Homeownership is an exciting experience. There’s something special about finding a great place for your family to call home. As you’re envisioning more closet space, a bigger kitchen, or maybe a fenced yard – you’re probably not as thrilled about the cost of initiating a mortgage. If you are like many Michiganians, you may need a leg-up to afford your first home. Thankfully, the Michigan State Housing and Development Authority offers first-time homeowners a chance to save money and qualify for a mortgage with Michigan Home Loan programs.
The Michigan Home Loan Program
The MI Home Loan program is a state-funded mortgage resource for first-time homebuyers. This program is designed to help offset the cost of purchasing a home (up to $224,500 statewide) for individuals and families who meet income, credit, and purchase qualifications in Michigan. Features and requirements of the MI Home Loan include:
Down payment assistance (up to $7,500 – or 4%) in the form of a 0% loan – which must be repaid if the home is resold.
Down payment assistance may also be used toward closing costs, taxes, and insurance.
Borrowers are required to take the Homebuyer Education class if over 95% of the purchase price is financed, whether or not down payment assistance is utilized.
A minimum credit score of 620 is required for approval (640 for manufactured home financing).
Repeat homebuyers may qualify for the MI Home Loan in areas with special development needs.
The MI Home Loan is restrictive in the application process, as all adults in the home must provide credit, income, and asset information to qualify. This rule does not apply to adult students living under their parents’ roof. Some households do not meet this criteria, and may wish to pursue a more flexible option.
Michigan Home Loan FLEX Program
The MI Home Loan FLEX program offers more flexible mortgage terms for first-time and repeat homebuyers in Michigan. Only one qualifying adult in the household is required to apply – so only one set of assets, credit, and income is considered for loan. The FLEX program offers the same down payment assistance, and the same borrowing limit ($224,500 statewide). Some additional features and requirements of the FLEX program:
Borrowers do not necessarily need to absolve or pay off outstanding debts or collections to qualify.
Borrowers should have a minimum credit score of 660;
However, in most cases, additional credit consideration is provided for applicants with little/no credit history.
The FLEX program is not subsidized by a state bond, so the interest rates will be slightly higher overall than the MI Home loan or most conventional programs.
Manufactured homes may not qualify for FLEX financing.
The Michigan Home Loan FLEX Program is an option for homebuyers who meet the guidelines set by MSHDA. While it can be more restrictive in some ways, more forgiving credit and ownership requirements often appeal to borrowers who need more flexible terms while initiating a mortgage.
How to Choose
Participating lenders can verify eligibility, confirm county guidelines, and help homebuyers apply for the MI Home Loan or FLEX program. A qualified lender will offer advice on the risks and benefits of these programs, and help homebuyers make an informed choice. Lenders can offer pre-approval, as well. This allows buyers to know what they can afford during their search for a home. Once the homebuying checklist is complete, the MI Home Loan (or FLEX) is then facilitated through MSHDA.
You May Qualify for the MI Home Loan
You may have resources available to you and your family through a MSHDA program.
Contact our office today for help locating a participating lender, 517-265-9644.