Prepare for your home-buying journey and secure your dream property
with these streamlined, step-by-step first-time home buyer guides.
Buying a home in Michigan is a big milestone, and the state offers plenty of great options for first-time buyers. With a median sales price of $293,956 — well below the national median of $398,771 — it’s an attractive place to put down roots. Whether you’re looking at Rochester’s 14.6% year-over-year growth or another local market, this guide is here to walk you through the process, from evaluating your finances to closing day.
What is a first-time homebuyer, exactly? It’s a common question, and getting the answer right can help you access specific programs tailored to your needs. Generally, you qualify as a first-time homebuyer if you haven’t owned a primary residence in the past three years. This definition also extends to anyone who owned a home with a former spouse, or those who previously owned a home that wasn’t on a permanent foundation (like certain manufactured homes).
Lenders use these guidelines to determine who deserves special assistance and advantages, so reviewing these rules can help you identify programs you may qualify for and find the right home loan for you in Michigan.
Michigan offers a variety of programs designed to give first-time buyers an edge. These options help you tackle affordability challenges head-on, whether that means securing down payment assistance or qualifying with more flexible credit requirements.
Eligibility can vary depending on your income and where you’re looking to buy your first home. Your mortgage loan officer will be your best resource here — they can help you navigate the various grants and loans available to find the best match for your financial situation.
Recommended: Michigan First-Time Home-Buying Assistance Programs
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Buying your first home is a big project, but breaking it down into steps makes the process much more manageable. In this guide, we’ll walk through how to check your credit, set a realistic budget, hunt for down payment assistance programs, and ultimately pick the right house. Let’s get started on turning your homeownership goals into a reality.
Before you start browsing listings, take a moment to look at your financial big picture. It’s important to ensure your budget can comfortably cover the “big rocks” of homeownership: your down payment, mortgage payments, property taxes, homeowners insurance, and ongoing maintenance.
A strong credit score helps here, as it usually secures you better loan terms. If your score needs a boost, take some time to focus on that before applying. Lenders will also look at your debt-to-income (DTI) ratio; while they prefer to see it under 43%, some programs may allow for up to 50%.
Finally, consider your timeline — buying is often a smart move if you plan to stay long-term, allowing you to build equity through appreciation and potentially lowering your monthly costs compared to renting.
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Before you fall in love with a property, set a firm budget using a home affordability calculator. This will help you define your comfort zone for monthly housing costs. When budgeting, don’t just account for the mortgage; factor in your down payment, taxes, any homeowners association fees, and maintenance. You’ll also want a little cushion for one-time expenses like new furniture, appliances, or landscaping.
Many buyers aim for a 20% down payment to avoid private mortgage insurance (PMI), but that isn’t the only path. First-time buyers often use conventional mortgages with as little as 3% down, and some government-backed loans even offer zero-down options. A down payment calculator is a great tool to help you visualize exactly how much cash you’ll need on hand.
You have a few different paths to choose from when it comes to financing your first home. Each type of mortgage loan has unique requirements:
Shopping for the right mortgage lender takes a bit of legwork, but it is well worth the effort. Taking the time to compare offers can save you money over the life of your loan.
Small differences in interest rates can have a big impact on your monthly payment. As you compare, look closely at the APR (annual percentage rate). While interest rates tell you the cost of borrowing, the APR gives you a clearer picture by including lender fees and discount points, helping you make an apples-to-apples comparison.
Before you start touring homes, it helps to know the difference between prequalification vs. preapproval. Prequalification gives you a ballpark estimate of your borrowing power. You can get prequalified with multiple lenders as you shop around for the best deals.
Preapproval, however, is the formal step where a lender verifies your financial life — including your credit, income, and assets. During the mortgage preapproval process, you’ll need to provide documents like pay stubs and tax returns, but it’s worth it: A preapproval letter shows sellers you’re a serious buyer and confirms exactly how much you can borrow.
Having a pro in your corner can make the entire process smoother and less stressful. A good buyer’s agent doesn’t just open doors — they tailor your search to your specific needs, find hidden gems not yet on the market, and handle the tricky contract negotiations and paperwork for you.
Before you team up with someone, be sure to ask them how their compensation works, especially given recent industry changes.
Once you have that preapproval letter in hand, the search officially begins. As you evaluate homes, think about the long-term lifestyle factors that matter to you: the local cost of living, school districts, safety, and your daily commute. Visit neighborhoods at different times of day to get a real feel for the area, and keep an eye out for potential maintenance red flags.
Throughout this process, it’s also important to know your rights. Federal laws strictly protect you against housing discrimination based on race, national origin, religion, sex, or family status. If you feel you have been treated unfairly, you have the right to file a complaint.
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When you find the perfect house, your agent will help you send an offer letter. If the seller accepts your offer, you will proceed to the contract stage and submit an earnest money deposit. This deposit is a good-faith payment held in an escrow account to show you are serious about the purchase. Your agent will then guide you through any counterproposals or price negotiations.
Once your offer is accepted, it’s time to bring in a professional home inspector. Think of the home inspection as your safety check. They’ll evaluate the property’s condition and look for hidden issues with the plumbing, electrical, or roofing. This typically costs $300-$500, but it can save you thousands down the road. If the report turns up major red flags, you have the power to ask the seller for repairs or even walk away from the deal.
Before your loan can close, your lender will require an independent appraisal to confirm the home’s market value. This ensures the price you’re paying aligns with what the property is actually worth. The buyer usually covers this cost, which typically runs between $300 and $600.
Closing day is the finish line. You’ll do a final walk-through to ensure the property is in the agreed-upon condition. Your lender will provide a Closing Disclosure at least three business days before the big day; review this carefully, as it details your final loan terms and closing costs. Once you’ve signed the paperwork, secured your homeowners insurance, and the loan is funded, you’ll get the keys!
An online calculator can be a big help in comparing home equity loan rates and terms. And it’s not the only calculator you’ll find helpful during your home equity loan process:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Once you’ve got the keys in hand, it’s time to shift from homebuyer to homeowner. To make the transition easier, start by setting up a monthly budget specifically for your new home expenses — this will help you manage ongoing maintenance and bills without stress. Additionally, build up an emergency fund to cover unexpected repairs. Finally, work through your move-in checklist: Transfer utilities, submit a change of address, swap out the door locks, and replace those furnace air filters.
Following an established plan can make learning how to buy a house for the first time more efficient. First, understand the definition of a first-time homebuyer, so you know which programs could help you overcome any affordability barriers. Securing a lender preapproval and working with a skilled buyer’s agent ensures a smooth process. With the right preparation, you can confidently navigate the market and find a home that fits your budget.
To buy a house for the first time, you need enough money to cover your chosen down payment (3%-20% of the purchase price for conventional loans) and closing costs (2%-5% of the mortgage amount). It is also good to have a budget for ongoing costs, including mortgage payments, local property taxes, home insurance, and homeowners association dues.
Conventional loans generally require first-time homebuyers to have a credit score of 620. Government-backed FHA loans allow down payments of 3.5% if your credit score is 580 or higher, while buyers with scores between 500-579 can qualify if they put down 10%. Programs such as VA and USDA loans don’t have a set minimum score, but lenders typically look for scores of at least 620 and 640, respectively.
When buying a house, you’ll want to start by checking your finances, finding a lender, and getting preapproved for a loan. Next, find a real estate agent, shop for homes in your price range, submit an offer letter once you find a suitable property, and pay an earnest money deposit. You’ll then want to get a home inspection, secure an appraisal, finalize your mortgage financing, obtain property insurance, and attend the closing to sign documents.
Common first-time homebuyer mistakes include skipping mortgage preapproval, underestimating closing costs, and failing to factor in maintenance expenses. Waiving the home inspection or making a large purchase right before the loan closes can also lead to issues.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
This article is not intended to be legal advice. Please consult an attorney for advice.Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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