Michigan Mortgage Guide

$263,590 median — that's 37% below the national average, and it's real. You can actually buy a livable house here without a jumbo loan or a six-figure down payment.

But here's what catches people off guard: property taxes. Michigan sits at 1.54% versus the national 1.1%. On a $263K home, that's roughly $4,000 a year. Not catastrophic, but higher than the sticker price makes you expect.

Right now you're in a seller's market, so don't assume "affordable state" means "easy to buy." In Ann Arbor, you're looking at $450K–$500K+ and offers still go fast. Detroit proper has pockets under $150K — genuinely cheap — but values vary block by block in ways that'll surprise you. Grand Rapids is the one that sneaks up on people: it reads like a mid-size Midwest city, but median prices are pushing $300K and inventory moves.

The suburb that surprises buyers most is Ferndale, just outside Detroit. It used to be deeply affordable. It isn't anymore — demand from Detroit buyers who want walkability pushed prices well past what most people expect when they hear "Metro Detroit."

Michigan Housing Development Authority (MHDA) runs down payment assistance programs worth looking into before you assume you need 20% down.

The thing most people don't realize about MSHDA's programs is that the down payment assistance isn't free money — it's structured in a way that can genuinely complicate your exit if you sell or refinance early. That matters a lot if you're not sure you're staying in Michigan long-term.

Here's what's actually available. The Michigan State Housing Development Authority (MSHDA) runs the MI Home Loan, which is the main program worth knowing. You get a 30-year fixed-rate mortgage at a below-market rate, and you can stack up to $10,000 in down payment assistance on top of it. That DPA comes as a zero-interest second loan — it doesn't accrue interest, but it doesn't go away either. You'll repay it when you sell, refinance, or pay off the first mortgage.

Income limits apply based on household size and the county you're buying in — Grand Rapids, Lansing, and Detroit all have different thresholds, so check your specific area. Most households earning under roughly $100K–$120K will qualify, but verify that at michigan.gov/mshda because those numbers shift.

The catch most people miss: you have to use an MSHDA-approved lender, and not every lender is on the list. Some are slow. If you're buying in a market where sellers want a quick close, that can actually cost you the house.

MSHDA also has a MI Home Loan Flex, which is slightly more lenient on credit and income, though the terms aren't always as favorable.

For current rates, income limits, and the approved lender list, go directly to michigan.gov/mshda — programs change frequently and anything you read secondhand (including this) should be verified before you make decisions.

The thing that catches most out-of-state buyers off guard in Michigan is the redemption period after foreclosure — and while you're buying (not losing a home), it still matters because it affects distressed properties you might be considering. Michigan gives homeowners up to 6 months to redeem a foreclosed property after the sheriff's sale. So if you're buying a foreclosed home in Detroit or Flint, that property may sit in legal limbo longer than you'd expect, and the previous owner technically still has rights to it during that window.

But honestly, the thing that hits your wallet at closing is transfer taxes. Michigan charges both a state and county transfer tax. State side is $3.75 per $500 of the sale price — so on a $300,000 home in Grand Rapids, you're looking at roughly $2,250 just there. Add the county tax on top (varies, but around $1.10 per $500) and it adds up fast. Sellers typically pay this in Michigan, but it affects negotiations, especially if the seller is tight on equity.

The Michigan State Housing Development Authority (MSHDA) also runs a down payment assistance program — $10,000 as a zero-interest loan — that Detroit-area and statewide buyers overlook constantly. It's not free money, but the terms are genuinely reasonable.

The thing nobody tells you about Michigan property taxes: your assessed value gets capped at 5% per year while you own the home, but the second it sells, that cap resets. So if the previous owner bought in 2005, their taxable value might be way below market. You buy it, the cap disappears, and your taxes jump to reflect current value — sometimes a $2,000–$3,000 annual increase overnight. At 1.54%, that adds up fast, especially in places like Ann Arbor or Birmingham where values have climbed hard.

And you can claw some of it back. Michigan's Homestead Property Tax Credit exempts a portion of your primary residence from the school operating levy — but you have to file for it. Miss the deadline and you lose that year entirely.

The gotcha that gets out-of-state buyers: Michigan requires sellers to disclose known defects, but "known" is doing a lot of work in that sentence. Basement water intrusion is endemic across older homes in Detroit and Grand Rapids — it's not always visible in summer, sellers aren't always forthcoming, and a standard inspection won't catch seasonal flooding. Ask specifically about sump pump history and whether there's a backup. If the seller hesitates, that's your answer.