Buying a home is exciting but it can be quite the endeavor. And if this is your first time financing a home, it can seem like a lot to navigate. There are several loan programs to choose from and your friends and family are probably giving you all kinds of different advice.
One common myth that’s still circulating among Michigan first time buyers is that you need a 20% down payment. Fortunately this is only a myth as homebuyers can put down as little as a 3% or there are zero down loans and down payment assistance programs available.
The following programs are not exclusive to first time buyers, however, they can certainly help buyers who aren’t able to rely on the sale of another property as their down payment or don’t meet certain requirements of a conventional loan.
First Time Homebuyer Programs for Michiganders
MSHDA Loans
This type of loan is popular with first time buyers as they can receive up to $7,500.00 for down payment assistance and closing costs. A homebuyer education class is required and applicants should have a minimum credit score of 640.
Learn More: What are the requirements for a MSHDA Loan
FHA Loans
An FHA loan is a mortgage insured by the Federal Housing Administration. They have more lenient credit score and DTI requirements than conventional mortgages and buyers may only need 3.5% for a down payment.
Learn More: Michigan FHA Loans: Loan Limits, Eligibility and Other Common Questions
VA Loans
A VA loan is guaranteed by the U.S. Department of Veterans Affairs and is available to Veterans, Service Members and select military spouses. VA loans offer higher debt to income ratios than other loans and there is no down payment required.
Learn More: VA Loan Requirements
USDA Loans
A USDA loan, sometimes referred to as a Rural Development(RD) loan, is a zero down payment mortgage issued through the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.
One main qualification for an RD loan is that the home must be in an eligible rural area so consult with a Michigan mortgage lender to see which locations are on the USDA eligibility map.
Learn More: Rural Development Single Family Housing Programs
Acronyms All Homebuyers Should Know
APR (Annual Percentage Rate) Annual cost of borrowing money based on the loan amount, interest rate and other fees.
FRM (Fixed-Rate Mortgage) Interest rate that does not change during the entire term of your loan.
DTI (Debt-to-income) A finance measure used by lenders that compares the amount of debt you have to your overall income.
PMI (Private Mortgage Insurance) Insurance that protects lenders from losses if a homeowner is unable to pay their mortgage. It is required by buyers who make less than a 20% down payment.
P&I (Principal and Interest) Portions of your monthly mortgage payment that go toward paying off the money you borrowed to buy your home.
Julie Krumholz Can Help Michigan First Time Homebuyers
With 35 years of industry experience, Julie Krumholz has worked in nearly all aspects of mortgage banking.
Throughout the years she has worked in processing, closing and loan origination, underwriting, QC auditing and has even co-owned a mortgage brokerage firm.
If you are looking for an experienced Lender in Michigan, call Julie from Superior National Bank today at: 586-382-5482 and let her help you navigate through the loan process and answer any questions you may have.
