National and Michigan First Time Homebuyer Programs for 2018

Buyer Information, Finance and Taxes

You don’t have to have perfect credit or a lot of money saved up to buy your first home. The first-time homebuyer programs of 2018 make home ownership an achievable dream for millions of Americans. If you’re ready to buy a home, the Michigan 2018 real estate market looks good for first time homebuyers.

National First Time Homebuyer Programs in 2018

1. FHA Loans

Credit Score: 580
 Down payment: 3.5%
Assistance: Not specified
 Other Requirements: Not specified

FHA Loans are among the most attractive and most popular options for first-time homebuyers. Insured by the Federal Housing Administration, FHA loans give first time homebuyers better rates with lower credit score requirements than many private loans. Credit scores can be as low as 580 and down payments can be as low as 3.5%. FHA loans are commonly used by first time homebuyers, but second time homebuyers can qualify for FHA loans too.

2. USDA Loans

Credit Score: 640
Down payment: 3.5%
Assistance: Not specified
 Other Requirements: Rural area

If you want to find your forever home in the countryside, a USDA loan is the ideal first time homebuyer program in 2018. USDA loans are very similar to FHA loans, except they are backed by the USDA instead of the FHA. While the property doesn’t have to be a farm, USDA loans are generally for properties in rural areas. A 640 credit score will make application easy, though buyers with lower credit scores can apply with additional documentation.

3. VA Loans

Credit Score: 0
 Down payment: 0
 Assistance: Not specified
 Other Requirements: Active or retired service member or spouse

VA loans are also similar to FHA loans, except they are backed by the U.S. Department of Veteran Affairs and they are only for retired or active service members or their surviving spouses. VA loans are particularly appealing because there are no credit score requirements, down payments, or private mortgage insurance needed.

4. HomePath Ready Buyer

Credit Score: Not Specified
 Down payment: 3%
 Assistance: 3%
Other Requirements: Education course, specified HomePath property

Government-sponsored enterprises Fannie Mae and Freddie Mac offer the HomePath Ready Buyer program to help first time homebuyers responsibly and affordably purchase a home. HomePath is unique because it gives several advantages to buyers over investors, and it sells properties that were previously in foreclosure and subsequently purchased by Fannie or Freddie. An online or in-person home buyer education course is required and closing cost assistance up to 3% is available.

5. Good Neighbor Next Door

Credit Score: Not Specified
Down payment: Not Specified
Assistance: 50% of home sale price
 Other Requirements: select occupations, select properties

If you’re a police officer, firefighter, emergency medical responder or teacher, you can get a home in certain areas for half the listed price. Sponsored by HUD, these loans are intended to benefit homebuyers as well as disadvantaged areas. Homebuyers must live in the home at least 36 months and only certain homes are eligible, but this first-time homebuyer program in 2018 offers considerable savings.

Michigan Specific First Time Homebuyer Programs in 2018

1. Michigan State Housing Development Authority (MSHDA) MI Home Loan

Credit Score: 640
Down payment: 1%
 Assistance: up to $7,500
 Other Requirements: below income maximum, Michigan properties only

The MSHDA offers favorable loans with down payment assistance to first time homebuyers statewide. MI Home Loans are FHA, USDA or VA loans with additional benefits from the state. The credit requirements are similar those of the federal government-backed loans, but down payments are much easier. By completing a Homebuyer Education class, buyers can receive an interest-free, payment-free second loan up to $7,500 for the down payment. The loan is only due when the property is sold, transferred or refinanced. There are a few requirements:

  • Homebuyers must contribute at least 1% of home sale price
  • A minimum credit score of 640 is required
  • All adult occupants must co-apply and qualify
  • Household income must be below area maximums (between $64,000 and $105,000 for two people, depending on area)
  • Buyers cannot have owned a home in the last three years

2. Michigan Mortgage Credit Certificate Program

Credit Score: Not Specified Down payment: Not Specified Assistance: 20% of loan interest Other Requirements: Subject to tax code

The mortgage credit certificate (MCC) program is a federal tax credit distributed by select states, including Michigan. This Michigan first time homebuyer program in 2018 can save some homebuyers thousands each year.

If you purchase a mortgage credit certificate from an approved Michigan lender, you can deduct up to 20% of your mortgage interest from your federal taxes. Since it’s a tax credit and not a tax deduction, it’s a dollar-for-dollar savings that essentially reduces the interest you pay by 20%. However, since the mortgage credit certificate is a nonrefundable tax credit, if won’t apply if your tax liability is already zero due to other credits. Talk to a tax professional to see if the MCC program is a good option for you.