Buying your first home is a big step. If you live in Michigan and are feeling overwhelmed by it all, you’ll be happy to know that several first time home buyer Michigan programs are available to make the process a little easier. Regardless of where you are thinking about buying in the state, you may be able to use these programs and incentives to make buying your first home less stressful and more affordable. To qualify for many of these programs, you may be required to complete special classes. In exchange, however, you may receive assistance with making a down payment, credits that reduce your tax obligation, matched savings accounts, special interest rates, and more.
What Kinds of Challenges will I Face when Buying My First Home?
As a first time home buyer Michigan, your first hurdle is simply understanding the process of buying a home. Since most people only buy a few houses in their lifetimes, they don’t usually understand the process very well and can easily end up in way over their heads. If you’re just starting out in life, you may not have very substantial savings. While a large down payment isn’t required for all mortgage products, having one helps  you qualify for lower interest rates and reduces the overall amount that you must pay back, which typically translates into lower monthly payments.
Another issue that many first time home buyers must address is having poor or non-existent credit. To qualify for a mortgage–and for many of the assistance programs that are available for first time home buyers in Michigan–you must have decent credit. Ideally, your credit should be excellent, as it will save you thousands of dollars in interest over the life of your mortgage. Since many first-time buyers are young, they don’t often have strong credit histories, and this can pose significant problems.
What Kinds of Assistance can I Get as a First Time Home Buyer Michigan?
Fortunately, the state of Michigan is here to help first-time home buyers. The state’s first-time home buyer assistance programs are administered by the Michigan State Housing Development Authority, or MSHDA. Most of these programs are available to first-time buyers across the state. Some of these programs are available to repeat home buyers in targeted areas in the state.
The most popular MSDHA programs for first-time home buyers in Michigan include:
- MI First Home – The primary benefit of this popular loan program is the down payment assistance that it provides. First-time home buyers across the state can apply for this program, which provides up to $7,500 in down payment assistance. Since many people hold off on buying their first homes because they don’t have enough money saved for down payments, this is a great way to level the playing field. Certain requirements must be met to be eligible for this program. First, you must complete a home buyer education class, which outlines the entire process of buying a home and should prove to be very useful. You must not have owned a home for the previous three years, and there is a sales price limit of $224,500. Household income limits also apply, and you must have a credit score of 640 or higher.
- Mortgage Credit Certificate – This program provides a federal tax credit to first-time home buyers. If you qualify, you may be able to credit up to 20% of the mortgage interest that you pay each year against your end-of-year tax liability. This is a dollar-for-dollar reduction of your liability, so it can save you significant amounts of money. Best of all, you can take the credit every year for the life of your original mortgage, which is typically 30 years. As with the MI First Home program, household income limits apply. To qualify, the sales price of the home that you are purchasing can’t exceed $224,500.
- Individual Development Accounts – Individual Development Accounts, or IDAs, are matched savings accounts that are designed to help low-income families more easily afford things like business expenses, educational expenses, and first time home buying expenses. Most participants deposit around $20 per month, and you must save a minimum of $1,000 before your contributions are matched. For homeownership, however, the program matches contributions at a rate of 3:1, so you can more easily and quickly save up to buy your first home. Many other resources are made available through this program, including credit counseling, financial education, and home ownership preparation and assistance. These extras are provided by participating non-profit agencies.
- MI First Home Mortgage Rates – As a first time home buyer Michigan, you may receive more competitive interest rates by opting for an MSDHA mortgage loan. The rate remains the same for the life of the loan, and it is available with or without down payment assistance. Please note that if you take down payment assistance, your interest rate will be a little higher.
Are Any First-Time Home Buyer Programs Offered by Michigan Cities?
Yes! Before getting the wheels in motion for buying your first home, check with your city and county. Oftentimes, local municipalities have additional assistance options for first time home buyers Michigan. Grand Rapids, for example, has a program that provides up to $5,000 toward down payments and closing costs for first-time home buyers. Jackson, MI, offers a number of affordable housing programs, including down payment assistance and counseling for first time buyers. Several programs are available to people who are buying homes in the city of Detroit, and they are partially offered to encourage more people to become homeowners in the city.
As you can see, you don’t have to go it alone as a first time home buyer Michigan. Even if you feel like you can easily afford to buy your first home, be sure to look into the programs that are outlined above. After all, every little bit helps when it comes to buying a home, and the more affordable you can make it, the better off you will be.
2 Point Highlight
Fortunately, the state of Michigan is here to help first-time home buyers.
Individual Development Accounts, or IDAs, are matched savings accounts that are designed to help low-income families more easily afford things like business expenses, educational expenses and first-time home buying expenses.
