Updated: July 2026 | Source: Michigan.gov/MSHDA · FHFA · HUD · Freddie Mac PMMS

Michigan Home Loans 2026 — Complete Guide

From 3.5% down FHA to $10,000 in state down payment assistance — here is what home buyers in Michigan can access in 2026.

Michigan's Proposal A famously caps how fast property tax can rise for existing owners — but that protection resets the moment a home changes hands, which catches many buyers off guard. This guide covers loan limits, current rates, that reset, and the MSHDA programs available to general buyers this year.

$293,956

MI median home price (May 2026)

6.55%

Avg. 30-yr conventional rate

$10,000

Max MSHDA down payment help

$541K / $833K

FHA / conforming limit — flat statewide

The number people miss: Michigan's Proposal A cap on property tax growth resets completely when a home is sold — the buyer's first tax bill is based on the current market value, not whatever low number the seller had been paying. A home that shows a low tax bill in a listing can carry a bill 30-50% higher once you actually own it.

Michigan Down Payment Assistance — MSHDA Programs

The Michigan State Housing Development Authority (MSHDA) offers down payment assistance paired with its MI Home Loan, with the amount depending on where you buy.

MSHDA Down Payment Programs

MI DPA Loan (anywhere in Michigan)Up to $7,500

MI 10K DPA Loan (236 targeted ZIP codes)Up to $10,000

Interest rate0% — no monthly payment

RepaymentNot forgiven — due at sale, refinance, or payoff

Not forgivable — an important distinction: Unlike DPA programs in many other states, MSHDA's assistance is never forgiven. You will repay the full $7,500 or $10,000 whenever you sell, refinance, or pay off your first mortgage, typically out of your home equity at that point. Treat it as an interest-free loan that removes today's cash barrier, not free money.

Is your ZIP code targeted? The $10,000 tier is only available in 236 specific ZIP codes, most concentrated in areas like Detroit, Wayne County, and other targeted communities. Ask your MSHDA-approved lender to confirm your exact ZIP code before assuming you qualify for the higher amount.

First-Generation DPA is currently paused: MSHDA's First-Generation DPA Program, which historically offered up to $25,000 for buyers whose parents also never owned a home, has run out of allocated funds as of mid-2026. New funding is added periodically — check current status with MSHDA before counting on this program.

Eligibility & Purchase Price Limit

Both MSHDA DPA options require a minimum 1% borrower contribution, a minimum credit score of 640 for FHA/VA/USDA or 660 for conventional, mandatory homebuyer education, and household income under your county's limit. The statewide sales price limit is $566,355, effective June 1, 2026.

Confirm your exact county income limit and ZIP code eligibility at Michigan.gov/MSHDA before applying.

Current Rates

Product	Rate	Source
30-yr Conventional	6.55%	Freddie Mac PMMS, week of July 16, 2026
15-yr Fixed	5.93%	Freddie Mac PMMS, week of July 16, 2026
MI Home Loan first mortgage	Below market	Confirm current rate with an MSHDA-approved lender

2026 Loan Limits — Flat Statewide

Michigan has no FHA or conforming high-cost counties in 2026 — the same limit applies whether you are buying in Detroit, Grand Rapids, or a lakefront community up north.

Loan Type	Limit (Statewide, All Counties)
FHA	$541,287
Conventional (Conforming)	$832,750
VA	No county limit for buyers with full entitlement

Confirm current limits at HUD.gov, though Michigan has held flat statewide limits for several years running.

Property Tax in Michigan — Proposal A Explained

What Buyers Should Budget For

Statewide average effective rate~1.25%–1.54%

2026 Proposal A inflation cap2.7% max annual growth (existing owners only)

Uncapping on saleTaxable Value resets to current market value

Principal Residence Exemption (PRE)Exempts primary residence from 18 mills school tax

Proposal A caps how fast a property's Taxable Value can grow each year for existing owners — 2.7% for 2026 — but that protection is tied to continuous ownership, not the property itself. The moment a home is sold, its Taxable Value "uncaps" and resets to the current State Equalized Value (roughly half of market value), meaning a new buyer's first tax bill reflects today's market, not the seller's years of capped growth. File form L-4013 for the Principal Residence Exemption by June 1 or November 1 to exempt your primary home from 18 mills of local school operating tax — typically worth around $1,800 to $1,900 a year on a $200,000 home. Michigan also offers a refundable Homestead Property Tax Credit on your state income tax return if your property tax exceeds 3.2% of household resources, subject to income and taxable value limits updated annually.

Pick Your Loan Type

FHA3.5% down, flexible credit ConventionalSkip MIP with 20% down USDA$0 down in eligible areas VA$0 down for veterans

Try the Loan Calculator Compare FHA, Conventional, USDA & VA with Michigan prices and current rates

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Are you a teacher, nurse, firefighter, police officer, EMT, or veteran? Michigan may run additional hero-specific loan programs on top of the general MSHDA options covered here. Browse the Hero Home Loan Programs hub and select Michigan for profession-specific options.

Frequently Asked Questions

Do I have to repay MSHDA's down payment assistance?

Yes, eventually. Unlike forgivable programs in some other states, MSHDA's MI DPA and MI 10K DPA loans are 0% interest with no monthly payment, but the full amount comes due when you sell, refinance, or pay off your mortgage.

Why is the listed tax bill on a home so different from what I'll actually pay?

The listed tax bill reflects the current owner's capped Taxable Value under Proposal A, which can be far below market value after years of ownership. Once you buy, the Taxable Value uncaps and resets to the current State Equalized Value, so your bill is likely to be noticeably higher than what the listing showed.

How do I know if I qualify for the $10,000 MI 10K DPA instead of $7,500?

Eligibility depends on whether the property's ZIP code is one of MSHDA's 236 targeted ZIP codes. Your MSHDA-approved lender can confirm this for any specific address before you make an offer.

Is the First-Generation DPA program still available?

As of mid-2026, this program's allocated funding has been exhausted and it is paused. MSHDA periodically adds new funding, so check current availability directly before assuming you can use it.

Bottom Line: Michigan offers below-average home prices and a repayable (not forgivable) down payment assistance option that still meaningfully lowers the cash needed at closing. The property tax picture requires real attention — do not budget off a listing's current tax bill, since Proposal A's protection does not transfer to you as the new buyer.

Disclaimer: This post is for informational purposes only and does not constitute financial, legal, or mortgage advice. Program terms, rates, income limits, and availability change frequently — verify all details directly with official program sources before making any financial decisions. StatewiseFinance is not affiliated with any government agency or lender listed in this post.