FHA Loans
See if you qualify for a 3.5% down payment FHA loan in Michigan.
What Is an FHA Loan?
An FHA loan, insured by the Federal Housing Administration, is a government-backed mortgage designed to make homeownership more accessible. If you have a lower credit score, limited savings for a down payment, or are a first-time homebuyer in Michigan, an FHA loan could be your perfect fit. It offers a low down payment and more flexible qualification requirements than many other loan types.
At Treadstone Funding, we see the FHA loan as a powerful tool for helping people achieve their homeownership dreams. It’s a popular choice for first-time buyers, self-employed individuals, and anyone who needs a more forgiving path to getting the keys to their new home in Grand Rapids or anywhere in Michigan’s lower peninsula.
FHA LOAN REQUIREMENTS
To qualify for an FHA loan in Michigan, you’ll need to meet a few key requirements.
• Credit Score: A minimum FICO score of 580 is typically needed to qualify for the 3.5% down payment.
• Down Payment: A minimum down payment of 3.5% is required. This can often come from gift funds from family or an approved source.
• Property Type: The home must be your primary residence. This can include single-family homes, condos, and even 2-4 unit multi-family properties (as long as you live in one of the units).
• Mortgage Insurance (MIP): All FHA loans require Mortgage Insurance Premium (MIP), which includes an upfront premium and an annual premium paid monthly.
• Steady Income: You must have a steady income and verifiable employment history.
• Appraisal: The property must meet FHA’s minimum property standards as determined by an FHA-approved appraiser.
How to Get Started with an FHA Loan
Benefits & Things to Consider with FHA Loans
• Low Down Payment: With a minimum requirement of just 3.5% down, FHA loans make homeownership achievable for those with limited savings.
• Flexible Credit Requirements: FHA guidelines are more lenient on credit scores, offering a path for those who may not qualify for a conventional loan.
• Gift Funds Allowed: You can use gift money from a family member, employer, or approved charity to cover 100% of your down payment and closing costs.
• Higher Debt-to-Income Ratios: FHA loans often allow for higher debt-to-income (DTI) ratios compared to conventional loans, giving you more flexibility in what you can afford.
Loan-Specific Numbers & Details
FHA loan limits are set by county and updated every year. For 2026, every Michigan county has the same limits.
| Property Type | 2026 FHA Loan Limit (All Michigan Counties) |
|---|---|
| 1-Unit Home | $541,287 |
| 2-Unit Home | $693,050 |
| 3-Unit Home | $837,700 |
| 4-Unit Home | $1,041,125 |
Note: FHA loan limits are updated annually and are subject to change. A Treadstone Loan Officer can confirm the exact limit for your purchase.
FHA Loans Are a Powerful Tool
An FHA loan is an excellent option for many buyers, but it’s important to understand the full picture. The required Mortgage Insurance Premium (MIP) is a key consideration. While it helps you secure the loan with a low down payment, it adds to your monthly cost. Our Loan Officers will help you compare an FHA loan against other options, ensuring you choose the mortgage that best serves your financial health for the long term.
FHA Loan Comparisons
| Feature | FHA Loan | Conventional Loan | USDA Loan |
|---|---|---|---|
| Min. Down Payment | 3.5% | 3-5% | 0% |
| Credit Score | More Flexible (580+) | Stricter (620+) | Moderate (620+) |
| Mortgage Insurance | Required (MIP) | Required under 20% down (PMI) | Required (Guarantee Fee) |
| Location | Anywhere | Anywhere | Eligible Rural Areas Only |
| Best For | Lower Credit/Low Down Payment | Strong Credit/Avoiding MI | Rural Buyers/No Down Payment |
What are FHA Loan rates today?
Mortgage rates fluctuate daily based on market trends. FHA rates are often very competitive. For the most current and accurate rates for your specific situation, it’s best to speak directly with one of our Loan Officers.
Technical Information About FHA Loans
- Loan Limits: Set by county and updated every year. For 2026, the limit for a single-family home is $541,287 in every Michigan county.
- Occupancy: Must be your primary residence. You cannot use an FHA loan for a second home or a pure investment property.
- Mortgage Insurance (MIP): Consists of an Upfront Mortgage Insurance Premium (UFMIP) that can be rolled into the loan amount, and an annual MIP paid monthly for the life of the loan (or 11 years if you put 10% or more down).
- Seller Concessions: FHA allows the seller to contribute up to 6% of the purchase price toward the buyer’s closing costs.
Why Treadstone?
Aside from having the coolest mortgage staff on the planet, working with Treadstone on your mortgage in West Michigan gives you a distinct advantage. We’re not just a lender; we’re your neighbors. Our entire team—from processing to underwriting—is right here in Grand Rapids, ensuring a smooth, proactive process. We don’t just close loans; we build relationships and empower our clients to become successful and knowledgeable homeowners.
FAQ About FHA Loans
FHA loans are great for first-time homebuyers, borrowers with less-than-perfect credit (scores of 580+), or those with limited funds for a down payment. You must have a steady income and plan to live in the home as your primary residence.
If your credit score is 580 or higher, you can qualify for the minimum down payment of 3.5%.
MIP is an insurance policy required on all FHA loans. It protects the lender in case of default and is what allows lenders to offer loans with lower down payments and more flexible credit requirements. It has two parts: an upfront premium and a monthly premium.
Yes! FHA loans are a fantastic tool for “house hacking.” You can buy a 2, 3, or 4-unit property with a 3.5% down payment, live in one unit, and rent out the others to help cover your mortgage.
Absolutely. Many homeowners refinance their FHA loan into a conventional loan once they have enough equity to eliminate mortgage insurance. FHA also offers a “Streamline Refinance” to lower your rate with reduced documentation.
FHA limits are set by county, but for 2026 every Michigan county has the same limit: $541,287 for a single-family home, $693,050 for 2 units, $837,700 for 3 units, and $1,041,125 for 4 units. Your Loan Officer can confirm the current limit before you make an offer.
Yes. FHA guidelines have shorter waiting periods after major credit events like bankruptcy or foreclosure compared to conventional loans, typically 2-3 years.
FHA loans cannot be used for properties that are purely for investment (like a rental you won’t live in) or for vacation homes. Also, properties that are not primarily residential (e.g., a building that is more than 50% commercial space) will not qualify.
