Guides
Michigan mortgage guides
Straight answers to the questions buyers actually ask — written for Michigan, with the local programs, taxes, and market realities that generic national advice leaves out.
How to buy a house in Michigan
Buying a house in Michigan follows seven steps: check your credit and budget, get pre-approved with a lender, explore MSHDA down payment assistance, shop with a local agent, make an offer with contingencies, complete inspection and appraisal, and close. What's specific to Michigan is the assistance available — up to $10,000 through the MI 10K DPA — and county property taxes that swing the monthly cost more than the rate does..
Mortgage pre-approval, explained
A mortgage pre-approval is a lender's conditional commitment to lend you a specific amount, issued after verifying your credit, income, and assets. It's much stronger than a pre-qualification, which is a rough estimate from unverified figures.
How much house can you afford in Michigan?
Lenders don't approve a price — they approve a monthly payment, usually capping your total debts at 43–45% of gross income and pricing best under 36%. As a rough guide, a Michigan household earning $75,000–$90,000 can afford around a $300,000 home at today's rates, depending on debts and down payment.
FHA vs conventional: which loan is better?
The short answer: below a 620 credit score or with limited savings, an FHA loan usually wins on approval odds and rate. At 700 or higher, a conventional loan usually wins on total cost, because its private mortgage insurance cancels at 20% equity while FHA's often lasts the life of the loan.
How much down payment do you actually need?
You don't need 20% down to buy a home in Michigan. VA and USDA loans require zero down for eligible buyers, FHA needs 3.5%, and conventional programs go as low as 3%.
Are mortgage points worth it?
Mortgage points are worth it only if you keep the loan past the break-even — the point cost divided by the monthly savings. One point costs 1% of the loan and typically lowers the rate about 0.25%.
Are mortgage rates going down?
Nobody can promise a direction — mortgage rates follow the bond market, which reacts to inflation, Federal Reserve policy, and the broader economy in ways no one forecasts reliably. What you can do is watch the trend, not chase a bottom: our weekly Michigan rate table shows the week-over-week change for every loan type.
What credit score do you need to buy a house in Michigan?
The credit score you need depends on the loan: 500–580 for FHA (3.5% down at 580, 10% below that), 620 for conventional, and 640 for MSHDA down payment assistance in Michigan. VA and USDA loans have no federal minimum, though lenders usually want 620.
When to refinance in Michigan
Refinancing pays when it lowers your rate, shortens your term, drops mortgage insurance, or frees cash you need — and you stay in the home past the break-even. Divide closing costs by your monthly savings: if you recoup within about 24 months and hold the loan longer, it's usually worth it.
What is earnest money?
Earnest money is a good-faith deposit you include with your offer to show the seller you are serious about buying. In Michigan it usually runs 1% to 3% of the purchase price and is held in escrow, not paid to the seller directly.
How much are closing costs in Michigan?
Closing costs in Michigan usually run about 2% to 5% of the purchase price. On a $250,000 home that is roughly $5,000 to $12,500.
What debt-to-income ratio do you need for a mortgage?
Most lenders want your total debt-to-income ratio at or below 43%, with 36% seen as comfortable. Some programs stretch to 50% for strong applicants.
How long does it take to close on a house?
From an accepted offer to keys in hand, closing on a house takes about 30 to 45 days on average. Cash deals can close in a week or two.
Renting vs buying a home in Michigan
Buying usually wins if you plan to stay put for at least five to seven years and can cover the down payment plus closing costs without draining your savings. Renting makes more sense for shorter stays, unstable income, or when you need the freedom to move.
How to get rid of PMI (and avoid it)
You can drop private mortgage insurance on a conventional loan two ways. Request cancellation once you reach 80 percent loan-to-value, or wait for automatic removal at 78 percent LTV based on your original schedule.
Should you use a mortgage co-signer?
A co-signer can help you qualify when your income or credit falls short, because their finances get added to the application. But cosigning a mortgage is a serious favor: the co-signer is fully liable for the debt, and the loan shows up on their credit and raises their debt-to-income ratio.
What is a good mortgage rate?
A good mortgage rate is one at or below the average offered to buyers with your credit, down payment, and loan type on the day you lock. There is no single magic number, because rates shift with the market constantly.
How to get a mortgage when you're self-employed
Self-employed borrowers can get the same mortgages as everyone else, but the paperwork is heavier. Lenders usually want two years of personal and business tax returns, then average your net (not gross) income to set your qualifying figure.
Financing a second or vacation home
A second home usually needs around 10 percent down, a solid credit profile, and enough income to carry two mortgages. Rates run a little higher than on your primary residence, and the home has to sit a reasonable distance away and be for your own use.
Using gift funds for your down payment
A family member can gift the money for your down payment, and both conventional and FHA loans allow up to 100 percent of it to come from a gift. You need a signed gift letter and a clear paper trail showing the money move from the donor to you.
Michigan property tax, explained
Michigan property tax is your home's taxable value multiplied by the local millage rate. The statewide effective rate runs roughly 1.3% to 1.5% of a home's market value — on the higher side nationally.
Michigan transfer tax, explained
Michigan charges a real estate transfer tax when a home changes hands. The state tax is $3.75 per $500 of the sale price (0.75%), plus a county tax of $0.55 to $0.75 per $500.