!

Ready to explore your Michigan mortgage options? As a local mortgage lender right here in Metro Detroit, I have extensive experience helping first-time homebuyers navigate these choices. Let’s have a chat about your specific situation and find the best path to your dream home in Michigan. Reach out today to get started!