Michigan Mortgage Guide

$240,000 median home price—43% below the national average. That's the headline, but here's what catches people: property taxes at 1.54% mean you're paying around $3,700 annually on that median home, which eats into the affordability advantage faster than you'd expect.

The price gap between regions is massive. Ann Arbor runs $380,000+ because of the university and tech jobs. Metro Detroit sits closer to $200,000, though pockets like Royal Oak or Birmingham push $350,000. Head up north or into rural areas and you'll find homes under $150,000, but job options shrink considerably.

One thing most people underestimate: the auto industry still drives Michigan's economy more than you'd think. When Detroit's big three struggle, it ripples through housing demand and property values statewide. The tech sector in Ann Arbor and parts of Detroit helps diversify things, but you're not insulated from manufacturing cycles here.

Winter costs matter too—you'll need real snow removal, higher heating bills, and homes built to handle freeze-thaw cycles. Budget an extra $150-250 monthly for utilities compared to milder climates. The Great Lakes access is genuinely great if you use it, but six months of cold is the trade for that affordability

The biggest thing people don't realize about buying in Michigan? MSHDA's programs are actually good, but you can't have owned a home in the last three years. That trips up a lot of people who sold during the pandemic and want back in.

The Michigan State Housing Development Authority runs the MI Home Loan, which is the program worth your time. You get a 30-year fixed mortgage with a competitive rate—sometimes better than conventional loans—plus down payment assistance up to $10,000 or 10% of the purchase price, whichever is less. The DPA comes as a second loan at 0% interest that you don't pay back as long as you stay in the house for five years. Leave earlier and you owe it back on a prorated basis.

The catch beyond the three-year thing: income limits apply based on county and household size, and you have to take a homebuyer education class. In Detroit or Grand Rapids, you'll find the income caps are reasonable for most first-timers, but if you're a couple both working decent jobs, you might be over the limit. The property price can't exceed the county limit either—around $300K in most areas, higher in pricier counties.

One thing that surprised me—you can use this on a foreclosure or short sale, which matters in parts of metro Detroit where those properties still pop up. And the education class is actually useful, not just a box to check.

Start at michigan.gov/mshda and look for approved lenders. Not every mortgage company participates, so you need one that's MSHDA-approved to access the program.

Here's what catches people off guard: Michigan has a six-month redemption period after foreclosure. If you default and the bank forecloses (which happens through the courts here, so it's already slow), you get six months to buy your house back by paying what you owe plus costs. Sounds like a safety net, right? But it also means if you're buying a foreclosed property, the previous owner might still be living there—and legally can stay there during redemption. You could close on a house and not be able to move in for months.

The other thing that'll hit you at closing: transfer taxes aren't crazy high statewide ($3.75 per $500 of value, so around $1,500 on a $200K home), but counties and cities pile on their own. In Detroit, you're looking at closer to $9 per $500 when you add it all up. It's not California-level pain, but budget an extra grand or two depending on where you're buying.

One more—Michigan's a judicial foreclosure state, meaning everything goes through court. The whole process drags out 60+ days minimum, sometimes way longer if it's contested. If you're buying a distressed property in places like Grand Rapids or Ann Arbor, just know timelines get weird.

Worth talking to a local attorney if foreclosure stuff applies to your situation.

File for your Principal Residence Exemption immediately when you close—and I mean within 90 days. Michigan caps annual property tax increases at 5% or inflation (whichever is lower) on your primary residence, but only if you file the PRE affidavit with your local assessor. Miss that window and you're paying the uncapped non-homestead rate, which runs about 18 mills higher in most counties. That's roughly $1,800 extra per year on a $200,000 home in Metro Detroit.

The water thing catches everyone. If you're buying anywhere near the Great Lakes or in older neighborhoods with clay soil (basically all of Detroit, Dearborn, parts of Grand Rapids), get the sewer line scoped during inspection. Most standard inspections skip this. A full sewer replacement runs $8,000-$15,000, and those clay pipes from the 1950s are cracking everywhere. Your homeowner's insurance won't touch it.

Winter timing works in your favor here. List inventory drops hard from December through February because no one wants to move in the snow. Sellers who list then are motivated—job transfers, estate sales, divorces that can't wait. You'll see way less competition than the spring frenzy, and snow on the ground means you can actually see how the roof handles ice dams before you buy.