UPDATE: Information from the State of Michigan regrading this money and your taxes: Taxability of Grant Funds: Please be aware that the amount of grant money received may be taxable and as such be reported on income tax returns as ordinary income. It is the borrower’s responsibility to consult with a tax professional regarding appropriate tax treatment of the grant funds.
First time home buyers in Michigan have a new tool to help finance that dream house: up to $5,000 free and clear from any repayment. There's now a grant program for the buying a single-family, owner occupied, principal residence. That means you live there with your family and it's your main home, not a lake cottage. While it's aimed mostly at the first time home buyer crowd, it doesn't actually have to be your first house ever. You can take advantage of this grant program if you haven't owned a home in the last 3 years. The Michigan State Housing Development Authority - or MSHDA (pronounced mish-duh) - is backing this grant program.
Military (active or veteran and including National Guard and Reserves) home buyers are eligible for a maximum $5,000 grant. Other home buyers can receive up to $3,000 to help buy the house. Neither grant can exceed 25% of the sales price. Lenders like AmeriFirst Home Mortgage can use this grant in conjunction with their own first lien or the grant can be combined with MSHDAs first mortgage and Down Payment Assistance (DPA) program. according to MSHDA, home buyers can use this grant on "any first lien mortgage transaction including MSHDA products." That pretty much covers the entire Michigan housing market.
- Single family/one-unit homes and condominiums (attached or detached).
- New or existing manufactured homes permanently affixed to a foundation and taxed as real estate.
Why does Michigan have this grant program?
From the MSHDA website:
Michigan Attorney General Bill Schuette and other participating state Attorneys General entered into a settlement with the five leading bank mortgage servicers. The National Mortgage Settlement (NMS) requires servicers to provide monetary sanctions and relief and mandates comprehensive reforms in mortgage loan servicing. Michigan received $97.2 million for the purpose of creating the Homeowner Protection Fund. A portion of these funds ($15 million) were appropriated by the Legislature to MSHDA for two new programs.
The 2 programs are this home buyer assistance grant and a smaller grant to HARP refinance. The HARP grant program consists of a grant for homeowners who are approved for a HARP refinance. Eligible applicants will receive $500 toward closing costs. This grant supports refinancing of single-family homes that are owner occupied, principal residences.
Learn more about this Michigan grant program for home buyers by talking to a mortgage consultant.
If you're not in Michigan, contact your state housing authority to find out what first time home buyer grants exist in your state. You might also look for local help in your town.