First-generation homebuyers can now apply for down payment assistance through a new statewide program.

The Michigan State Housing Development Authority (MSHDA) announced the launch of a pilot program offering $25,000 deferred loans for eligible buyers. The funds can help cover upfront home buying expenses, including down payments and closing costs.

The $8 million program, funded by the state of Michigan, is expected to cover more than 320 families and individuals across the state. It will operate on a first-come, first-served basis, according to MSHDA. The goal? Ease financial barriers so more Michiganders can own a home.

“With rents soaring, this program offers families a foot in the door and much-needed stability by helping them secure a home with a fixed monthly cost,” Amy Hovey, MSHDA chief executive officer and executive director, said in a news release. “This financial boost will allow first-generation homebuyers to invest in their futures, strengthen their communities, and build generational wealth.”

Here is what to know:

What will this program offer?

Eligible buyers can get a deferred loan up to $25,000. The loan functions as a second mortgage with no monthly payments or interest. The full amount must be repaid after 30 years or if the mortgage holder sells, refinances or transfers their home, whichever comes first, according to MSHDA.

Who is eligible?

The program is available in all 83 counties. Here’s an overview of the requirements:

• Applicants must meet MSDHA’s definition of a “first-generation homebuyer.” That means they must be purchasing the property, live in the purchased home as their primary residence and have not had ownership history in the last three years. One of the following three criteria must also apply: the borrowers’ parents must not have had ownership history in the last three years, they must have aged out of foster care or have been emancipated, according to MSHDA.
• The applicant has to fall within income limits set by MSHDA, which vary by county. For the city of Detroit, for instance, the income limit for one to two people is $115,080.
• The borrower must have a credit score of at least 640.
• The property’s sales price cannot exceed $224,500. It must be a single-family owner-occupied house or condominium.
• The downpayment assistance must be combined with a MI Home Loan — a mortgage product for first-time buyers and repeat buyers in certain areas — but it cannot be paired with MSHDA’s MI 10K DPA loan program, a separate down-payment assistance program.
• The borrower must make a 1% minimum cash investment.
• The applicant must complete a face-to-face homebuyer education course with a HUD-certified counselor.

How to apply

Interested applicants must work with approved lenders first. To find a list of lenders by location, go to bit.ly/MSHDALenders. For a full rundown of the requirements and how to apply, visit MSHDA website’s at Michigan.gov/firstgendpa.