Registered to Buying · 4 min read
Service notes
- The program offers up to $25,000, capped at 50 percent of the purchase price.
- Applicants must have lived in Detroit for the past 12 months, or have lost a Detroit home to tax foreclosure between 2010 and 2016.
- The home must stay the buyer’s principal residence for three years or the award must be repaid.
For many Detroit renters, the obstacle to owning a home is not the monthly payment but the cash needed to close. The City of Detroit’s Down Payment Assistance Program, now in its third phase, is designed for exactly that gap. It is funded with $9 million in federal Community Development Block Grant money, including disaster recovery funds, and it is aimed at people who already live in the city. Here is how it works, based on the program pages of the city’s Housing and Revitalization Department.
What you can get
The program awards up to $25,000. It can be used for the down payment, prepaid items, an interest rate buy-down, closing costs and principal reduction. You do not automatically receive the full amount. The award depends on the purchase price and your actual costs, and total assistance cannot exceed 50 percent of the purchase price. On a $40,000 home, for example, the cap would be $20,000.
The money is never paid to you directly. It goes to the closing to cover the eligible costs.
Who qualifies
You must meet all of these requirements:
- Detroit residency. You have lived in the City of Detroit for the last 12 months, or you can prove you lost a Detroit home to property tax foreclosure between 2010 and 2016.
- Not a recent owner. You have not held an interest in a property in the last three years. The 2010 to 2016 foreclosure exception applies here too.
- Income. Household income is at or below 80 percent of the area median income for your household size, using the limits HUD publishes each year. The program pages list the current limits by household size.
- Education. You complete a HUD-approved homebuyer education course and get the certificate.
- The home. A 1-2 unit property in Detroit that will be your primary residence.
- Your contribution. At least $1,000 of your own money toward the purchase.
- Affordability. Your housing expense ratio may not exceed 30 percent.
Priority goes to applicants who can show they were affected by the August 2023 flooding in Detroit, with a copy of a FEMA or DWSD claim, or whose Detroit property was foreclosed because of property tax over-assessment between 2010 and 2016.
The steps, in order
| Step | What to do |
|---|---|
| 1 | Find a lender and get pre-qualified for a mortgage |
| 2 | Complete a HUD-approved homebuyer education course |
| 3 | Find a home and sign a purchase agreement |
| 4 | Apply online through the city’s Neighborly portal |
| 5 | Wait for a decision, typically 2 to 3 weeks after a complete file is received |
| 6 | Close; the award is applied at closing |
Funds are distributed first-come, first-served, so a complete application matters. The city’s pages list lenders that have closed at least four loans in the program’s previous year, though there is no reserved list and you can use any participating lender.
The three-year rule
The program states it in capital letters: the purchased home must remain your principal residence for three years after the award, or the award must be repaid. Plan accordingly if a job move or a change in family size is likely in that window.
Free help along the way
The Housing and Revitalization Department also connects residents with housing counseling. Its Detroit Housing Resource HelpLine, 866-313-2520, fielded 150,000 calls in its first year and is expanding to link Detroiters with more supportive services. Call it early, before you start the homebuyer course, to find out what counseling is available.
Common questions
Can I combine it with other assistance?
Yes. The city says you can use multiple forms of down payment assistance together.
Can I use it twice?
No. The assistance can be used only once.
I owned a home before. Am I out?
Only if you owned within the last three years, unless you lost a Detroit home to property tax foreclosure between 2010 and 2016, in which case you can still qualify.
Tip: Lead hazards can stall a closing. The city publishes a visual lead inspection best practices guide for lenders and agents in the program. If the house was built before 1978, read Lead-Safe Housing in Detroit: Paint, Water Service Lines and Free Help for Families before you make an offer.
After closing
Two things to do right away: file Michigan’s Principal Residence Exemption with the city assessor so your tax bill drops by 18 mills, and set up the water account in your name with a DWSD closing bill so the seller’s balance does not follow you. See Detroit Property Taxes for New Homeowners: Mills, the Principal Residence Exemption and HOPE and Water Service in Detroit: Starting an Account, the Drainage Charge and the Lifeline Plan.
If a lower-priced fixer-upper suits you better, compare this program with a Land Bank purchase in Buying a Detroit Land Bank Home: Auctions, Own It Now and the Rehab Rules. Keep in mind that Land Bank homes come with rehab obligations of their own.