Michigan · State guide
How to buy a house in Michigan
One of the most affordable states in the country, with a state program that adds $10,000 toward your costs — but with a property-tax quirk that catches new buyers off guard. Here is the playbook for buying in the Great Lakes State.
Last updated June 2026
Why Michigan is different
Buying a house in Michigan, the short version
The federal process is the same everywhere — read the complete guide to buying a house for the eight universal steps — but Michigan has its own programs, taxes, and closing rules worth knowing before you start.
The picture: Michigan is one of the most affordable states (a statewide median around $294,000; the city of Detroit is very cheap, Ann Arbor and the Oakland County suburbs are pricey, and the Upper Peninsula is cheapest). The state agency, MSHDA, offers a below-market loan plus up to $10,000 in down payment assistance, now available statewide.
Two things to plan for. Michigan property taxes “uncap” when you buy — meaning your bill resets higher than the seller’s, often by a lot — so never budget off the old tax bill. And home insurance is moderate statewide but among the most expensive in the country in Detroit. Use the 50-state hub to compare other states.
The market
What homes cost in Michigan
Among the most affordable states, with a wide gap between Detroit, Ann Arbor, and the north.
The statewide median sale price was about $294,000 in spring 2026 (Redfin), up around 5% year over year, well below the national median. Prices vary widely by area:
Median prices by area
Ann Arbor (Washtenaw) is the priciest, ~$445K · Traverse City ~$437K–$470K · the Detroit suburbs (Birmingham, Royal Oak, Troy in Oakland County) command premiums · Grand Rapids ~$300K and very competitive · Kalamazoo County ~$296K · Macomb County ~$266K · the city of Detroit is the cheapest big market, ~$100K (and rising) · the Upper Peninsula is the most affordable region overall.
Down payment & rate help
MSHDA programs
You don’t apply directly — you work through an MSHDA-approved lender. A 640 credit score and a homebuyer course are the main requirements.
-
01
MI Home Loan
The core: a 30-year fixed mortgage at a below-market rate, underwritten as FHA, VA, USDA, or conventional. It’s for first-time buyers statewide (and repeat buyers in targeted areas), with a 2026 sales-price limit of $566,355. Homebuyer education is required.
-
02
MI 10K DPA Loan
The standout: up to $10,000 toward your down payment, closing costs, and prepaids — now available statewide. It’s a 0% interest, deferred second mortgage with no monthly payment, repaid only when you sell, refinance, or pay off the loan (not a grant).
-
03
Mortgage Credit Certificate
MSHDA’s MCC gives you a federal tax credit worth 20% of your annual mortgage interest (up to $2,000 a year), for the life of the loan. There’s also a first-generation pilot offering up to $25,000 in forgivable help when funding is available.
-
04
Local & federal help
Cities add their own: Detroit offers up to $25,000, and Grand Rapids up to $7,500 (forgivable after 5 years). Plus FHA (3.5% down), VA (0% down), and USDA (0% down) in rural areas.
The MSHDA rules in brief
You’ll generally need a 640 credit score (660 for a manufactured home), completion of a homebuyer education course (required for the DPA), a minimum 1% of your own funds, and household income under county limits — roughly $98,400 to $170,760 for a 1–2 person household depending on the county. The MI 10K DPA is a deferred second mortgage you repay later, not a grant. “First-time” means no ownership in three years; in targeted areas (entire counties like Washtenaw, Ingham, and Kalamazoo), repeat buyers also qualify.
★ Free expert help
Buying in Michigan? Get matched with a local expert.
From MSHDA’s $10,000 help to estimating what your property taxes will really be after they uncap, a local pro can walk you through it — and answer the questions this page can’t. Free, with no obligation.
Property taxes
Property taxes in Michigan: watch the “uncapping”
Michigan property taxes are relatively high — an effective rate around 1.25%, with a typical bill near $2,900. Your tax is based on taxable value (multiplied by the local millage), and under Proposal A, a current owner’s taxable value can rise no more than the lesser of 5% or inflation each year (just 2.7% for 2026). That protection keeps long-time owners’ taxes low — but it doesn’t carry over to you when you buy.
Taxes reset when you buy — and file your PRE
This is the key Michigan rule: when a home sells, its taxable value “uncaps” the next year and resets to 50% of market value. So a new buyer often pays much more in property tax than the seller did — sometimes thousands more a year. Never budget off the seller’s bill; ask the assessor for the current state equalized value (SEV) and estimate from that. After closing, file the Principal Residence Exemption (Form 2368) to drop the 18 mills of school operating tax — worth roughly $1,800 a year on a $200,000 home. Veterans rated 100% disabled get a full property-tax exemption (Form 5107).
Closing & costs
Closing on a home in Michigan
Michigan is a title-company state — a title company or settlement agent handles the closing, and an attorney isn’t required. Title insurance is standard (by Michigan custom the seller pays for the owner’s policy and the buyer pays the lender’s). The transfer tax is a combined state and county tax of about 0.86% ($3.75 + $0.55 per $500 of price), customarily paid by the seller — about $2,580 on a $300,000 home. On financing, the 2026 conforming limit is $832,750 and the FHA floor is $541,287 in every Michigan county (no county is high-cost — even metro Detroit, Grand Rapids, and Ann Arbor are at the floor), since the state is so affordable.
The disclosure — and a possible seller tax refund
Michigan requires sellers of homes (1–4 units) to give you a written Seller’s Disclosure Statement of known conditions before you sign, plus the federal lead-paint disclosure for pre-1978 homes. Always get your own home inspection on top of it. One useful note for later: if you eventually sell your principal residence at or below the value you bought it at, you may qualify for a refund of the state transfer tax (Form 2796) — worth checking.
Insurance & risks
Insuring a Michigan home
Home insurance in Michigan is moderate-to-high — averaging roughly $2,900 a year statewide and rising fast (Michigan was among the steepest increases in the country for 2026). But location matters enormously: Detroit is among the most expensive in the nation, averaging around $5,100 a year due to crime, aging housing, and claims history, while Grand Rapids is among the cheapest. The main risks are severe storms, wind, hail, and tornadoes (especially in southern Michigan), and harsh winters — ice dams and frozen pipes are big claim drivers.
Detroit premiums, winter pipes, and a separate flood policy
If you’re buying in Detroit or Wayne County, get quotes from several carriers — premiums there can run 2–3× the state average, and the Michigan FAIR Plan is the last-resort option if you’re declined. Note that Michigan lets insurers use your credit score to price coverage, so good credit helps. To avoid the most common winter claims, insulate against ice dams and protect pipes from freezing. And flood is never covered by a standard policy — after events like the 2021 Detroit-metro flooding, check the FEMA flood map and add an NFIP policy (and sewer-backup coverage) if needed.
Wherever you buy
The steps that work the same in Michigan
Michigan sets the local rules, but these parts of buying are the same everywhere.
Quick answers
Buying a house in Michigan: common questions
How much money do you need to buy a house in Michigan?
With a conventional loan you need 3% down, FHA 3.5%, and VA or USDA can be 0%. On a typical ~$294,000 home that’s roughly $9,000–$10,000 down plus closing costs. MSHDA’s MI 10K DPA can cover up to $10,000 of that. See how much you really need →
Does Michigan have down payment assistance?
Yes. MSHDA’s MI 10K DPA offers up to $10,000 (a 0% deferred second), now statewide. Cities add their own — Detroit up to $25,000, Grand Rapids up to $7,500 forgivable. See assistance programs →
What is property tax “uncapping” in Michigan?
Under Proposal A, a current owner’s taxable value can only rise a little each year. But when a home sells, it “uncaps” and resets to 50% of market value — so your bill as the new buyer is often much higher than the seller’s. Always estimate taxes on the current SEV.
What is the Principal Residence Exemption?
The PRE exempts your primary home from the 18 mills of local school operating tax — worth roughly $1,800 a year on a $200,000 home. File Form 2368 with your local assessor by June 1 (or November 1) after you move in.
What credit score do you need in Michigan?
MSHDA generally requires a 640 (660 for a manufactured home). For loans broadly, FHA can go to 580 and USDA/VA typically want 620. A higher score mainly earns a lower rate. Check the score by loan type →
Do I need an attorney to buy a house in Michigan?
No. Michigan is a title-company state — a title company or settlement agent handles the closing. An attorney is optional but wise for a for-sale-by-owner or complex transaction.
Does Michigan have a transfer tax?
Yes — a combined state and county transfer tax of about 0.86% of the price ($3.75 + $0.55 per $500), customarily paid by the seller. That’s about $2,580 on a $300,000 home.
Why is home insurance so expensive in Detroit?
Detroit has among the highest premiums in the country — around $5,100 a year — due to crime, aging housing stock, and claims history. Get quotes from several carriers, and use the Michigan FAIR Plan if you’re declined.
What’s the conforming loan limit in Michigan?
$832,750 in every county for 2026, with the FHA floor at $541,287 statewide. No Michigan county is high-cost, so even metro Detroit and Ann Arbor are at the floor. Loans above the limit are jumbo.
★ Ready for the next step?
Don’t navigate the Michigan market alone.
Tell us where you are in the process and we’ll connect you with an expert who can help — whether that’s an MSHDA loan, the $10,000 down payment help, a USDA 0%-down approval, or fixing your credit. It’s free, with no obligation.
Compare states
Buying in a different state?
The programs, taxes, and closing rules change at the state line. Pick another state, or see all 50.