- State of Michigan Home Buyer Tax Credit
There is no longer a State of Michigan home buyer tax credit, but there are still first-time buyer programs in Michigan that can help you buy a home. Even though the credit itself has not been extended, there are still ways you can get your first house, with some help.
FHA loans are great for Michigan first time homeowners of modest incomes, because they generally let you put less of a down payment down (only 3.5% of a home's final selling price as opposed to the 10% or even 20% most lenders want these days, or 30% if your credit scores less than 580), and they're generally available to people with less than perfect credit scores as well. You may qualify for an FHA loan if your score is less than 600.
The State of Michigan First Time Home Buyer Programs
There are grant programs available in the State of Michigan that can help you come up with money for closing costs and a down payment. Do a search for programs in your area, to see what's available.
Other things you need to have if you want to buy a home in the State of Michigan
You'll also need to have certain qualifications to get into your first home, even if you qualify for a Michigan FHA home loan or other first time buyer program. Regardless of which Michigan first time buyer programs you're interested in, certain qualifications are required to qualify. These include:
A good credit history
In order to qualify for a home, you must have a good payment history. Showing that you can make your payments on time displays that you are responsible buyer in a lenders eyes. Pull your reports and make sure they are accurate, before you apply for a mortgage. If they're not, you can challenge inaccuracies by contacting each of the credit bureaus and asking that they remove them since they have to investigate inaccurate information and remove it, usually within about 60 days.
An adequate credit score
As a first time buyer, you'll generally need a score of at least 660 to qualify for conventional loans. If your scores are less than that, you probably won't be able to qualify for a conventional loan, although you may be able to qualify for programs meant for people of more modest means; an FHA loan, for example, you generally need score of at least 580.
An adequate debt to income ratio
Most first time buyer programs Michigan require that you have an adequate debt to income ratio in order to qualify for a mortgage. Your lender can help you figure out what this is, but in general, the limit for a debt to income ratio is 41%. That means that no more than 41% of your gross income goes toward all debt (including your mortgage, student loans, car payments, charge cards, etc.).
An adequate (and steady) income
You will have to show that you have an adequate income to buy a home -- and that will be true for any Michigan first time homebuyer program
. As a general rule, the cost of housing cannot exceed 29% of your total gross income. That includes your mortgage payment, taxes, and insurance.
Life goes on after the state of Michigan first time buyer credit
So, as you can see, there are some great opportunities available to first time buyers in Michigan even though some Michigan programs are no longer available.
UPDATE: 03/25/2013 - Michigan First Time Homebuyer Assistance Grant Program
We received the following email from the state on March 25th regarding this grant program;
"As of March 25, 2013 approximately $3,000,000 remains for Homebuyer Assistance Grants. As we begin the process of winding down the Homebuyer Assistance grant program, after 5:00 p.m. on Friday, March 29, 2013 we will no longer be able to accept Homebuyer Assistance grant applications for NON-military homebuyers. Please be sure to notify your borrowers and staff accordingly, and remember, applications uploaded through DEG must be approved by your underwriters with a “clear-to-close” and a firm closing date that is scheduled within 30 calendar days.
We will continue to fund Michigan Homebuyer Assistance grants for active military and veteran homebuyers, with preference given to disabled veterans, until all remaining funds have been disbursed."
So, unless you are active military, or a Veteran, you can no longer receive this grant. However, there are still some great first time buyer programs available in the State of Michigan with zero down payment options as well as very low down payment options. Houses are still on sale and rates are still very low so buying a home still makes good financial sense!
Call us today at 248-674-6450 to discuss your buying options and you may be surprised as to what is available to you.