First-time home buyer programs in Michigan: assistance, loans and real costs

Before the program names: michigan first-time buyers are often surprised by the “pop-up” tax: the capped taxable value uncaps at sale, so the property tax bill a lender estimates from the seller’s history can be far too low — ask for the state equalized value instead.

State housing agency	Michigan State Housing Development Authority (MSHDA)
Median home price (approx.)	$250,000 — statewide order of magnitude; metros differ
3.5% / 5% / 20% down	$8,750 / $12,500 / $50,000 on the median
Property tax (effective)	about 1.38% — roughly $3,450 a year on the median
Mortgage credit certificate	Not consistently offered — ask a lender
Transfer tax	Michigan’s state real estate transfer tax is $3.75 per $500 (0.75%) plus a county tax of $0.55 per $500 (0.11%), both customarily paid by the seller.

Michigan’s first-time buyer programs

The Michigan State Housing Development Authority’s MI Home Loan offers 30-year fixed FHA, VA, USDA and conventional loans with the MI 10K DPA Loan; the MI Home Loan Flex serves repeat buyers. Detroit and other cities layer local assistance on top.

How the assistance money works

The MI 10K DPA Loan provides up to $10,000 statewide as a 0% second mortgage with no monthly payment, due on sale, refinance or payoff; it can cover down payment, closing costs and prepaid items.

Read the lien type before the dollar figure: grant (no repayment), forgivable second (repaid only if you leave early), deferred second (repaid at sale or refinance), or repayable second (a monthly payment that counts in your debt-to-income ratio). See how down payment assistance programs work.

Tax credit for first-time buyers

MSHDA has offered a Mortgage Credit Certificate in the past but it is not always open; ask an MSHDA-approved lender whether the MCC is currently available.

Who qualifies: income, price and credit limits

MSHDA income limits vary by county and household size and a statewide purchase price limit applies; a 640 minimum credit score (660 for manufactured homes), a minimum 1% borrower contribution and homebuyer education are required.

Transfer taxes and closing costs in Michigan

Michigan’s state real estate transfer tax is $3.75 per $500 (0.75%) plus a county tax of $0.55 per $500 (0.11%), both customarily paid by the seller.

With the transfer taxes on the seller, Michigan buyer closing costs typically total 2% to 3% of the price; property taxes are billed in summer and winter, and Michigan’s taxable-value cap resets on sale, so a new buyer’s tax bill can jump above the seller’s. Sellers can pay a share of these costs within program limits — see seller concessions — and our closing costs guide covers the rest.

What the payment looks like on a $250,000 home

Worked on Michigan’s rough $250,000 median (your county may be far above or below) at an illustrative 6.5%: down payment, loan amount, principal and interest, and the monthly share of property tax at the state’s approximate 1.38% effective rate, or about $3,450 a year. Exclude nothing else from your own budget — insurance, PMI, HOA dues all apply.

Structure	Down payment	Loan amount	P&I at 6.5% (30 yr)	Property tax / mo (est.)
FHA, 3.5% down	$8,750	$241,250	$1,525	$288
Conventional, 5% down	$12,500	$237,500	$1,501	$288
Conventional, 20% down (no PMI)	$50,000	$200,000	$1,264	$288

Illustrative rate and approximate state figures — not an offer or a quote. Full payment tables cover $150,000 to $800,000 at 5% to 8%; the affordability guide explains how lenders size the loan.

Frequently asked questions

Does Michigan have down payment assistance for first-time buyers?

The MI 10K DPA Loan provides up to $10,000 statewide as a 0% second mortgage with no monthly payment, due on sale, refinance or payoff; it can cover down payment, closing costs and prepaid items. Amounts and structures are updated regularly; treat the figures here as the shape of the program and verify the current numbers with the agency.

Is there a first-time home buyer tax credit in Michigan?

MSHDA has offered a Mortgage Credit Certificate in the past but it is not always open; ask an MSHDA-approved lender whether the MCC is currently available. An MCC must be issued at closing — it cannot be added to an existing loan — so ask about it before you choose a lender.

What are typical closing costs when buying a house in Michigan?

With the transfer taxes on the seller, Michigan buyer closing costs typically total 2% to 3% of the price; property taxes are billed in summer and winter, and Michigan’s taxable-value cap resets on sale, so a new buyer’s tax bill can jump above the seller’s. Michigan’s state real estate transfer tax is $3.75 per $500 (0.75%) plus a county tax of $0.55 per $500 (0.11%), both customarily paid by the seller.