MSHDA Down Payment Assistance

The Michigan State Housing Development Authority or MSHDA program is a down payment assistance program available to home buyers in Michigan.   The easiest way to explain this program is that its an add on to an FHA, Conventional, VA, or Rural Development loan.   Kind of like when you are purchasing a car and opt for the leather seats instead of fabric.  Its the same car just with additional features.    In the case of using the MSHDA option, the state is covering part of the down payment that is required and also some of the closing costs with an zero interest loan.   That’s right MSHDA is not “free” money, it’s a loan from the state at a zero percent interest rate that is paid back when the house is sold or mortgage refinanced.   Lets look at a quick example.

Example: FHA Loan with MSHDA DPA

Price $200,000

FHA requires 3.5% down or $7,000

MSHDA requires the buyer cover 1% of that or 2,000

7,000 Needed – 2,000 buyer contribution = 5,000 used from MSHDA to cover the remaining down payment

In the case of $7,500 in down payment assistance funds that would leave $2,500 in the MSHDA pot of money that could be used towards closing costs.

After closing the buyer owes on two loans, the main mortgage that had 3.5% put down on it and the 2nd mortgage with MSHDA for 7,500.  When the house is sold or refinanced those two loans get paid back.

Pros, Cons, and Weird Stuff with MSHDA Down Payment Assistance
  • Michigan down payment assistance up to $7,500.  Up to $10,000 in select zip codes within the state.
  • Homebuyer Education Required
  • Works with FHA, VA, RD, and Conventional loan programs
  • The main program all household members must be on the loan.  There is a second program where this isn’t a requirement but the rates are higher and the program is less attractive
  • Household income and Sales Price limits
  • Sales Price limit – $224,500 statewide
  • Minimum credit score of 640 for stick built homes and 660 for manufactured homes
  • There is a list of Targeted Areas that affects first time buyer requirements for some of the programs
  • Collections must be paid with one of the MSHDA programs
  • No more than 2 acres (there are some exceptions)
  • No more than 1 buildable lot

You can see there is a lot there!  This stuff can get confusing and everyone’s situation is different.  The bottom-line is that there are lots of options when buying a home and we are here to help figure out the options that is best for YOU!   Feel free to reach out at (269) 488-9494 and we can help answer all of your questions.   If you would like to get qualified for one of these programs you can start with filling out the loan application.

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October Lunch and Learn / Webinar: The Ins & Outs of Appraisals

Appraisals – Its complicated

When we start talking appraisals it can get confusing.  As lenders, we learn what’s important for getting the loan closed.  Realtors put their market analysis hat on when they think about them.  Neither is correct.  Look at it this way, an appraiser is in a profession in and of it’s self.  Appraisers are licensed and trained to look at property values in a pretty specific way.  On top of that the different loan programs all have different “rules” the appraiser must follow.  Then at the end of the day its not a specific formula but a matter of opinion.  That’s why we always tell people we could order 5 appraisals on a property and we would get 5 different sets of results.   During this event we are going to go over many of the things the appraisers look at, how they analyze the property, and some of the different variables that come into play across different loan programs.  If you are looking for a deeper understanding of how appraisers think this is a must attend event.

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