Want to purchase a home but need a down payment?

What Are My Options for a Down Payment on a Home?

One of the most common questions I get from first-time home buyers is: “What are my options for coming up with a down payment?” The good news is—there are more ways to cover your down payment than just saving up cash. If you’re thinking about buying your first home in Michigan, here are a few key options to consider:

1. MSHDA First-Time Home Buyer Program

The Michigan State Housing Development Authority (MSHDA) offers down payment assistance programs that can provide up to $10,000 toward your down payment and closing costs. This is a great option for eligible first-time buyers and even repeat buyers purchasing in targeted areas.

• It’s typically a 0% interest loan, which doesn’t require monthly payments.
• Repayment is due only when you sell, refinance, or pay off the mortgage.

Tip: You’ll need to work with a lender approved by MSHDA to access this program.

2. Borrowing From Your 401(k)

If you have a 401(k) retirement account, you might have the option to borrow against it for a home purchase. Some plans offer a first-time homebuyer loan, allowing you to borrow funds without the early withdrawal penalty—though it must be paid back with interest over time.

• You’re borrowing from yourself, so the interest goes back into your account.
• Make sure you understand the repayment terms and how it might affect your retirement goals.

Important: Not all 401(k) plans offer this option, so check with your plan administrator.

3. Traditional Savings

Saving up for a down payment the old-fashioned way is still one of the most common methods.

• Aim for at least 3% to 5% of the home’s purchase price for conventional loans (or 3.5%for FHA loans).
• Set up a dedicated savings account and automate deposits to stay on track.

Final Thoughts

Whether you’re using MSHDA assistance, tapping into your 401(k), or building your savings over time, there are options available to make homeownership more accessible. The best approach often combines more than one of these strategies—and depends on your personal financial situation.

If you’re thinking about buying a home and aren’t sure where to start, let’s connect. I’m here to help you understand all your options and take the next step with confidence.

There are multiple other down payment assistance programs based on the specific homes eligibility, contact me with the homes address for more information.

Anna Thocher is an equal housing opportunity Realtor. All services and information are provided without regard to race, color, religion, sex, disability, familial status, national origin, or any other protected class.