Down payment guide
How much down payment do you actually need?
Short answer
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%. Twenty percent only matters for avoiding PMI. And Michigan's MI 10K DPA can supply up to $10,000 toward the down payment and closing costs, so the real cash-to-close is often far lower than the sticker suggests.
Minimums by loan type
Each loan sets its own floor. VA loans (for veterans and service members) and USDA loans (for eligible rural properties and incomes) require zero down. FHA needs 3.5% with a 580 score. Conventional first-time programs — Conventional 97, HomeReady, Home Possible — go to 3%. Twenty percent isn't a requirement to buy; it's the threshold above which you skip private mortgage insurance and often earn a better rate.
What down payment assistance changes
In Michigan, the MI 10K DPA provides up to $10,000 toward down payment and closing costs statewide as a 0%-interest loan repaid when you sell or refinance. Detroit's program has offered up to $25,000. Layer that on an FHA loan at 3.5% down and the cash needed on a $200,000 home can fall from roughly $13,000 to a few thousand dollars. You'll need a 640 score and a MSHDA-approved lender to combine them.
Bigger down payment: pros and cons
More down lowers your payment, cuts total interest, and — past 20% — eliminates PMI, sometimes earning a better rate. But draining savings to hit 20% isn't always wise: keeping an emergency reserve and a cushion for the first property-tax and insurance bills matters more than shaving a small amount off the payment. For many Michigan buyers, a smaller down payment plus assistance is the smarter path into a home.
Frequently asked questions
Can I buy a house in Michigan with no money down?
Yes, with a VA loan (veterans and service members) or a USDA loan (eligible rural areas and incomes) — both require zero down. Otherwise, FHA at 3.5% plus the MI 10K DPA can bring cash-to-close close to zero for qualified buyers.
Is it better to put 20% down?
It avoids PMI and lowers the payment, but it isn't required and isn't always the best use of cash. Keeping reserves and taking down payment assistance often makes more sense than emptying savings to reach 20%.
How much is a down payment on a $250,000 house in Michigan?
3.5% FHA is $8,750; 3% conventional is $7,500; 20% is $50,000. With the MI 10K DPA covering up to $10,000, an FHA buyer's out-of-pocket down payment can drop to nearly nothing.