Written by Matthew Corriveau – Mortgage Loan Officer, Plymouth
In today’s challenging economy, one of the biggest obstacles for many prospective homebuyers is finding affordable housing. In the event a buyer can find a home they want to purchase, down payment funds may pose an additional challenge. Fortunately, the Michigan State Development Authority, MSHDA, offers mortgage and down payment assistance programs that help prospective buyers move into the home of their dreams.
MSHDA offers two down payment assistance loan programs that can be combined with a MSHDA first mortgage:
- MI DPA Loan up to $7,500 – available statewide
- MI 10K DPA Loan up to $10,000 – available in 236 zip codes
Requirements to Qualify for a MSHDA DPA Loan
As with most down payment assistance programs (DPA), there are some general guidelines that must be met to qualify. MSHDA requires the borrower place an upfront investment in the property that is equivalent to one percent of the home’s purchase price, and the maximum purchase price cannot exceed $224,500.
Eligible income limits range from $84,200 to $164,900, depending on the where the home is located and the number of household members. Your Michigan First Mortgage Loan Officer will be able to quickly determine income eligibility requirements in every Michigan zip code. Every adult that intends to live in the household must co-apply and qualify for the loan. Full-time students and disabled adults are not required to apply.
Applicants must meet a minimum credit score of 640 and their debt-to-income ratio cannot exceed 45%.
Additionally, the state of Michigan requires that all homebuyers applying for a MSHDA mortgage and a MSHDA down payment assistance loan must complete a Homebuyer Education Class provided by a HUD approved counseling agency. After graduating you will receive a Certificate of Completion from the class provider that is valid for 12 months.
A common misconception amongst recipients is that the MSHDA DPA loan is forgivable. It is not. While MSHDA will occasionally offer limited time programs with forgivable terms, currently both MI DPA loans must be repaid when the house is sold, refinanced, or when the first mortgage is paid in full or homeownership interest is transferred. The good news is that these loans are a zero percent interest second mortgage with no monthly payments if a borrower qualifies.
MSDHA is a great down payment assistance option to help homebuyers achieve their homeownership goals. Speak with a Michigan First Mortgage Loan Officer about all possible MSHDA options and get on the path to owning a home today!