Access to affordable housing is a key pillar of financial security, and the Michigan State Housing Development Authority (MSHDA) has a vision of making Michigan “a place where all people have quality affordable housing as a foundation to reach their full potential.”

Let’s take a closer look at some of the MSHDA offerings and how they may be able to connect hopeful buyers to homeownership opportunities.

What is MSHDA?
MSHDA, which was established in 1966, “provides financial and technical assistance through public and private partnerships to create and preserve safe and decent affordable housing, engage in community economic development activities, develop vibrant cities, towns and villages, and address homeless issues.”

MSHDA’s vision is to serve the people of Michigan “by partnering to provide quality housing that is affordable, a cornerstone of diverse, thriving communities.”

MI Home Loan and MI Home Loan Flex
MSHDA provides a variety of products to help buyers achieve and afford homeownership. Their flagship down payment assistance (DPA) programs provide up to $7,500 in assistance, which can be used towards the down payment, closing costs, and prepaid and escrow items.

The first option is MSHDA’s MI Home Loan, which is available to first-time homebuyers statewide and repeat homebuyers in targeted areas. Applicants must have a middle credit score of 640 or higher (660 for manufactured homes), the debt-to-income ratio must not exceed 45%, household liquid assets cannot be more than $20,000, and the maximum sales price allowed is $224,500.

With the MI Home Loan, all adults occupying the residence must co-apply and qualify for the loan, excluding adult children who are verifiable full-time students. There are also set income limits, which range anywhere from $74,000 to $142,380, depending on household size and where the property is located.

MSHDA’s MI Home Loan Flex is very similar to the MI Home Loan, but it does allow some leniency. For instance, with the Flex program, you don’t need to be a first-time homebuyer, and you can exclude members of the household from the mortgage. Only qualified borrowers are underwritten for income, assets, and credit.

 

One thing to keep in mind is that with these two programs, there is no cash back. Just because a borrower is eligible for the full $7,500, doesn’t mean they will get it. Borrowers will only receive what is needed to cover the down payment, closing costs, and prepaid and escrow items.

 

MI 10K DPA Loan

Earlier this year, MSHDA announced its MI 10K DPA program, which offers up to $10,000 in assistance. This new program is only available in 236 zip codes within the state, and a list of qualifying areas can be found on the MSHDA website.

 

The 10K program has similar qualifying criteria to the other two offerings, but one thing that sets it apart from the others, is that the borrower can use the entire $10,000.  Anything left over after the required down payment, closing costs, and prepaid and escrow items can be used to pay down the first mortgage.

 

Borrowers utilizing any of these three DPA programs will need to have some skin in the game, providing a cash investment of 1% of the sales price, and all borrowers must complete a homebuyer education course.

 

One of the most critical things for buyers to know is that like other DPA programs, the MSHDA assistance loans are not “free money,” They are zero-interest, non-amortizing loans with no monthly payments, but they are not forgivable. DPA is considered a soft-second mortgage and the money must be paid back upon the sale or transfer of the property, or if the first mortgage is refinanced or paid in full.

The MSHDA programs have helped many hopeful buyers realize their dream of homeownership, but like any financial decision, it’s important to work with an experienced, local lender to make sure it’s the right choice for you.

Visit the Greater Lansing Association of REALTORS^® website at www.lansing-realestate.com for a list of professional, area lenders who can help guide you through your next transaction.