How Much Money Do You Really Need to Buy a Home in Michigan?

Plan for four pieces: your down payment, closing costs, prepaid items and escrow deposits, and an earnest money deposit that is credited back at closing. CFPB says closing costs typically range from 2% to 5% of the purchase price, not counting the down payment. Seller concessions, lender credits, and gift funds can reduce what comes out of your own savings. Your Loan Estimate shows your actual Estimated Cash to Close.

Possibly. Conventional options such as Fannie Mae HomeReady and Freddie Mac Home Possible (which use income limits) and Fannie Mae's 97% LTV option and Freddie Mac HomeOne (which require at least one first-time homebuyer) allow 3% down for eligible borrowers. FHA requires 3.5% down with a 580 or higher credit score. Eligibility depends on your full financial picture.

On a conventional loan, putting less than 20% down usually means private mortgage insurance (PMI). CFPB explains that you can generally ask to cancel PMI once your balance reaches 80% of the home's original value, and it generally ends automatically at 78%. FHA loans carry mortgage insurance premiums that work differently, and VA loans don't have monthly mortgage insurance.

Michigan Treasury says the seller (grantor) is legally responsible for the state real estate transfer tax, which is $3.75 for each $500 of value. Counties also charge a transfer tax, generally $0.55 for each $500. Buyers and sellers can agree in the purchase agreement for the buyer to pay it, so read that section closely.

Often, yes, within limits. Fannie Mae limits interested party contributions to 3%, 6%, or 9% of the price depending on your loan-to-value ratio. FHA allows up to 6% of the sales price. VA limits seller concessions to 4% of the home's reasonable value, but doesn't count the seller paying normal closing costs toward that limit. Concessions can't exceed your actual costs and generally can't be used for your down payment.

Usually, if the donor is eligible under your loan program. Fannie Mae accepts gifts from relatives and certain non-relatives with a familial relationship. FHA accepts gifts from family members, employers or labor unions, close friends with a documented interest, charitable organizations, and certain government agencies. Expect a signed gift letter stating no repayment is expected and proof of how the money moved.

Not always. Some assistance is a grant, but much of it is a second mortgage that is forgivable over time, deferred until you sell or refinance, or repaid monthly. Read the repayment and recapture terms before you commit. Availability changes, so ask Shane what may be available for your situation.

Possibly, but each option has trade-offs. A 401(k) loan must be repaid, and leaving your job can make the balance due. A hardship distribution is taxable and can't be repaid. IRA withdrawals of up to $10,000 for a qualified first-time home purchase avoid the 10% additional tax but are still subject to income tax. Talk with a tax advisor first; this isn't tax advice.

CFPB explains that earnest money is a good-faith deposit held by the seller or a third party, such as a real estate agent or title company. If the sale closes, it's applied to your closing costs or down payment. If the contract ends for a reason the contract allows, it's returned; if you don't perform, it may be forfeited to the seller.

VA says a VA-backed purchase loan often requires no down payment as long as the sales price isn't higher than the appraised value, and borrowers with full entitlement don't have a VA loan limit. Most borrowers pay a one-time VA funding fee, which can be financed, and some veterans are exempt. You'll need a Certificate of Eligibility.