Are you looking to buy a home in Michigan? The Michigan State Housing Development Authority, MSHDA, loan program is the key to making that goal achievable. Navigating the world of home loans can be confusing, but MSHDA aims to simplify the process. 

Whether you’re struggling with a down payment or seeking lower interest rates, these programs are designed to offer valuable assistance. By understanding the MSHDA loan requirements, you’ll be better prepared to take advantage of these opportunities and step closer to affordable homeownership.

What Makes MSHDA Loans Worthwhile?

The main goal of MSHDA home loans is to make homeownership affordable and achievable for Michigan residents. These loans provide financial assistance to first-time homebuyers and those who might not have significant savings for a down payment. They help provide homebuyers with:

• Lower interest rates: Many MSHDA loans come with lower-than-average interest rates.
• Down payment assistance: These programs often provide funds to cover down payments and closing costs, some of the biggest hurdles for new buyers.
• Simplified application processes: MSHDA works with local lenders to ensure a smoother, more straightforward application process.

Interested in a MI Home Loan? Give us a call at 1-866-532-0550 to learn more or get preapproved today with our easy-to-use digital preapproval app. With Pro SNAP, getting approved is secure, convenient, and takes as little as 15 minutes.

Types of MSHDA Loans

MSHDA offers a variety of loans to cater to different needs. Here’s a quick rundown of the types of MSHDA programs:

• MI Home Loan: The MI Home Loan is available to first-time homebuyers and repeat buyers in designated targeted areas. It provides advantages such as lower interest rates, more lenient qualification criteria, and down payment assistance. 
• MI Home Loan Flex: A more flexible option than the MI Home Loan, suitable for first-time and repeat buyers. With the MI Home Loan Flex, underwriting is focused solely on the qualified borrowers’ assets, credit, and income rather than the entire household. 
• Down Payment Assistance (DPA) Program: Provides financial assistance, up to $10,000 for your down payment and closing costs. Must be combined with a MSHDA MI Home Loan first mortgage (FHA, RD Guaranteed, or Conventional).
• Mortgage Credit Certificate (MCC): The MCC program isn’t a loan but a tax credit that can save you money on your federal taxes. Qualified homebuyers can credit 20% of their annual mortgage interest paid against their year-end tax liability.

MSHDA Loan Requirements and Eligibility Guidelines

When exploring home-buying options in Michigan, MSHDA loans offer some standout advantages. So, how do you know if you qualify? Let’s break down the MSHDA requirements.

Income Limits

To qualify for an MSHDA loan, your income must fall within certain limits. These limits vary by county and household size. By adhering to these income caps, MSHDA ensures that assistance is directed to those who need it most. Learn more about the 2024 income limits here. 

• County Differences: Different counties in Michigan have varying income maximum limits. Check the specific limits for the county where you plan to buy.
• Household Size: The income limits change depending on the number of people in your household. Larger households typically have higher income caps. For example, in Macomb County, the income limit in a 1-2 person household is $95,900, and for a 3+ person household it is $110,285. All individuals living in the home over the age of 18 must qualify for the loan.

Sales Price Limits

Sales price limits are the maximum prices for homes purchased using MSHDA’s assistance programs. These limits ensure that homes financed through MSHDA remain within reach for those who qualify. For 2024, the sales price limit across all areas in Michigan is $224,500. 

• Contribution Requirements: To qualify for down payment assistance, borrowers must contribute a minimum of 1% of the sales price (gifts allowed)

Credit Score Requirements

MSHDA loans have specific credit score requirements. A good credit score not only helps you qualify but also secures better loan terms.

• Minimum Credit Score: Generally, you need a minimum credit score of 640 to qualify for MSHDA loans. There are various steps that you can take to improve your credit score before applying for a MSHDA program or any home loan.

First-Time Homebuyer Criteria

MSHDA aims to help first-time homebuyers, but what exactly does that mean?

• Eligibility: The program is available to first-time homebuyers across Michigan—individuals who have not owned a home in the past three years. If you don’t meet the first-time homebuyer criteria, MSHDA loans are available to repeat buyers, but only in designated targeted areas. Ask your lender if your intended location is eligible. 

Property Requirements

Not all properties qualify for an MSHDA loan. So, what properties meet the MSHDA loan requirements? 

• Eligible Property Types: MSHDA offers fixed-rate mortgage loans to purchase a new or existing home, multiple-section manufactured home (built after June 14, 1976), or condominium. 
• Location Criteria: The property must be located in Michigan. Some loans also target specific areas that need greater economic development.
• Condition Criteria: The property must be your primary residence.

Homebuyer Education Classes

Homebuyer education is required for borrowers receiving a MSHDA MI Home Loan that includes a $10,000 MI 10K DPA Loan.  

• Availability: MSHDA recognizes a variety of online Homebuyer Education courses, including Fannie Mae HomeView, Freddie Mac CreditSmart, eHome America, and Framework. Additionally, MSHDA accepts certificates from HUD-approved housing counseling agencies. These classes can be taken either in person or online.
• Benefits: Completing the course not only fulfills a requirement but also prepares you for the responsibilities of owning a home. Education classes ensure that homebuyers have a good understanding of their mortgage loan, the closing process, budgeting, recapturing taxes, avoiding predatory lending and foreclosure.

Application Process for MSHDA Loans

Applying for an MSHDA loan can be a straightforward process if you know the steps. From pre-qualification to closing, each stage helps you move closer to becoming a Michigan homeowner.

1. Find a MSHDA-Approved Lender

Once you’re pre-qualified, the next step is to find a lender. The Michigan State Housing Development Authority requires borrowers to apply with a MSHDA-approved lender. These lenders know the ins and outs of the programs and are experienced in guiding homeowners through the process. Here’s how to find one:

• MSHDA Website: Visit the MSHDA website for a list of approved lenders.
• Referrals: Ask friends, family, or real estate agents for recommendations.
• Research: Check online reviews and ratings to gauge a lender’s reputation.

2. Get Pre-Approved

The next step in applying for an MSHDA loan is pre-qualification. This helps you understand how much you can borrow and what your monthly payments might look like. Here’s what you’ll typically need to provide:

• Personal Information: Your Social Security number, date of birth, and contact details.
• Income Details: Proof of income, including recent pay stubs, tax returns, and W-2 forms.
• Credit History: Information about your credit score and any outstanding debts or loans.

3. Submit Your Application

After choosing a lender, it’s time to submit your loan application. Working with your Loan Officer, follow these steps to complete and submit your application:

1. Fill Out Forms: If you meet the MSHDA loan requirements, your lender will provide you with the necessary forms to apply. Make sure to fill them out accurately and completely.
2. Gather Documentation: Collect all required documents, such as identification, proof of income, credit history, and anything else your Loan Officer requires.
3. Submit: Once everything is in order, you or your lender will submit your application online or in person.

4. Loan Approval and Closing

After submitting your application, the approval process begins. Here’s what to expect:

• Underwriting: The lender reviews your financial information and conducts an appraisal of the property.
• Approval: If everything checks out, you’ll receive a loan approval. This generally involves some conditions, like finalizing insurance or other paperwork.
• Closing: At closing, you’ll sign the loan documents, pay any remaining fees, and receive the keys to your new home. 

Need Help Determining If You Meet the MSHDA Loan Requirements? Contact Us to See!

Take the next step with confidence. Mortgage 1 has been the top MSHDA lender for over a decade, specializing in assisting Michigan residents to become homeowners through affordable programs such as MSHDA. Contact our team today to see if you qualify or have any questions. If you meet the requirements and are ready to take the next step, get preapproved with our online preapproval application. It’s fast, secure, and hassle-free.