Buying your first home in the Lansing area can feel exciting and a little overwhelming. With so many loan options and acronyms, it is hard to know where to start. You want a simple path that fits your budget, your timeline, and the neighborhoods you love in Ingham County.
In this guide, you will learn the main first-time loan types (FHA, VA, USDA, and conventional), how Michigan’s MSHDA down payment assistance can help, what lenders typically require, and the steps from pre-approval to closing. You will also find local tips for Lansing and a short checklist to get moving with confidence. Let’s dive in.
Loan types at a glance
FHA loans: low down payment
FHA loans are government-insured and designed to lower barriers for first-time buyers. If your credit score is around 580 or higher, you may qualify for a 3.5% down option. FHA is often more flexible with past credit hiccups and certain collections than conventional loans.
Pros:
- Lower down payment and more flexible credit history.
- Widely available through many lenders.
Watchouts:
- Requires upfront and annual mortgage insurance premiums that add to your payment.
- Property condition rules can trigger repair requirements after the appraisal.
VA loans: benefit for veterans
VA loans are a powerful benefit for eligible veterans, active-duty service members, and certain surviving spouses. VA guarantees part of the loan, which helps lenders offer strong terms. Most VA buyers put 0% down and have no monthly PMI.
Pros:
- Often no down payment and competitive rates.
- No monthly PMI; a one-time VA funding fee applies unless exempt.
Watchouts:
- Requires a Certificate of Eligibility and the home must meet VA property standards.
- Occupancy and funding fee rules apply.
USDA loans: rural options
USDA Guaranteed Loans help eligible buyers in qualifying rural or suburban areas. In many cases, you can buy with 0% down, subject to income limits and property eligibility.
Pros:
- Zero down payment potential for qualifying buyers and locations.
- Designed for moderate- and low-income households.
Watchouts:
- Income and property eligibility rules apply. Some parts of Ingham County qualify while core Lansing areas likely do not.
- Upfront and annual fees function like mortgage insurance.
Conventional loans: flexible choices
Conventional loans are not backed by FHA, VA, or USDA. First-time buyer programs through Fannie Mae and Freddie Mac can allow as little as 3% down. When you put less than 20% down, you will have private mortgage insurance (PMI), which can drop off later as equity grows.
Pros:
- PMI can be removed when you reach sufficient equity.
- Often best for buyers with solid credit who want to limit long-term insurance costs.
Watchouts:
- Stricter credit and income standards than FHA for many borrowers.
- Lender overlays vary by company.
MSHDA assistance in Lansing
The Michigan State Housing Development Authority (MSHDA) offers down payment assistance that can make your first home more affordable. In many programs, assistance is provided as a second mortgage at 0% interest with deferred payments, or in some cases, as forgivable assistance. Program rules, amounts, and combinations change over time, so confirm specifics with a participating lender.
How it commonly works:
- Pairs with an eligible first mortgage (often FHA, conventional, VA, or USDA) through a MSHDA-approved lender.
- Can be used toward down payment and/or closing costs.
- Includes income and purchase price limits that vary by county and household size.
- Often requires a homebuyer education course before closing.
Practical tips:
- Verify you meet Ingham County income and price limits before you write an offer.
- Complete required education early to prevent delays.
- Ask your lender how MSHDA assistance affects monthly payment, cash to close, and timeline.
What lenders look for
Credit scores and history
Lenders review both your score and your track record. As general guidance, many FHA approvals start around 580 for the 3.5% down option. Conventional programs often look for 620+. VA does not set a universal minimum, but many lenders prefer 620–640 or above. USDA often prefers 640+ for automated approvals. Late payments, collections, and any past bankruptcy or foreclosure will be evaluated under each program’s rules.
Debt-to-income basics
Your debt-to-income ratio (DTI) compares your monthly debts to your gross monthly income. Many programs consider DTIs up to about 43%. Some allow higher with strong compensating factors such as higher credit scores, cash reserves, or a stable payment history. VA and USDA also consider residual income.
Income and employment
Plan to document your last 2 years in the same field when possible. Lenders verify income using pay stubs, W-2s, tax returns for self-employed or commission income, and bank statements. They also verify employment directly with your employer.
Assets and reserves
You will document the source of your down payment and any gift funds with bank statements and a gift letter if applicable. Some conventional loans may require reserves equal to a certain number of months of mortgage payments. FHA typically does not require reserves for standard cases, though lender overlays can vary.
Property and appraisal
The home must meet your loan’s property standards. FHA and VA appraisals emphasize health and safety issues, which can lead to repair requirements. USDA properties must meet eligibility and habitability standards. Conventional loans are often more flexible on property condition, but the appraisal still must support value.
Timeline from pre-approval to keys
- Step 0: Preparation (ongoing). Review your credit, save for cash to close, and complete homebuyer education if you plan to use MSHDA.
- Step 1: Pre-approval (1–7 days). A lender pulls credit and verifies documents to issue a letter sellers expect to see.
- Step 2: Home search and offer (weeks to months). Focus on Lansing and Ingham County areas that fit your budget and goals. After acceptance, you will provide earnest money.
- Step 3: Application and underwriting (about 30–45 days). Your lender orders the appraisal, title work, and other third-party reviews. If using MSHDA or VA, allow time for extra verifications.
- Step 4: Inspections and conditions (variable). You schedule a home inspection. If the appraisal calls for repairs, negotiate timing and responsibility.
- Step 5: Closing (about 30–60 days from acceptance). You sign final documents, transfer funds, and the deed records. VA buyers address the funding fee unless exempt.
Notes on timing:
- Straightforward conventional loans can close in around 30 days.
- FHA and USDA often run 30–45 days.
- VA timelines are similar, and getting your VA Certificate of Eligibility early can help.
- MSHDA paperwork and education can add time if started late, so begin early.
Local Lansing tips
- USDA eligibility. Some rural or fringe parts of Ingham County may qualify for USDA financing, while most properties within Lansing city limits likely do not. Check eligibility for specific addresses during your search.
- Appraisals on older homes. Many Lansing neighborhoods include older housing. FHA and VA appraisals may call out peeling paint, handrail issues, or other health and safety items. Build in time for repairs if needed.
- Conforming loan limits and pricing. If you are shopping in higher-priced nearby suburbs, you may approach conforming loan limits faster. Discuss the current limits with your lender as part of pre-approval.
- Condos and HOAs. Condominiums may require project approvals and HOA document reviews that can affect your timeline. Ask early whether the condo is approved for your loan type.
Your next steps
- Pull your free credit reports and check for errors.
- Gather key documents: ID, recent pay stubs, W-2s or tax returns, and recent bank statements.
- If you plan to use MSHDA, complete the required homebuyer education early.
- Contact 2–3 local lenders, including at least one MSHDA-participating lender, to compare pre-approvals and Loan Estimates.
- If you are considering rural or fringe areas of Ingham County, have a lender confirm USDA property eligibility. Veterans should request their VA Certificate of Eligibility early.
When you are ready for a clear, local plan, schedule a conversation. We will align loan options to your budget, confirm if MSHDA is a fit, and build a step-by-step timeline to closing. Schedule a free consultation with Heidi Smith to get started.
FAQs
What first-time loan options exist in Lansing?
- FHA, VA, USDA, and conventional loans are the primary choices, and many Lansing buyers also pair a first mortgage with MSHDA down payment assistance when eligible.
How much do I need for a down payment in Ingham County?
- FHA can be about 3.5% down with qualifying credit, conventional first-time programs can be 3% down, and VA/USDA may allow 0% down; you also need funds for closing costs.
Can MSHDA be combined with FHA, VA, USDA, or conventional?
- MSHDA assistance has historically paired with multiple first-mortgage types, but combinations and rules change; confirm the current options with a participating lender.
What credit score do I need for my first mortgage?
- Many lenders look for around 580 for FHA’s 3.5% down, 620+ for conventional, 620–640+ for VA at many lenders, and 640+ for USDA automated approvals, with variations by lender.
How long does closing take for a first-time buyer?
- A typical timeline runs 30–45 days from contract to closing, depending on loan type, appraisal timing, repairs, and whether programs like MSHDA add extra steps.
Will older Lansing homes pass FHA or VA appraisals?
- Many do, but FHA and VA appraisals focus on health and safety; items like peeling paint or missing handrails may require repairs before closing.
