Loan guide

FHA loans in Michigan

By MML Editorial Team Updated July 1, 2026 6 min read

The FHA loan is Michigan's default path for buyers with thinner credit or smaller savings — 3.5% down with a 580 score, and rates that usually run below conventional.

Min. down payment: 3.5% (580+), 10% (500–579)
Min. credit score: 580 (500 with more down)
Mortgage insurance: Upfront 1.75% + annual, often life-of-loan
Best for: First-time & lower-credit Michigan buyers

How fha loans work

An FHA loan is a mortgage insured by the Federal Housing Administration. The government backing lets lenders accept lower credit scores and down payments than a conventional loan: 3.5% down at a 580 FICO, or 10% down between 500 and 579. Because the loan is insured, rates on FHA loans in Michigan often sit a step below conventional — which is why they dominate first-time-buyer activity from Warren to Grand Rapids.

The trade-off is mortgage insurance. FHA charges an upfront premium of 1.75% of the loan (usually financed in) plus an annual premium that, at the minimum down payment, lasts the life of the loan. That's why FHA APRs look high next to their note rates. The standard exit is to build 20% equity and refinance into a conventional loan to drop the insurance.

What's different in Michigan

FHA loan limits are set per county. Across most of Michigan the single-family limit sits at the national floor — the state has no high-cost counties — so the practical cap is the same in Kalamazoo as it is in Detroit. Check your county's current limit at HUD before assuming a price ceiling.

FHA pairs cleanly with Michigan's assistance programs: a MSHDA MI Home Loan can be structured as an FHA first mortgage with the MI 10K DPA layered on top, cutting the cash needed on a $200,000 home from roughly $13,000 to a few thousand dollars.

Requirements at a glance

580+ credit score for 3.5% down (500–579 requires 10%)
Debt-to-income generally under 43–50% with compensating factors
Property must be your primary residence and pass an FHA appraisal
Two years of steady, documentable income

Rates Today's Michigan FHA rates → Tool Estimate your FHA payment →

Frequently asked questions

What is an FHA loan?

A mortgage insured by the Federal Housing Administration that lets Michigan buyers put as little as 3.5% down with a 580 credit score. The government backing shifts risk off the lender, which is what makes the lower down payment and score possible — in exchange for mortgage insurance premiums.

What are the FHA loan requirements in Michigan?

A 580 score for 3.5% down (or 500–579 with 10% down), a debt-to-income ratio generally under 43–50%, steady two-year income, and a primary-residence property that passes an FHA appraisal. Michigan county loan limits apply, mostly at the national floor.

Can I use an FHA loan with MSHDA down payment assistance?

Yes. The MSHDA MI Home Loan can take FHA form, with the MI 10K DPA covering down payment and closing costs. You'll need a MSHDA-approved lender and a 640 credit score to meet MSHDA's stricter minimum — see our first-time buyer guide.

This guide is general information, not a lending decision. Loan limits and program rules change — verify current figures with a licensed Michigan lender and confirm licensing at NMLS Consumer Access. See all Michigan loan types or compare lenders.