Detroit Down Payment Assistance and First-Time Homebuyer Programs

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.

Are you looking to buy a home in Detroit? On this page, we’ll break down home buyer programs that will help you become a home buyer.

Down payment assistance programs in Detroit

Down payment assistance and first time home buyer programs aim to help home buyers make a larger down payment, cover closing costs, or a combination of both. There are several types of home buyer benefits, including grants, forgivable loans, and interest rate reductions and tax credits.

A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify. Some loans are even forgivable if you meet certain requirements like staying in the home for a few years.

Less commonly, some programs come with lower interest rates and tax credits (e.g., mortgage credit certificates) to help lower your monthly payments.

Detroit Down Payment Assistance Program

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.

Statewide down payment assistance programs available in Detroit

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.

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.