Loan guide

FHA loans in Michigan

By MML Editorial Team Updated July 16, 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
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 mortgage insurance trade-off

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.

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.

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.

But FHA's 580 floor does not carry over. MSHDA sets its own minimum at 640 and requires a MSHDA-approved lender, so a buyer scoring 580 to 639 qualifies for the FHA loan and not for the assistance.

Buying a condo? Check approval first

A condo adds a step FHA buyers miss: the entire project must be on FHA's approved list (or clear a single-unit 'spot' approval), not just your unit. A conventional loan has its own version — the project must be 'warrantable' — so a condo that fails either bar is far harder to finance.

Check today's Michigan FHA rates before you lock.

Requirements at a glance

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 →

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.