Why Do Most Michigan Homebuyers Choose FHA Loans?

Michigan is a beautiful state with plenty of recreational spots and steady economic growth, which makes it attractive for those who want to move. The cost of living is also affordable, which could seal the deal for most homebuyers.

But before you go house hunting for your new Michigan home, you need to look for ways to finance your purchase if you’re not paying in cash.

Qualifying for an  may be a good option since many borrowers love FHA loans over other loan types.

Read along to discover why Michigan homebuyers prefer FHA loans when buying new homes.

What are the benefits of choosing an FHA loan for your Michigan home?

FHA loans are a great choice not only for first-time homebuyers but repeat buyers as well. Anyone can apply, and as long as you qualify, you can enjoy the benefits of the FHA loan program.

Take note that there is a limit to what type of home you can buy with your FHA loan. If you plan to buy a vacation home, second home, or investment property, you should look for other loan products since the FHA only approves primary residences.

Use an FHA loan calculator for Michigan if you want to know how much home you can afford for your new primary residence.

Here are the top reasons for applying for an FHA loan in Michigan:

  1. Mortgage rates are most likely lower than market rates

FHA rates are usually 0.125% lower than those for a conventional 30-year fixed-rate loan.

You can save thousands of dollars with an FHA loan compared to other loan products with higher interest rates.

  1. A low down payment is an option.

You don’t have to pay the traditional 20% upfront with an FHA loan. The FHA allows a down payment as low as 3.5% even if you have below-average credit scores. 

While the VA and USDA have zero down options, they have strict rules with qualification, location, and income limits compared to the low down the FHA loans provide, which have no such restrictions.

  1. You can qualify even with not-so-good credit scores.

Michigan borrowers love the FHA since you can qualify for a loan even with a credit score of 500. Other popular loan products require a minimum credit score of 620 to qualify.

The FHA has helped many Michigan borrowers at the lower end of the credit-scoring spectrum become homeowners.

To qualify for an FHA loan with a low credit score, you must put down at least 10%. To avail of the 3.5% down, you need at least a 580 credit score.

  1. There are no added requirements, unlike other loan products.

VA loans have low and zero down payment programs, but you must be part of the military to qualify. The USDA also offers zero down loans, but you need to have moderate or low income and buy in an eligible rural area.

If you are looking at Fannie Mae’s conventional HomeReady program, you can put down 3%, but you must meet restrictions on household income.

The FHA is less stringent as they allow buyers to buy where they want without having to be a part of an organization or be part of a specific income bracket.

  1. You can buy a fixer-upper with an FHA loan. 

For first-time home buyers on a budget, a fixer-upper is often a good choice for a first home. The good news is the FHA 203(k) rehabilitation loan allows you to buy a home that needs repair and finance the purchase, including the cost of repairs.

You can use an FHA down payment calculator to find out how much you need to pay upfront.

Are you ready to apply for an FHA loan?

Applying for an FHA loan can be overwhelming especially for first-timers. Let our loan officers handle everything for a smooth home-buying experience.

Reliance Financial Group of Michigan is authorized to grant FHA loans giving Michigan borrowers access to the benefits of the loan program.

Let’s meet to discuss if an FHA loan is the right product for you. Give us a call or send us a message to help you get started today.




* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.