Spread the love 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.
Sign up with Movoto now for the best way to find your dream home. All the homes, all the info, totally free. 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.
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Pennsylvania Program description Keystone Home Loan Program To be eligible, you and any other adults who will live in your home must be first-time home buyers, meaning you cannot have owned a home within the last three years. These requirements can be waived if you buy a home in a targeted area or you're a discharged U.S. military veteran. Purchase price and income limits apply. You must have an acceptable credit history, ability to repay your loan and sufficient funds for an application fee, closing costs and down payment based on the purchase price of your home.
Whether you'll have to pay mortgage insurance will depend on your choice of conventional, USDA, VA or FHA-backed financing. Keystone Advantage Assistance Loan Program This down-payment-assistance loan, which can be paired with Pennsylvania’s purchase programs, can help cover down payment and closing costs of up to 4 percent of the of the purchase price (maximum $6,000) in the form of a second mortgage at a 0 percent interest rates.
This loan is repaid over a 10 year term. Borrowers must have a credit score of at least 660, and cannot have liquid assets of more than $50,000. HFA Preferred Risk Sharing (No MI) The No MI program offers a conventional mortgage with a 30-year fixed-rate term, structured so you won't have to pay mortgage insurance (MI) even if your down payment is less than 20 percent of your home's purchase price.
Instead, your loan might have a slightly higher interest rate. To be eligible, you must have an acceptable credit history and ability to make mortgage payments, which will be not more than 30 percent of of your income, and there are income limits based upon household size and location. You'll have to pay an application fee and closing costs and contribute at least $1,000 of your own money toward your down payment.
The remaining funds can be a gift or from a down payment assistance program. HFA Preferred (Lo MI) The Lo MI program also offers a conventional mortgage with a 30-year fixed-rate term, but you will need to pay for mortgage insurance if your down payment is less than 20 percent. To be eligible, borrowers must meet the same requirements listed for the Preferred Risk Sharing Program. ACCESS Home Modification Program Made in conjunction with a Keystone Home Loan or Keystone Government Loan, this program offers an interest-free deferred-payment loan to those who have a permanent disability or live with a family member who has a one and need funds to make accessibility modifications to a home they wish to buy.
This program provides a deferred payment loan, with no interest, and no monthly payment; the loan becomes due and payable upon sale, transfer, or non-owner occupancy of the property. There are no fees associated with the loan; the minimum loan amount is $1,000 and the maximum is $10,000. Home modifications must meet the needs of the person who has a physical disability and will live in the home. Examples include bathroom modifications, installation of grab bars and handrails, lifting devices, adding a main-level bathroom or bedroom, widening doorways or hallways and other such changes.
Access Downpayment and Closing Cost Assistance Program This program can only be coupled with the ACCESS Home Modification program and and whose gross, annual household income does not exceed 80 percent of statewide family median income. The program offers an interest-free deferred-payment second loan to people who have a permanent disability or live with a family member who has a permanent disability.
The minimum loan amount is $1,000. The maximum is $15,000. This loan will become due and payable if you move out of your home or sell or transfer it to another owner. The amount of assistance is based on the borrower’s need. For any first mortgage with a loan-to-value greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds, and the borrower can have and have liquid assets of no more than $5,000.
HOMEstead Downpayment and Closing Cost Assistance Loan Program Homebuyers eligible for the HOMEstead program may qualify for up to $10,000 in downpayment and closing cost assistance in the form of a no-interest, second mortgage loan. HOMEstead funds are forgiven at 20 percent per year over five years for all loans closed on or after January 1, 2007. The minimum loan amount is $1,000; the maximum is $10,000.
For all loans with loan-to-values greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds. Renovate and Repair Loan Program Homeowners can borrow up to a maximum of $35,000 or 120 percent of the home's value for approved home repairs or renovations of their primary residence (minimum of $2,500) in the form of a 10, 15, or 20-year fixed rate loan.
Borrowers must have credit score of at least 620, but households can have a combined income no greater than 150 percent of the state’s median income. R&R loans can be a source of payment for emergency repairs to critical life–safety systems in the homes, as long as the loan application is made to the Local Program Administrator within 30 days of the repair. Purchase Improvement Loan Program Coupled with the Keystone Home Loan Program, this program allows buyers to combine a Keystone Home Loan with additional funds for home repairs or improvements.
The minimum additional loan amount is $1,000. The maximum is $15,000. The home's purchase price is subject to limits and the appraised value after completion must support the cost of the repairs. The repairs might include plumbing or electric systems, improved heating or air-conditioning systems, addition of living space, kitchen or bathroom renovation, roof replacement or energy conservation or solar energy improvements.
Up to of three inspection fees of up to $75 each may be included in the repair costs. Employer Assisted Housing (EAH) Initiative This program offers homebuyers working for a “Participating EAH Employer” (there are 49) with a 30-year fixed-rate loan and down-payment assistance. The down-payment assistance comes in the form of an interest-free 10-year loan of up to $8,000. This program targets “community employees, medical personnel, school employees, police and fire personnel, county workers, laborers, service industry staff, etc.
” Borrowers must meet the qualifications of the Keystone Advantage Program. Mortgage Credit Certificate The Mortgage Credit Certificate allows homebuyers to claim a tax credit of 20-50 percent (20%-50%) of the mortgage interest paid per year, capped at $2,000 annually. It is a dollar-for-dollar reduction against your federal tax liability; the percentage amount you can deduct depends on your annual income.
The MCC can be used in conjunction with HFA Preferred and Keystone Government programs.