Looking to purchase a home in Michigan? There are many areas to research during the process, and one of the most important decisions you will make is how to finance such a large purpose. While exploring your financing options, you may want to consider an FHA Home Loan, especially if you are a first-time homebuyer.
They are particularly appealing to first-time buyers because of the low down payment, which may be as low as 3.5 percent, compared to a conventional loan where the minimum is 10 percent. A couple of other benefits are that most of the closing costs can be factored into the loan, and it is easier to qualify for an FHA loan opposed to other methods if you have less than perfect credit.
The term FHA Loan may lead some people to think that the government lends the money, but this is not the case. Rather, a bank or mortgage company lends the money and the loan is backed by Housing and Urban Development (HUD). For this reason, if you were to default on the loan, HUD guarantees that not all of the money will be lost to the lending institution, and they will be repaid some of the loan amount.
To be eligible for an FHA Loan in Michigan, you must meet the following requirements:
- Able to make at least a 3.5 percent down payment
- The home you plan to purchase must be your primary residence
- The residence must either be a home, condo or manufactured home
- For the last three years, you must have had stable income
The following are the maximum loan amounts in Michigan for which you can qualify and are broken down according to county:
The most common loan limit for an FHA Home Loan in Michigan is:
- Single family home: $345,000
- Duplex: $441,650
- Tri-plex: $533,850
- Four-plex: $663,450
If you are looking to purchase in the metropolitan area, the loan limits increase according to county:
Kalamazoo and Van Buren:
- Single family home: $286,250
- Duplex: $366,450
- Tri-plex: $442,950
- Four-plex: $550,450
Lapeer, Lenawee, Livingston, Macomb, Monroe, Oakland, St. Clair, Wayne (Warren-Troy-Farmington Hills metropolis):
- Single family home: $297,500
- Duplex: $380,850
- Tri-plex: $460,350
- Four-plex: $572,100
Berrien (Niles-Benton Harbor MSA):
- Single family home: $298,750
- Duplex: $382,450
- Tri-plex: $462,300
- Four-plex: $574,500
Washtenaw (Ann Arbor MSA):
- Single family home: $345,000
- Duplex: $441,650
- Tri-plex: $533,850
- Four-plex: $663,450
Now that you may have an idea of where in Michigan you may want to purchase, it's time to find a lender and move forward with the process. It is always important to find one that you trust and can go to with any and all questions, so make sure to do your research on the bank or mortgage company before you commit to anything. You can search for an FHA lender on HUD's web site
Guest blog written by
Michael Blumreich
FHAMortgageCenter.com.
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