Michigan Home Loans & Mortgage Rates

Michigan’s housing market offers incredible range and value. From revitalizing Detroit neighborhoods to booming Grand Rapids, from the college-town energy of Ann Arbor to affordable lakefront communities throughout the state, Michigan punches well above its weight for homebuyers looking for value.

The statewide median sits around $255,000 with strong appreciation of roughly 4.8% year-over-year. Grand Rapids and West Michigan have become one of the hottest markets in the Midwest, with Kent County medians around $325,000 and homes moving fast. The Detroit metro is a story of two markets: Wayne County proper has a median around $170,000, while Oakland County’s affluent suburbs reach $370,000. Ann Arbor (Washtenaw County) is the premium market at roughly $400,000 median. Lansing, Kalamazoo, and many smaller markets remain extremely affordable under $220,000.

All 83 Michigan counties sit at the $541,287 FHA baseline with no high-cost exceptions. The conforming limit is $832,750 statewide. At Michigan’s price points, FHA financing covers the overwhelming majority of homes.

MSHDA (Michigan State Housing Development Authority) provides the MI Home Loan program with up to $10,000 in DPA through the MI 10K DPA Loan Program in qualifying ZIP codes, and $7,500 statewide through the MI DPA Loan Program. These are zero-interest, deferred second mortgages with no monthly payments.

Michigan’s property taxes average about 1.38% effective, with significant variation. Wayne County (Detroit) runs about 1.73%, while Kent County (Grand Rapids) is lower at approximately 1.03%. Michigan’s Proposal A of 1994 caps assessed value increases at inflation or 5% (whichever is lower), providing stability for existing homeowners.

2026 Loan Limit Takeaways

All 83 Michigan counties share the same $541,287 FHA limit and $832,750 conforming limit. No county qualifies as high-cost. Even in the most expensive Ann Arbor market, FHA covers a substantial portion of available homes. For the majority of Michigan, FHA limits are more than double the median home price.

Down Payment Assistance Notes

MSHDA programs are the core offering. The $7,500 is available statewide, while the $10,000 is available in 236 qualifying ZIP codes. Purchase price limit of $224,500 is a key constraint — this works well for Detroit, Flint, Saginaw, and many rural markets but may limit options in Grand Rapids, Ann Arbor, and Oakland County suburbs. Detroit’s $25,000 DPA is among the most generous city-level programs nationally. MSHDA programs can stack with local city programs.

Closing Costs in Michigan

Michigan has a two-part transfer tax system and moderate closing costs overall.

State Transfer Tax: Michigan charges $3.75 per $500 of the sale price ($7.50 per $1,000, or 0.75%). On a $255,000 home, the state transfer tax is approximately $1,913. Paid by the seller.

County Transfer Tax: $0.55 per $500 of the sale price ($1.10 per $1,000, or 0.11%). On a $255,000 home, approximately $281. Paid by the seller.

Combined Transfer Tax: On a $255,000 home, total transfer tax is approximately $2,194 (0.86%). This is entirely the seller’s responsibility.

No Mortgage Recording Tax: Michigan does not charge a separate mortgage recording tax.

Title Company State: Michigan primarily uses title companies for closings. Attorney involvement is optional but not required. Title/closing fees typically $400-$1,000.

Estimated Total Buyer Closing Costs: On a $255,000 purchase, expect approximately $4,600-$8,900 in buyer closing costs (1.8-3.5%). Michigan’s buyer costs are moderate since transfer taxes fall on the seller. Buyers primarily pay for lender fees, title insurance (lender’s policy), appraisal, inspection, and prepaid items.

Property Taxes in Michigan

Michigan property taxes are above the national average but include important protections for homeowners.

Statewide Average: Effective rate approximately 1.38-1.62%, depending on the source and methodology. Above the national average of 0.89%. The median annual payment is about $2,145.

Proposal A Protection: Michigan’s Proposal A of 1994 limits annual increases in taxable value to the rate of inflation or 5%, whichever is lower. This protects existing homeowners from rapid tax increases even as property values rise. However, when a property is sold, the taxable value “uncaps” to the State Equalized Value (50% of market value), meaning new buyers pay taxes based on the actual purchase price.

Metro Area Rates: Wayne County (Detroit) approximately 1.73% effective. Oakland County approximately 1.23-1.36%. Macomb County approximately 1.28-1.47%. Kent County (Grand Rapids) approximately 1.03-1.19%. Washtenaw County (Ann Arbor) approximately 1.56%. Grand Traverse County (Traverse City) approximately 0.96%.

Homestead Exemption: Michigan’s Principal Residence Exemption (PRE) exempts homeowners from 18 mills of school operating taxes. This can save homeowners $1,000-$3,000+ annually compared to non-homestead (investment) properties. Must be your primary residence.

On a $255,000 home in Grand Rapids/Kent County, expect roughly $2,600-$3,000 per year. In Detroit/Wayne County on a $170,000 home, expect approximately $2,900-$3,400. In Ann Arbor/Washtenaw on a $400,000 home, expect approximately $6,200-$7,200.

USDA Loan Eligibility in Michigan

Michigan has extensive USDA eligibility, especially in the Upper Peninsula and rural Lower Michigan.

The entire Upper Peninsula qualifies, including areas around Marquette, Sault Ste. Marie, and Escanaba. In the Lower Peninsula, eligible areas include Northern Michigan (outside Traverse City core, Petoskey, Gaylord, Alpena), the Thumb region (Huron, Sanilac, Tuscola counties), Central Michigan (Isabella, Clare, Gladwin counties), Southwest Michigan outside Kalamazoo core (Van Buren, Cass, Branch counties), and Southeast Michigan’s rural pockets (Lenawee, Hillsdale, Monroe County portions).

Even within commuting distance of major metros: outer Livingston County, Monroe County (south of Detroit), Shiawassee County (near Lansing), and Allegan County (near Grand Rapids) have USDA-eligible areas. Michigan’s combination of affordable rural housing and USDA zero-down financing creates excellent opportunities.