FHA Qualifications in Michigan

Are you dreaming of owning a home in Michigan but worried about meeting the stringent requirements of traditional mortgages? FHA (Federal Housing Administration) programs in Michigan could be the perfect solution for you. These home loans are designed to make homeownership more accessible, especially for first-time buyers and those with less-than-perfect credit. These loans are backed by the government, which means lenders are more willing to offer favorable terms, such as lower down payments and flexible credit score requirements.


FHA Requirements for Home Buyers

Whether you’re looking for a cozy suburban house or a downtown loft, FHA programs in Michigan can help you achieve your homeownership goals. These loans offer competitive interest rates, making them an attractive option for many homebuyers. Ready to see if you can take advantage of the benefits an FHA Loan has to offer? Make sure you meet these qualifications:

  • 3.5% minimum down payment plus closing costs and prepaid fees
  • Minimum 580 credit score
  • DTI no greater than 50%
  • Proof of steady employment and income
  • No bankruptcies within 24 months
  • Financed property must not be less than 50% residential
  • Home must be the purchaser’s primary residence

If you have any questions or only meet some of these, let us know. We may be able to find a better option for you!


FHA Loan Limits in Michigan

When seeking an FHA home loan, buyers need to keep the loan limits in mind.

2024 FHA Loan limits for Kent County, Ottawa County, Grand Traverse County, Kalamazoo County, Ingham County, Wayne County, and Ionia County are:

  • 1 Unit: $498,257
  • 2 Units: $637,950
  • 3 Units: $771,125
  • 4 Units: $958,350

FHA Loan Income Limits
One of the appealing aspects of FHA Loans is that they do not have strict income limits, unlike some other types of loans. This means that borrowers do not need to meet a specific income threshold to qualify for an FHA Loan. Instead, the focus is on the borrower’s ability to make their monthly mortgage payments. This flexibility makes FHA Loans an attractive option for a wide range of borrowers, including those with varying income levels and those who may not qualify for Conventional Loans bound by income restrictions.


Types of FHA Government Loans

Understanding the various types of FHA government loans is essential for anyone considering homeownership through FHA financing. FHA home loans offer a range of options tailored to different needs and circumstances, each with their own features and benefits.

The standard Michigan FHA Loan used to finance the purchase of a home is the 203(b) Loan. This FHA home loan is especially popular among first-time homebuyers and those with unfavorable credit thanks to its low down payment requirement and flexible credit score guidelines.

With a 203(b) Loan, borrowers can finance up to 96.5% of the purchase price of the home, meaning a down payment of only 3.5% is required. Additionally, FHA 203(b) Loans offer competitive interest rates and can be used to purchase a variety of property types, including single-family homes, multi-unit properties, and condominiums.

The FHA 203(k) Loan, commonly known as a “rehab loan,” enables homebuyers to purchase a property and finance the cost of renovations or repairs within the same loan. This option is ideal for buyers interested in purchasing a fixer-upper or an older home in need of significant upgrades.

With the 203(k) Loan, buyers can include both the purchase price and renovation costs, simplifying the financing process, condensing everything into one tidy mortgage. The loan amount is based on the property’s expected value after contractor-completed renovations, ensuring adequate funds to cover both aspects. This program offers two versions: the standard 203(k) for extensive renovations, including structural repairs, and the limited 203(k) for smaller projects like cosmetic upgrades.

HUD Homes (FHA Foreclosures)

HUD homes are properties that were initially purchased with an FHA Loan but have since been foreclosed. These homes are then sold by the U.S. Department of Housing and Urban Development (HUD) at discounted prices to recover the losses from the foreclosure. HUD homes can be an excellent opportunity for homebuyers looking for affordable housing options, as they are often priced below market value.

Bear in mind that purchasing an HUD home in Michigan involves a unique process. These homes are typically sold through an online bidding process, managed by HUD-approved Michigan Real Estate Agents. Buyers can inspect the property before placing a bid and must submit their offers through a HUD-approved agent.

HUD homes are sold as-is, so buyers are responsible for any repairs or improvements needed. However, buyers may finance the purchase and any necessary repairs using the FHA 203(k) Loan.


Where can I get an FHA Loan?

At Treadstone, we lend anywhere in the State of Michigan! Connect with us and we will help you nail down whether an FHA Loan is right for you, and if it is, we will walk you through the process! If not, we’ll create a plan to move you toward homeownership.


Frequently Asked Questions

Do FHA Loans require a down payment?

Yes, FHA Loans typically require a down payment. The minimum down payment for an FHA Loan is 3.5% of the purchase price.


Do FHA Loans require inspections?

FHA Loans typically require inspections. One of the key inspections required for an FHA Loan is the appraisal, which is conducted by an FHA-approved appraiser. The purpose of the appraisal is to determine the fair market value of the property and ensure it meets minimum property standards set by the FHA.

In addition to the appraisal, the FHA may require other inspections, such as a home inspection, to identify any issues that could affect the safety or habitability of the property. These inspections help protect both the borrower and the lender by ensuring that the property is in good condition and meets FHA requirements.


How to get approved for an FHA Loan?

Not all lenders offer FHA Loans, so you’ll need to find one that does. You can search for FHA-approved lenders on the HUD website and, of course, you’ll want to take a look at the eligibility requirements before you get started.

Terms and qualifications are subject to underwriting approval and can change without notice. Not all borrowers may qualify. Credit score and down payment examples are for illustrative purposes.


FHA Loans make the dream of owning a home more accessible