This Midwestern City (and an NBA Star) Will Cover 40% of Homebuyers’ Down Payments

The state of Michigan is working with Detroit Pistons star Tobias Harris to provide down payment assistance to first-time homebuyers. 

The program will provide qualified buyers with up to 40% of a home’s purchase price in down payment assistance through a partnership between the Michigan State Housing Development Authority (MSHDA) and the Tobias Harris Homeownership Initiative.

So How Does This Work?

The assistance is designed to help buyers avoid paying for private mortgage insurance, which lenders often require of buyers who don’t make a down payment of at least 20%. That will lower monthly payments for homebuyers.

Harris’ organization offers what are known as shared-appreciation mortgages, a payment structure in which the homebuyer shares a percentage of the gains in the home’s value with the lender. This means that if the buyer sells their home for more than they bought it for, the lender gets a cut of the profits. In exchange, the lender typically offers a below-market interest rate.

In this case, Detroit homebuyers taking advantage of this program would be required to pay back the down payment assistance when they sell or refinance their home, MSHDA said. 

Relief For Homebuyers in Hot Detroit Market?

The median sale price of homes sold in Detroit was $110,000 in August, up from $95,000 a year earlier, according to data from Realtor.com. In fact, Detroit saw the biggest year-over-year jump among U.S. metro areas in the amount of the income required to afford a median-priced house, according to a report from Redfin last month.

“Homeownership is one of the most powerful ways to build stability and generational wealth,” Harris said in a statement. “With this initiative, I’m focused on expanding access to homeownership so Detroiters can plant roots and build equity in the city they call home.”