Michigan Down Payment Assistance and First-Time Homebuyer Programs

Michigan is known for its industrial scene, bolstered by the automotive, manufacturing, healthcare, and energy industries. However, it also offers the opportunity to enjoy a lifestyle encompassing urban vibrancy and the great outdoors. The state is also ranked fourth most affordable in the country, with the cost of living 10 percent below the national average.

Yet, despite the overall affordability, Michigan faces a housing supply crisis, which has created a housing affordability issue. The typical response to a supply shortage is increased production; however, this is easier said than done, especially in the housing sector. Oppositions from Not-in-my-backyard (NIMBY) groups and racially motivated regulations have impeded the development of more affordable housing options across Michigan.

Fortunately, policymakers aim to address these issues with a Statewide Housing Plan, which outlines eight priorities, including homeownership in the state. Among other priorities, this plan seeks to facilitate a minimum of 13,500 homeownership opportunities for low-income and middle-income households through increased access to education, products, and services.

Looking for assistance in a specific part of Michigan?

This page summarizes the assistance programs accessible to homebuyers in Michigan, covering statewide and local resources. For precise details regarding down payment assistance in your specific locality, please refer to local information available here:

• Lansing
• Wayne County
• Westland
• Livonia
• Detroit

Down payment assistance in Michigan

Part of Michigan’s Statewide Housing Plan is to improve homeownership within the state through assistance programs and services regarding downpayment and closing costs. Stairs Financials provides updated information on these programs, enabling residents to evaluate and choose the best-suited option.

Michigan State Housing Development Authority

The Michigan State Housing Development Authority (MSHDA) offers homeownership assistance programs for Michigan residents through the MI Next Home Down Payment Assistance and the MI First Home Down Payment Assistance.

Both programs are zero-interest, non-amortizing loans with no monthly payment and can be used in conjunction. However, the MI Next Home Down Payment Assistance is designed for repeat homebuyers, while the MI First Home Down Payment Assistance is for first-time homebuyers.

Assistance type: Forgivable Loans

Sponsor: Michigan State Housing Development Authority

Assistance amount: $7,500 or 4% of the sales price

Purchase price limit: $224,500

Eligibility requirements

• Applicants must have a minimum credit score of 640 or 660, depending on specific conditions.
• Only qualifying borrowers can apply for the Next Home Down Payment Assistance, while all adults in the household intending to occupy the residence must co-apply for the First Home Down Payment Assistance.
• First-time homebuyers must complete a homebuyers education course.

Lansing Down Payment Assistance

Michigan’s capital and Ingham County’s most populous city, Lansing, offers the best of rich history, cultural attractions, and a thriving economy. Despite being the political center of Michigan, Lansing remains a very affordable city, with the cost of living below the nation’s average. However, housing is quite different, with the average rental price in the city rising to nearly $1,000

To curb high rental prices, the City of Lansing Development Office created the Down Payment Assistance program to help individuals with low to moderate income purchase their first home. This program assistance is a zero-interest loan forgivable after five years for existing homes and 20 years for newly constructed homes. The loan becomes due and payable in full when the house no longer serves as the principal place of residence.

Assistance type: Forgivable Loans

Sponsor: City of Lansing Development Office

Assistance amount: Based on needs and is not to exceed $14,999

Purchase price limit: $182,000 in Ingham County and $201,000 in Eaton County for existing homes;  $273,000 for newly constructed homes.

Minimum borrower contribution: $1,000

Eligibility requirements

• The applicant’s household income must not exceed the maximum income amount for the applicable household size.
• Applicants may use funds for down payment, eligible closing costs, and prepaid items.
• Applicants must attend an approved homebuyer education course.

Wayne County Down Payment Assistance

Wayne County is a cornerstone of Michigan’s economy and culture. Over time, the county has evolved and thrived, offering residents and visitors many experiences and opportunities. However, housing remains an issue in this region, particularly in the context of affordability and accessibility.

The Wayne County Down Payment Assistance Program initiative aims to help individuals and families in Wayne County achieve homeownership by providing financial support for down payments. The assistance is in the form of a second mortgage and is reserved only for first-time homebuyers.

Assistance type: Forgivable Loans

Sponsor: Wayne County

Assistance amount: Fixed $14,999 for existing houses

Minimum borrower contribution: $1,000

Eligibility requirements

• Applicants must be first-time homebuyers who have not owned a home within the last three years.
• The applicant’s income level must be $61,400 for a two-person household and $69,050 for a three-person or more household. 

Westland Down Payment Assistance

Westland is a vibrant city highly regarded for its family-friendly neighborhoods, diverse community, and strong community pride. The city continues to attract new residents and businesses, making it a great place to call home. However, as part of Wayne County, it also suffers from some of the housing issues in the region.

As such, the City of Westland’s Homebuyer Assistance Program provides down payment and closing cost assistance for low to moderate-income first-time homebuyers in the region. This assistance is provided through deferred payment loans, which would be repaid in full if the homebuyer sells the property during the specified five-year term of affordability.

Assistance type: Deferred Payment Loans

Sponsor: City of Westland

Assistance amount: Up to $7,500 for homes built before 2000 and $14,500 for homes built since 2000

Eligibility requirements

• Applicants must be first-time homebuyers.
• Every borrower’s annual gross income must not exceed 80% of Detroit’s median income as determined by HUD income limits.
• Property must be the homebuyer’s primary residence located anywhere within the City of Westland.

Livonia Down Payment Assistance

Ranked as Michigan’s sixth-largest city, Livonia offers so much that makes it a unique place to call home. Residents can enjoy its easy access to downtown Detroit and Ann Arbor, top-rated schools, excellent rec center, engaging events all year, and somewhat affordable housing compared to higher-priced nearby areas.

First-time homebuyers in Livonia can also explore the city’s Down Payment Assistance Program to ease the financial strain of homeownership. This program helps residents who have not owned a home in the past three years to purchase specific properties, including single-family homes, condos, and multifamily units within Livonia.

Assistance type: Forgivable Loans

Sponsor: City of Livonia

Assistance amount: $14,999

Eligibility requirements

• Applicant’s household income must be at or below 80% of the Area Median Income.
• The homeowner must occupy the purchased home as the primary residence for five years for the second mortgage to be forgiven.
• Applicants must complete homebuyer education.

Detroit Down Payment Assistance Program

Detroit, known as “The Motor City,” is the most populous city in Michigan and a central hub for the automotive industry. The city is also renowned for its contributions to music, sports, and various cultural institutions. As of the 2020 census, Detroit had a population of 639,111, and it continues to evolve, drawing more visitors and residents alike.

The City of Detroit, through the Housing and Revitalization Department, looks to make the city a more affordable place to live with the Detroit Down Payment Assistance Program. This program aims to assist low-income earners with financial assistance for down payment and other homeownership-related expenses, including rate buy-downs, closing costs, and principal reduction.

Assistance type: Grants

Sponsor: City of Detroit

Assistance amount: $25,000

Eligibility requirements

• Eligible applicants must not have held an interest in property in the last three years.
• The total household income for the applicant can be at most $59,160 for two persons and $74,580 for three or more people.
• All individuals receiving a grant must use the home as their primary residence for three years or pay back the loan prorated, based on how long they lived there.

The Detroit Home Restoration and Acquisition Program

The Liberty Bank also brings its Community Restoration Program to Detroit with the Detroit Home Restoration and Acquisition Program. This new non-traditional mortgage loan enables homebuyers to finance the acquisition and any necessary repairs or renovations to their purchased property in Detroit’s Hardest Hit Priority Neighborhoods.

Assistance type: Interest-Only Loans

Sponsor: Liberty Bank Home Restoration and Acquisition Program (HRAP).

Assistance amount: Up to $15,000 in down payment assistance; Detroit Public School employees may qualify for up to $20,000

Minimum borrower contribution: 10% of winning auction bid

Eligibility requirements

• Applicants must occupy the home as a primary residence.
• Applicants must comply with all requirements if they purchase the home from the Land Bank’s auction.
• Applicants must complete a homebuyer’s education program.

Michigan down payment assistance program FAQs

Here are some of the most frequently asked questions from first-time Michigan homebuyers looking for down payment assistance.

Does Michigan have a first-time buyer program?

Certainly! Michigan offers several programs to assist first-time homebuyers, including the MI Home Loan Program, Home Restoration and Acquisition Program, and several other local down payment assistance initiatives.

How to buy a house for the first time in Michigan?

As a first-time homebuyer in Michigan, you have several options to explore when buying your first home. Typically, the first step is to understand your budget and finances. Determine how much you can afford for a monthly mortgage payment through your income, expenses, savings, and credit score.

Mortgage and down payment assistance programs are also important considerations to make as first-time homebuyers. Take advantage of Stairs Financial’s comprehensive information on Michigan’s first-time homebuyer assistance programs to identify the eligibility requirements and choose the best option.

What is the minimum down payment in Michigan?

The minimum downpayment in Michigan for first-time homebuyers is 3% for conventional loans and about 3.5% for FHA loans. Other options like the VA and USDA loans can offer a zero down payment option.

Can you get Biden first-time home buyer assistance in Michigan?

The Biden first-time homebuyer assistance program remains a bill under consideration by the 2023-2024 Congress and has yet to be enacted into law. Nonetheless, national initiatives such as the Mortgage Relief Credit and Down Payment Assistance for First-Generation Homeowners will be accessible in Michigan upon implementation.

What type of Michigan first-time homebuyer assistance is available?

Most first-time homebuyer assistance programs in Michigan are in the form of grants and forgivable loans. However, these loans are only forgiven when specific criteria are satisfied.

What is the Michigan first-time homebuyer income limit?

The income limit for down payment assistance for first-time homebuyers in Michigan is 80% of each city’s median income (AMI). However, this threshold might fluctuate; hence, you should always check the latest guidelines from the Michigan State Housing Development Agency (MSHDA) or through a participating lender.

What are some requirements for first-time home buyers in Michigan?

Some standard requirements for first-time homebuyers in Michigan include;

• Applicants should not have owned a home within a certain period, mainly about three years.
• There may be income limits based on the median income in the area, which can affect eligibility for specific programs.
• The property location can also be a determining factor; for instance, the Home Restoration and Acquisition Program is reserved for the Hardest Hit Priority Neighborhoods.

How do I qualify for Michigan’s first-time home buyer programs?

Aside from not owning a home in the last three years, the primary qualifying criterion for these programs is the deal’s financials, including credit score, household income, and purchase price limit.

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.