Michigan Home Loans — MSHDA Down Payment Assistance and DSCR Investor Financing

Michigan organizes into two borrower profiles that have almost nothing in common. The first is the first-time buyer using MSHDA's MI Home Loan — a state-backed mortgage program that delivers up to $10,000 in zero-interest, deferred-payment down payment assistance statewide. For buyers who have stable income but limited cash reserves, MSHDA is one of the strongest DPA programs in the Midwest and it stacks on top of FHA, VA, USDA, and conventional loans. The second profile is the DSCR investor who understands that Detroit and its surrounding market trades at cap rates that the Sun Belt and coastal markets simply cannot replicate — gross yields of 7 to 15 percent depending on submarket and property tier.

These two profiles rarely overlap but they represent complementary demand. Michigan's population is essentially flat statewide, but the Grand Rapids and Ann Arbor metros are growing, Detroit has genuinely stabilized after its bankruptcy-era decline, and the state's economic diversification — away from pure automotive and toward healthcare, life sciences, and tech — is producing a more durable rental base than existed a decade ago.

The MI Home Loan is MSHDA's primary first mortgage. It carries a competitive rate and is the vehicle that unlocks down payment assistance. As of June 2026, the statewide sales price cap is $566,355 — well above what most first-time buyers in Michigan are targeting. The MI 10K DPA Loan provides up to $10,000 as a zero-interest second mortgage with no monthly payments. Repayment occurs only when the borrower sells, refinances, or pays off the first mortgage. The minimum credit score for FHA, VA, and USDA loans paired with MSHDA is 640. Conventional MSHDA loans require 660.

Income limits vary by county and household size and are updated periodically by MSHDA — they run roughly $84,600 to $121,000 for most Michigan counties in 2026, with higher limits in Washtenaw County and other higher-cost areas. First-time buyer status is required for non-targeted areas — meaning you have not owned a primary residence in the past three years. Buyers in targeted areas can be repeat buyers and still qualify. Every MI Home Loan requires completion of a Michigan homebuyer education course regardless of whether DPA is taken.

Detroit is a cash-flow market, not an appreciation market. That distinction drives everything. The inner-ring stable neighborhoods — East English Village, West Village, Rosedale Park, Grandmont-Rosedale — trade at $145,000 to $295,000 with rents of $1,400 to $1,800 producing gross yields of 7 to 10 percent. These are the deals where DSCR underwriting works cleanly: properties with substantial square footage, stable tenant pools, and insurance markets that remain functional. Detroit's effective property tax rate of approximately 2.8 percent is the highest of any major Michigan city — it goes directly into PITIA and directly into the DSCR ratio. Model it accurately before contracting.

Grand Rapids is structurally different from Detroit. It is a growth market with a diversified economic base — Corewell Health, Meijer, Herman Miller, Gentex, and a rapidly expanding life sciences corridor. Cap rates are lower than Detroit at 3 to 5 percent in established neighborhoods, but the risk profile is also lower: stable appreciation, professional tenant pools, lower turnover, and an insurance market that doesn't carry the Detroit premium. Wyoming and Kentwood on Grand Rapids' southwest edge produce the metro's best DSCR math — acquisition prices of $150,000 to $240,000 with rents of $1,350 to $1,750 supporting DSCR ratios of 1.25 to 1.45 consistently.