Michigan First-time Home Buyer Guide

Homebuying is exciting but it may be challenging and complicated at the same time, especially if you're a first time home buyer who is new to the market. But the process can become smoother and less stressful if you get prepared and guided through it.

Here are some tips and advice on home purchase for first time homebuyers to make their way to the market smoother. 

  • Determine if renting or buying a home makes more sense. Before deciding to buy your first home, research your options and develop the criteria to weigh your options. You should make sure it makes financial sense to purchase because in certain counties like Wayne County or Oakland County (Detroit area) it actually pays to rent vs. buy.

  • Ask yourself if it’s really time for you to buy and if you can afford it. The best approach is to buy a home when you can afford it. Start with doing a serious audit of your finances to make sure you are prepared for both the purchase and the ongoing expenses of a home. Make sure you have an emergency savings account, review your spending to know how much you can allocate to a mortgage payment. Consider the one-time fees you are expected to pay as you close on your home (down payment, appraiser fees, home inspection fees, and closing costs.)

  • Check if you are qualifying for a mortgage. Check if you have a good credit and a low  debt-to-income (DTI) ratio. Make sure to get pre-approved for a loan before placing an offer on a home․ You can check out this article for eligibility requirements of various home loan programs in Michigan. Also make sure you understand the difference between getting pre-qualified vs. pre-approved.

  • Shop for a mortgage. Do some independent shopping. Specialists recommend looking up mortgage rates online, then call three or four lenders and mortgage brokers and ask them for a written list showing their fees. Make sure you avoid the lowest rate if you’re going to pay too much in fees.

  • Consider the type of home that best serves your needs. The options of a residential property you can decide on include a traditional single-family home, a duplex, a townhouse, a condo, a co-operative, or a multi-family building with two to four units. Depending on your homeownership goals, each option has its pros and cons.

  • Get your documentation in order. If you’re close to putting an offer on a home, start collecting documents that you’ll need to verify your finances on the mortgage application. These documents include copies of W-2 forms and your two most recent payroll stubs, self-employed borrowers, bank statements, debt payments, etc. 

  • Find a good real estate agent but get prepared by yourself too. A real estate agent can help you negotiate the purchase process, including making an offer, getting a loan, and completing paperwork, as well as  they can protect you from any pitfalls you might encounter during the process. But make sure you do some research too–take homeownership classes and don’t miss Homeownership Days hosted by different organizations. 

First-time Home Buyer Educational Programs

Potential buyers are encouraged to complete education courses as they may help them qualify for down payment and closing cost assistance programs. These courses also have huge practical benefits - they help you get better prepared for what to expect during the purchase transaction as well as the ongoing responsibilities of homeownership.

First-time home buyer classes are courses featuring content guided by the U.S. Department of Housing and Urban Development. Many states, local governments and nonprofits that provide grants or down payment assistance require first time homebuyers to take a HUD-approved “housing counseling” class. A typical class covers topics like “How much home can you afford?”, “What do you need in your home?”, “What mortgage loan products to consider”, or “How to improve your credit score”, etc.

Some home buyer education courses are free. In-person classes may cost as little as $15 to $30, while online courses, which can be six to eight hours long, can range from $75 to $125.

Here is a list of Michigan homebuyer education providers and courses (most of them are HUD-approved):

MSHDA's Housing Education Program

NEMCSA Homebuyer Education Program

Habitat for Humanity of Huron Valley Homebuyer Pre-Purchase course

MSU Extension Pre-Purchase / Homebuyer Education

NIBC Homeownership Education

Community Home Solutions Homebuyer Education

Southwest Michigan Community Action Agency Homebuyer Education Workshops

NMCAA Homebuyer Education

  Housing Services Mid Michigan Homebuyer Education

  Abayomi CDC Homebuyer Education

  Central Detroit Christian Homebuyer Education

  NID Housing Homebuyer Education

  SEED Housing Counseling & Education

  Southwest Solutions Homebuyer Education

  Wayne Metro Homebuyer Education

  Genesee County Habitat for Humanity Homebuyer Education

  Metro Community Development Homebuyer Education

  ICCF  Introduction to Homeownership Class

  CAAJLH - Housing Counseling

  KHHS Homebuyer Education

  CAHP Home Buyer Education Workshop

  Center for Financial Health Homebuyer Education

  Blue Water Community Action Homebuyer Education

  Community Housing Network Homebuyer Education

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