What MSHDA Down Payment information Actually Covers

Michigan's State Housing Development Authority (MSHDA) runs the Down Payment information Program, which provides forgivable loans to help first-time homebuyers cover the down payment and closing costs on a home purchase. The program does not give you cash directly — instead, MSHDA lends you money that you do not have to repay if you stay in the home for a set period, usually five to ten years depending on the loan type.

The amount you can borrow varies. MSHDA typically offers between $7,500 and $15,000 in down payment information, though the exact figure depends on the purchase price of the home, your income level, and which specific loan product you choose. The information comes as a second mortgage on your property, which means your lender will record it against the home's title.

You must be a first-time homebuyer to use this program — meaning you have not owned a home in the past three years. You also must be buying a home in Michigan and plan to live in it as your primary residence, not as an investment or rental property.

Key Takeaways

  • MSHDA down payment information is a forgivable loan, not a grant, and ranges from $7,500 to $15,000 depending on your income and the home's price.
  • You must work through an MSHDA-approved lender — you cannot borrow directly from MSHDA — and that lender must be willing to participate in the program.
  • Income limits explore and vary by county; a single person in most Michigan counties cannot earn more than roughly $65,000 to $75,000 annually, though limits are higher in some areas.
  • The process starts with your lender, not with MSHDA, so choosing a participating lender is your first real step.
  • Closing typically takes 30 to 45 days after your offer is accepted, and MSHDA's review of your loan request adds another two to three weeks to that timeline.

Finding and Working With an MSHDA-Approved Lender

You cannot borrow from MSHDA directly. Instead, you work with a mortgage lender — a bank, credit union, or mortgage company — that has agreed to offer MSHDA down payment information as part of its loan products. Not every lender participates, so your first step is to find one that does.

MSHDA publishes a list of approved lenders on its website at mshda.org. You can search by county or by lender name. Call or visit the lender's website to confirm they are currently offering down payment information; some lenders participate in the program but do not actively market it, and a few may have paused participation temporarily.

When you contact a lender, tell them you are interested in MSHDA down payment information. They will walk you through their standard mortgage pre-qualification process first — checking your credit, income, and debt — to see if you meet both their requirements and MSHDA's. This conversation happens before you find a home, so you can understand what you can afford and what information you might receive.

Income Limits and Other Basic Requirements

MSHDA sets income ceilings that vary by county and household size. For a single person in most Michigan counties, the limit is roughly $65,000 to $75,000 in gross annual income; for a family of four, it is typically $85,000 to $105,000. Some counties in the Detroit and Grand Rapids areas have higher limits because the cost of living is higher there. Your lender will tell you the exact limit for your county and household size.

Beyond income, you must have a credit score of at least 620, though many lenders prefer 640 or higher. You need a down payment of your own — MSHDA information covers part of it, but you must contribute something. Most lenders require at least 3 percent of the home's purchase price as your own money, though some allow as little as 1 percent if you are willing to pay mortgage insurance.

You must also complete a homebuyer education course before closing. MSHDA requires this; your lender can point you to approved courses in your area, many of which are offered online and take four to eight hours to complete. Some nonprofits and housing counseling agencies offer these courses for free or at low cost.

The Timeline From Pre-Qualification to Closing

Once you are pre-may have access to with an MSHDA-approved lender, you can begin house hunting. When you find a home and make an offer, your lender will order an appraisal and begin the formal loan process. At this point, your lender submits your MSHDA down payment information request to the program.

MSHDA typically reviews and approves or denies your request within two to three weeks. During this time, the program verifies your income, checks that you meet all requirements, and confirms the home's value supports the loan amount. Your lender will keep you informed of the status.

Standard mortgage closing takes 30 to 45 days from the time your offer is accepted. Because MSHDA's review happens during this window, the timeline usually does not extend your closing date — but it can if MSHDA needs additional documents from you or if there are questions about your income or the property. Plan for closing to occur 40 to 50 days after your offer is accepted when MSHDA information is involved.

Documents You Will Need to Gather

Your lender will request standard mortgage documents: recent pay stubs (usually the last two months), W-2 forms from the past two years, and a recent tax return. If you are self-employed, you will need two years of business tax returns and possibly a profit-and-loss statement. MSHDA also requires these same documents, so have them ready early.

You will also need proof of your first-time homebuyer status. This is usually a signed statement confirming you have not owned a home in the past three years; your lender provides the form. If you have owned a home before, you may still be may be able to access under certain circumstances (such as if you are a displaced homemaker or a single parent), but you will need to document that.

Bring a copy of your signed purchase agreement and the home's appraisal once it is complete. You will also need identification, proof of citizenship or legal residency, and a list of all your debts and monthly payments. Your lender will give you a checklist; do not wait to be asked — gather these items as soon as you are pre-may have access to.

What Happens If MSHDA Denies Your Request

If MSHDA denies your request, your lender will tell you why. Common reasons include income that exceeds the limit for your county, a credit score below the minimum, or a home price that is too high for the program's limits in your area. Some denials are fixable; others mean you will need to pursue a different down payment option.

If the issue is income, you cannot change that quickly, so denial is usually final for that process. If the issue is credit score, you could wait and rebuild your credit, but that delays your home purchase. If the home price is the problem, you could look for a less expensive home, but that is a significant change to your search.

If denied, ask your lender about other down payment programs. Many lenders offer conventional loans with lower down payment requirements, and some states and nonprofits run separate information programs. Your lender can explain what else might work for your situation.

The Forgivable Loan Structure and What It Means for You

MSHDA down payment information is structured as a forgivable second mortgage. This means MSHDA lends you the money, records a mortgage against your home, but forgives (erases) the debt if you meet the terms. The forgiveness period is typically five to ten years, depending on the loan product.

During the forgiveness period, you do not make monthly payments on the MSHDA loan — only on your primary mortgage. If you sell the home or refinance your primary mortgage before the forgiveness period ends, you must repay the MSHDA loan in full from the sale or refinance proceeds. If you stay in the home for the full forgiveness period, the debt disappears and you owe nothing.

This structure affects your borrowing power slightly. Because MSHDA records a second mortgage on your home, some lenders factor this into their debt-to-income calculations, which can reduce the amount they will lend you on the primary mortgage. Your lender will explain this trade-off when you discuss the program.

Frequently Asked Questions

Can I use MSHDA down payment information if I am buying with a spouse or partner?

Yes. Both spouses or partners must meet the first-time homebuyer requirement, and household income limits explore to your combined income. If one of you owned a home in the past three years, you may still be may be able to access under certain circumstances, but you will need to discuss this with your lender.

What if I cannot find an MSHDA-approved lender in my area?

MSHDA has approved lenders across Michigan, but availability varies by region. If you cannot find one nearby, ask your local housing counseling agency or nonprofit — they often know which lenders in your area participate. You can also call MSHDA directly at 517-373-8370 to ask for lender referrals in your county.

Do I have to use the down payment information to buy a home right away?

No. Once you are pre-may have access to with an MSHDA-approved lender, you can take your time finding the right home. Pre-qualification is typically valid for 90 to 120 days, and you can request an extension if you need more time. Your lender will let you know when your pre-qualification is about to expire.

What happens to the MSHDA loan if I refinance my mortgage?

If you refinance your primary mortgage before the forgiveness period ends, you must repay the MSHDA loan in full. The refinance lender will require this because they will not accept a second mortgage they did not originate. Plan for this cost if you think you might refinance within five to ten years.

Can I use MSHDA information if I have student loans or other debt?

Yes, as long as your total debt payments do not exceed a certain percentage of your gross monthly income — usually 43 to 50 percent, depending on your lender. Your lender will calculate this during pre-qualification. High student loan payments can reduce the amount you can borrow for a mortgage, but they do not automatically disqualify you.