The Michigan State Housing Development Authority (MSHDA) now backs one of the more successful down payment assistance and home loan programs in the United States. If you live in Michigan, the size of the down payment is no longer an excuse if you want to become a home owner. Here are some of the important facts to know about the MSHDA loan so that you can see if it is a program for you.
Who Is the MSHDA Loan Program For?
The MSHDA website states that the down payment assistance program is for low to mid-income people who are looking for that additional bit of leverage to get into the home buying market. The program has a special consideration for first time home buyers, as its MI First Home program gives additional benefits on top of the vanilla MI Next Home program. According to the website, both programs are meant to benefit families of any size depending on the size and the location of the property.
What Is the Structure of the MSDHA Loan Program and Down Payment Assistance Addition?
The down payment addition to an MSDHA loan comes to the borrower in the form of a second mortgage. It must be used alongside the MI First Home Program or the MI Next Home Program, and other eligibility criteria must be met as well.
What Are the Eligibility Requirements?
The MSDHA loan program first requires a potential home buyer to enroll in a home buying course that is run through an agency that is approved by either MSDHA or the Department of Housing and Urban Development (HUD). The class gives potential home buyers valuable information about the total cost and responsibility of owning a home. The education program is considered one of the best for the first time home buyer by many real estate veterans.
In order to be eligible, a borrower is also required to put some skin in the game. At least one percent of the sales price must be contributed by the borrower to the MSDHA loan up front. However, this minimum may come from a gift source that has been preapproved by MSDHA, so the buyer may still purchase a house with no out of pocket costs.
Borrowers who are looking to participate in the down payment assistance program through the MI First Home Program will need a credit score of at least 640, or 660 for multi unit homes built after June 14, 1976. All of the adults who are planning on living in the home must apply at the same time, and all of their credit must qualify, not just the credit of the primary borrower. The only exception to this rule is in the case of full time students.
Borrowers who are trying to get down payment assistance through the MI Next Home Program are held to a slightly higher credit score standard of 660.
There may be additional requirements placed upon the borrower by the lending institution.
What Are the Benefits and Limits of the Down Payment Program?
The limit for all down payment assistance through the MSDHA program is $7,500. However, the down payment can be limited to four percent of the sales price if that percentage is less than $7,500. The benefit is repeatable, meaning that once a borrower qualifies, he may use it again for future properties. Manufactured homes are not eligible for down payment assistance. Once the program is accepted, it is a valid commitment for 90 days if the home is used, with an expansion to 180 days for a newly constructed home.
Should I Look Into Using Down Payment Assistance?
If you have been looking into real estate, you live in Michigan, and you are having trouble saving up more than 20 percent of the total price of the home that you want, you may want to participate in this down payment assistance program. One of its distinct advantages is its ability to be used alongside loans from the Federal Housing Administration (FHA) or the United States Department of Veterans Affairs (VA). Even if the FHA or the VA do not offer you a no down payment loan, you can reduce your upfront costs by adding the MSDHA program to your subsidy with no penalty.
You may incur some additional closing costs and fees if you use the down payment assistance program or the MSDHA program. These costs come straight out of your pocket and will not add to the value that you have in your home; however, none of these fees will be nearly as large as the down payment minimum that you would otherwise be responsible for.
You also avoid the private mortgage insurance (PMI) cost that usually comes with bringing an offer with less than 20 percent in cash as a down payment. This benefit alone can save you tens of thousands of dollars, more than enough to pay back your investment in the MSDHA program.
Overall, you will need to choose by your finances. Many home buyers have been helped into their first home through the rather generous efforts of the MSDHA. Perhaps you will be the next borrower who achieves the American Dream with a little help.
2 Point Highlight
Borrowers who are trying to get down payment assistance through the MI Next Home Program are held to a slightly higher credit score standard of 660.
These costs come straight out of your pocket and will not add to the value that you have in your home; however, none of these fees will be nearly as large as the down payment minimum that you would otherwise be responsible for.
