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 of $7,500 statewide, or up to $10,000 in specific zip codes.
We’ve created this comprehensive MSHDA loan guide to you explore the qualification requirements, the pros and cons, and how to get approved.
- 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.