The Michigan State Housing Development Authority (MSHDA) is a great resource for both home buyers and homeowners. They offer information on fair housing, the home buying process, home maintenance, and avoiding foreclosure. However, they are best known for their MSHDA loans for both purchasing a home and down payment assistance. The great thing about these loans is that they aren’t just limited to first-time homebuyers. Anyone can use MSHDA loans as long as they (and their new home) meet the designated criteria. Today we are going to discuss a little about MSHDA loans, but before you decide if this is the best option for you, be sure to talk to your lender. Let’s get started!
The Criteria
Max Sale Price: $224,500
This is the most restrictive of criteria when it comes to MSHDA loans as it is quite low for the Saline and Ann Arbor areas, but if you are looking in Ypsilanti or a little further out, this is a doable number. Luckily MSHDA is aware this number is low and has a bill going through legislation now requesting to increase this limit to just under $300,000. They are very hopeful that this legislation will pass and go into effect sometime later this year.
Max Income: $84,200-$164,920 depending on family size
They determine this number by calculating 120% of the state’s average income.
Min Fico Score: 640
This is the same as Fannie Mae’s requirements.
Buyer Status: First-time homebuyers anywhere in the state AND non-first-time home buyers if buying in a “Targeted Area”
All of Washtenaw County is considered a targeted area by MSHDA.
Min down payment: 1% of the purchase price
You are always more than welcome to do a higher down payment. This is just the bare minimum amount. This money can be a gift from others.
The Benefits
Lower interest rates
As of 3/8/23, the 30-year interest rate for a 30-year fixed loan without a down payment assistance loan is 6.125%. That’s almost a whole percentage lower than most loans on the market. A 30 year fixed loan with a down payment assistance loan is 6.625%
Down Payment Assistance Loans
Now, to be clear, these are not grants so they do have to be paid back. However, they are the next best thing. The MSHDA downpayment assistance loans have 0% interest and you pay $0 dollars a month for them. So they are “free” to a point. What happens is they put a lien on your property, so if you refinance, or sell your property, the full amount for the DPA loan will become due and payable. If you keep your home for 30 years, the DPA loan amount will be due upon paying off your mortgage. These loans include a $7,500 and a $10,000 option with different requirements so talk to your lender about these to see if they would be a good fit for you.
Have questions? Check out the MSHDA website. We would also be happy to connect you with MSHDA approved lenders in our area.
Thanks for reading!
Published on 2023-03-08 12:48:37
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