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 and USDA: zero down — VA for veterans and service members, USDA for eligible rural properties and incomes
- FHA: 3.5% with a 580 score
- Conventional first-time programs: 3% via Conventional 97, HomeReady, and Home Possible
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.
Bigger down payment: pros and cons
- Pros: lowers your payment, cuts total interest, and — past 20% — eliminates PMI, sometimes earning a better rate
- Cons: draining savings to hit 20% can leave you short on an emergency reserve and the first tax and insurance bills
Keeping a cushion often 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.