Compare Current Mortgage Rates in Michigan

Mortgage rates in Michigan can affect what you pay for a home, whether you’re buying in Detroit, Dearborn, or Kalamazoo. Higher interest rates will increase your monthly mortgage payments, so knowing how those rates are determined will help you find the best mortgage for your needs. Below, learn what factors influence Michigan mortgage rates, how to get first-time homebuyer assistance, and what your mortgage options are.

Michigan mortgage rates are set by lenders, but several factors influence their decisions, ranging from broad economic conditions to local housing demand: 

• Federal Reserve actions: As the central bank of the United States, the Federal Reserve impacts rates on 10-year Treasury bonds, which in turn tend to affect rates on 30-year mortgages. 
• Economic conditions: A strong economy is typically linked with higher mortgage rates, so when unemployment is low and growth is high, rates tend to rise as well.
• Inflation: Inflation is also connected to mortgage rates; as the Fed raises its target federal funds rate to try to cool rising inflation, mortgage rates tend to trend upward as well. 
• Buyer demand: Housing prices vary widely throughout the state, with properties in some areas of Detroit averaging less than $100,000, while others near the popular resort town of Traverse City averaging nearly half a million. Buyer demand drives prices (Michigan has some of the most affordable housing in the U.S.) and influences mortgage rates, too.
• Loan program participation: Lenders participating in Michigan’s state housing authority programs or federal loan programs may offer lower interest rates.

Yes, Michigan has a first-time homebuyer program that can help you afford a home. Run by the Michigan State Housing Development Authority (MSHDA), the MI Home Loan program offers 30-year, fixed-rate mortgage loans to first-time homebuyers. These loans are also available for repeat buyers in a wide range of targeted markets, including 66 of Michigan’s 83 counties and metropolitan areas such as Royal Oak, Detroit, Saginaw, Grand Rapids, and many others. 

Keep in mind that “first-time homebuyer” only means that you haven’t owned a home in the past three years; if you’ve owned a home previously but have been renting more recently, you may qualify.

• MI Home Loan mortgage: To qualify for this loan, buyers need a minimum credit score of 640 and an income under $90,300 to $148,800 (depending on county). In addition, the home’s sales price must be $224,500 or less.
• MI 10K DPA: Eligible buyers can get up to $10,000 in down payment assistance through MSHDA, but they must complete a homebuyer education class (and meet other income and sales price requirements) to qualify.
• Mortgage credit certificate: To help first-time homebuyers at tax time, Michigan also offers a federal mortgage credit certificate, which reduces your tax liability up to 20% of the annual mortgage interest paid. If you meet income and sales price requirements and apply before you buy, you could claim this tax credit every year for up to 30 years.
• Local first-time homebuyer programs: In addition to statewide programs, you may qualify for programs in particular metropolitan areas. For instance, Detroit offers grants of up to $25,000 to first-time buyers, with funding available for down payment assistance, interest rate buy-downs, closing costs, and reduction in principal. (The program is paused as of January 2024 as the first round of funding is distributed but is expected to reopen for 2024 applications.) 

There are several things you can do to get the best mortgage rates in Michigan when buying your next home: 

• Improve your credit score: Your credit score impacts the rates your mortgage lender will give you; the higher your score, the lower the rates, typically. If your credit score could use some improvement, focus on making your payments on time decreasing your balances, and making sure there aren’t any errors on your credit report.
• Determine your budget: The amount you borrow and your down payment can affect whether you qualify for certain mortgage programs as well as the interest rate you could receive. 
• Shop around: Comparing multiple lenders is crucial to getting a good interest rate. You may find that another lender has lower rates, lower fees, or other perks that make it a better fit for you.
• Compare different loans: In addition to comparing lenders, compare loan products, too. Interest rates can vary depending on whether you’re considering a 30-year or 15-year term a fixed-rate loan or an adjustable-rate loan. 
• Get a mortgage pre-approval: Getting a mortgage pre-approval will let you compare rates and see how much a lender may approve you to borrow.

Michigan mortgage lenders offer a wide variety of mortgage options. Consider your finances, the type of home and area you’d like to live in, and your budget to find the right mortgage. Your mortgage broker or lender can help you narrow down your choices, too.

Conventional mortgage

• What it is: A traditional mortgage not backed by the government.
• Credit score: Typically 620 or higher.
• Down payment: 20% to avoid PMI but can be as low as 3% with some lenders.
• Loan limits: $766,550 ($1,149,825 in certain high-cost areas).

FHA loan

• What it is: A mortgage backed by the FHA, designed to help people afford a home.
• Credit score: Can be as low as 500 with a 10% down payment.
• Down payment: May be available with as low as 3.5%. All FHA loans require mortgage insurance.
• Loan limits: $498,257 ($1,149,825 to $1,724,737 in certain high-cost areas).

VA loan

• What it is: Government-backed Veterans Affairs loan for service members and their families.
• Credit score: No minimum credit score required.
• Down payment: As low as 0% down.
• Loan limits: $766,550 (eligible veterans with full entitlement and a down payment may be able to exceed this limit).

USDA loan

• What it is: Government-backed U.S. Department of Agriculture loan for buyers in designated rural areas, subject to some income requirements.
• Credit score: No minimum credit score required.
• Down payment: As low as 0% down.
• Loan limits: No stated limit for USDA-guaranteed loans ($398,600 to $970,800 for USDA direct loans).

Jumbo mortgage

• What it is: Non-conforming loan that exceeds loan limits.
• Credit score: May need good credit to qualify.
• Down payment: Down payments under 20% will require mortgage insurance, and some lenders may require a large down payment.
• Loan limits: Above $766,550.