Is a MSHDA Loan Right for You?

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Written By Krystle Davis – Loan Officer in Evergreen

For prospective homebuyers who are tired of renting but are struggling to pull together a down payment, a MSHDA loan may be a great option to help you achieve homeownership!

MSHDA, or the Michigan State Housing Development Authority, is a federal program with funds available to help Michigan residents with the upfront costs associated with buying a home. For homebuyers who qualify, MSHDA offers down payment assistance up to $10,000.

We’ve created this comprehensive MSHDA loan guide to you explore the qualification requirements, the pros and cons, and how to get approved.

Qualification Requirements:

  • At least a 640-credit score
  • All people living in the home over the age of 18 must qualify on the loan, though there are exceptions
  • You must have at least 1% of the purchase price invested
  • You must have a 45% debt-to-income ratio
  • No liquid asset minimums needed
  • This home must be your primary residence
  • You must take a homebuyer’s education class
  • Must pass household income limits
  • Homes must be priced at $224,500 or less
  • Available for first time homebuyers or repeat homebuyers after 3 years


Pros to a MSHDA Loan

  • Loan is due when home is sold, refinanced, or paid off
  • Lower monthly mortgage insurance
  • Covers majority of upfront costs
  • MSHDA loan is a “silent second” and does not accrue interest
  • Can be used for Conventional, FHA, VA and USDA mortgages
  • Can be used for a purchase of a Single Family home or a Condo

Cons to a MSHDA loan

  • It is a loan, not a grant, and must be paid back
  • Lack of equity in home might make this loan harder to pay back
  • Second lien is placed on your home until the loan is paid back
  • MSHDA sets the interest rate based on the market
  • Homes can not be on more than 2 acres of land


How to get approved for a MSHDA loan:

  • You must be preapproved by a Certified MSHDA lender by meeting the requirements listed above
  • Take the Homeownership Education Class
    • The certificate that you receive from the class is valid for 12 months
    • This class can be taken online or in person
    • This class must be administered by a HUD-approved Housing counseling agenc


MSHDA is not for everyone, but if you are looking for homeownership and need some help with the upfront costs, MSHDA could be a great option for you!

Want to learn more? Schedule a phone call with a MSHDA loan expert at Michigan First Mortgage.

You may also like:

Five Down Payment Strategies for Homebuyers
Renting vs Buying a Home
Fixed vs Adjustable-Rate Mortgages