Michigan Launches $25K Down Payment Assistance Program for First-Generation Buyers

In an era where rising property costs and high interest rates have placed homeownership out of reach for many, the State of Michigan has taken a decisive step to change the narrative. The Michigan State Housing Development Authority (MSHDA) recently launched the First-Generation Down Payment Assistance (DPA) Program, a groundbreaking pilot initiative that provides up to $25,000 in financial support to first-generation homebuyers.

With $8 million allocated from the state budget, the program aims to assist approximately 320 families across Michigan, offering them a critical boost to cover down payments, closing costs, and prepaid expenses. At a time when the National Association of Realtors (NAR) reports that first-time homebuyers represent just 24% of the market—the lowest in decades—this program couldn’t be more timely.

“Homeownership is a vital pathway to economic stability and community investment,” stated Amy Hovey, MSHDA’s Executive Director. “This program is about more than just numbers; it’s about creating opportunities for families to build generational wealth and gain long-term financial security.”

Understanding the Housing Affordability Crisis

For first-time and first-generation homebuyers, the dream of owning a home often feels out of reach. Rising home prices, limited inventory, and surging rental rates make saving for a down payment challenging. Jessica Lautz, Deputy Chief Economist at NAR, noted:

“The housing market is increasingly divided between those who can leverage existing equity to buy homes with cash and those struggling to even make a down payment.”

In Michigan, median home prices have continued to climb, while wages have not kept pace. The burden of upfront costs, including down payments and closing fees, often represents the largest hurdle for would-be homeowners—particularly those without family wealth or existing equity. The First-Generation DPA Program directly addresses this gap, helping families take that crucial first step onto the property ladder.

What the First-Generation Down Payment Assistance Program Offers

The First-Generation DPA provides up to $25,000 in loan assistance, which can be applied toward:

Down payments – Often the largest upfront cost, making it easier to secure competitive mortgage rates.
Closing costs – Covering fees that can total thousands of dollars, including lender charges, title insurance, and legal fees.
Prepaid expenses – Escrow accounts for property taxes and homeowner’s insurance, which lenders typically require at closing.

This financial cushion is particularly beneficial for buyers facing the dual challenge of soaring rents and the escalating cost of living.

Who Qualifies? Detailed Eligibility Requirements

To ensure the program reaches those who need it most, MSHDA has set comprehensive eligibility guidelines:

First-Generation Homebuyer Criteria

Applicants must meet the following standards:

No ownership interest (sole or joint) in any property within the past three years.
The purchased property must be used as the primary residence.
One of these conditions must apply:

Neither parent of the borrower has owned a home in the past three years.
The applicant has aged out of foster care.
The applicant is emancipated from parental or guardian oversight.

Credit and Income Requirements

Minimum credit score: 640
Minimum cash contribution: 1% of the purchase price from the buyer’s own funds.
Household income must fall within limits established by MSHDA to ensure the program targets those with the greatest financial need.

Property Requirements

Maximum purchase price: $224,500
The property must be located in Michigan and intended for owner-occupancy.

Homebuyer Education

Completion of a HUD-certified homebuyer education course is mandatory. Courses are offered face-to-face with approved counseling agencies to ensure buyers are fully informed about the responsibilities of homeownership.

Loan Compatibility & Restrictions

The First-Generation DPA must be used with an approved MI Home Loan product (FHA, Conventional, or USDA).
It cannot be combined with the MI $10K DPA program to avoid overlapping benefits.

How Does This Program Compare to Other State and Federal Initiatives?

While down payment assistance programs are not new, Michigan’s focus on first-generation buyers is unique. Traditional first-time buyer programs often overlook the generational wealth gap that affects those whose families have never owned property.

By contrast, federal initiatives like the FHA’s low down payment loans help first-time buyers broadly but don’t specifically address first-generation challenges. Michigan’s program bridges this gap, acknowledging that family history plays a significant role in homeownership opportunities.

Furthermore, the First-Generation DPA goes beyond previous state offerings—such as the MI $10K DPA—by more than doubling the assistance amount, allowing buyers to cover a broader range of upfront costs.

Real-Life Impact: How This Program Changes Lives

Consider the story of Sarah, a 29-year-old Michigan resident who has been renting for over a decade. With monthly rent climbing to unsustainable levels, she longed to purchase a home but struggled to save for a down payment while covering everyday expenses.

Through the First-Generation DPA program, Sarah secured $25,000 in assistance, covering her down payment and closing costs. With her new home, she now pays less monthly than she did in rent—and is building equity with every payment.

“This program didn’t just give me money; it gave me a chance to build a future for myself and my family,” Sarah said.

Such stories underscore the program’s potential to transform lives and communities across Michigan.

Why Homeownership Matters: Beyond the Financial Benefits

Homeownership is often described as the American Dream—and for good reason. Beyond financial benefits like equity building and tax advantages, owning a home provides:

Community Stability: Homeowners are more likely to invest in their neighborhoods, fostering safer and more connected communities.
Improved Educational Outcomes: Children of homeowners tend to perform better academically, benefiting from stable living environments.
Generational Wealth Creation: Unlike renting, homeownership allows families to pass down assets, helping break cycles of poverty.

“This program is about more than homes—it’s about opportunity and equity,” said Lt. Gov. Garlin Gilchrist. “We’re ensuring families can build wealth and stability for generations to come.”

Step-by-Step Guide: How to Apply for the First-Generation DPA Program

Navigating the application process is straightforward, thanks to MSHDA’s comprehensive support network. Here’s how to get started:

Step 1: Confirm Eligibility

Review the criteria related to income, credit score, and first-generation status.

Step 2: Complete Homebuyer Education

Enroll in a HUD-certified course through the MSHDA Housing Education Locator.

Step 3: Choose an Experienced Lender

Contact one of MSHDA’s approved lenders via the MI Home Loan Experienced Loan Officer Locator.

Step 4: Submit Your Application

Provide documentation verifying income, credit, and property details.

Step 5: Secure Your MI Home Loan

Work with your lender to find the best loan product (Conventional, FHA, or USDA) compatible with the DPA.

Step 6: Close on Your Home

Use the DPA funds to cover your down payment, closing costs, and prepaid expenses.

What Experts and Community Leaders Are Saying

The program has garnered widespread support among housing advocates, financial experts, and state officials.

“This initiative is a game-changer,” said Jessica Lautz of NAR. “It’s targeted, thoughtful, and provides tangible solutions to longstanding barriers.”

Lt. Gov. Gilchrist echoed these sentiments:

“We’re not just talking about affordable housing—we’re delivering solutions that make a real difference.”

Looking Ahead: Michigan’s Broader Housing Strategy

The First-Generation DPA program is part of Michigan’s broader commitment to housing affordability. The state is on track to build or rehabilitate 115,000 housing units by 2027, ensuring that affordable housing options extend beyond first-time buyers.

Programs like these reflect Michigan’s recognition that housing is foundational to economic prosperity and community development.

A New Chapter for Michigan Families

Owning a home has long been a symbol of financial stability and personal achievement. With the First-Generation Down Payment Assistance Program, Michigan is not just making homeownership accessible—it’s investing in the future of its residents and communities.

For first-generation buyers who once thought a home was out of reach, the message is clear: Help is here.