A lot of people feel like they are not able to get into a home because they don’t have cash on hand for a down payment. Many times this is far from the truth. If you have relatively good credit, 660+, most loans only require you to put a small portion up as the down payment. Conventional loans require 3% down, FHA loans 3.5% down, VA loans, and USDA loans require 0% down. In nearly all cases the down payment can be a gift from a family member or close friend if you don’t have the funds in the bank. If you don’t have someone that will help you front the down payment. You could always see if the the property you are looking at qualifies for a 0% down USDA loan, (these loans are generally available in rural areas), they require a jumping through a few hoops, but are a legitimate way to purchase a home that qualifies. You can find some of these properties in Northern Oakland County, or generally around the outskirts Metro Detroit. VA loans, are great and are a wonderful way the Veterans can use there benefits to purchase a home. If you are not a Veteran, the house your looking at is not in a rural area, and you don’t have anyone to help with the cost of down payment, you may still be in luck. The Michigan State Housing Developmental Authority also offers down payment assistance up to $7,500 for those with credit scores above 640. Again, with all things government, there are going to be some hoops to jump through, but there are two programs home owners can use to buy their first home, or their next home. The home value on these loans can not exceed $224,500 at the time I wrote this, but they are available statewide.
Here are links to the down payment assistance programs that Michigan offers:
The Down payment Assistance loan is a zero-interest, non-amortizing loan with no monthly payments; it is only due upon sale or transfer of the property or if the first mortgage is refinanced or paid in full.
To qualify for the MI Next Home Down payment assistance programs borrowers must meet the following requirements:
- Applicants must be repeat homebuyers statewide.
- A minimum credit score of 660 is required.
- Manufactured homes are not eligible under the program.
- All adults in the household need not apply; only qualifying borrowers (that are repeat homebuyers) will be underwritten for credit, assets, and income.
- Collections and judgments do not need to be paid off; lenders will follow their Automated Underwriting System findings.
- Borrowers must fall under the set income limits, which vary by family size and property location.
- The sales price of the property cannot exceed $224,500, statewide.
- Borrowers must complete a homebuyers education course.
To qualify for the MI First Home Down Payment Assistance (DPA), the following criteria must be met:
- Applicants must complete a Homebuyer Education class.
- The program is available to first-time homebuyers statewide and repeat homebuyers in targeted areas.
- Applicants must have a minimum credit score of 640, OR 660 for multiple-section manufactured homes permanently affixed to a foundation, built after June 14, 1976, and taxed as real estate (not located in a rent/lease community).
- All adults in the household intending to occupy the residence must co-apply and credit qualify for the mortgage loan, excluding children who are verified to be full-time students.