TL;DR
The three most common loan types for Michigan home buyers are FHA, Conventional, and VA. FHA allows down payments as low as 3.5% with credit scores 580+, but charges mortgage insurance for the life of the loan. Conventional needs 3–5% down (or 20% to skip PMI) and rewards scores 740+ with the lowest rates. VA is the strongest option if you’re eligible — 0% down, no mortgage insurance, and competitive rates. Here’s how to choose between them as a Downriver Michigan buyer in 2026.
FHA Loans
FHA (Federal Housing Administration) loans are insured by the federal government and are the most forgiving on credit and down payment.
Down payment: 3.5% with credit score 580+, or 10% with credit score 500–579.
Credit score minimum: 500 (technically); most lenders require 580–620.
DTI (debt-to-income): Up to 50% with strong compensating factors.
Mortgage insurance: Upfront 1.75% premium PLUS monthly MIP for the LIFE of the loan (unless you refinance out).
Loan limit (Wayne County 2026): Approximately $498,257 for a single-family home.
Best for: First-time buyers with credit 580–680 or limited down payment.
Conventional Loans
Conventional loans are not government-insured. They follow Fannie Mae / Freddie Mac guidelines.
Down payment: 3% (first-time buyer) or 5% (standard), 20% to avoid PMI.
Credit score minimum: 620, but rates improve dramatically at 720+ and 740+.
DTI: Up to 45%, sometimes 50% with strong reserves.
Mortgage insurance (PMI): Monthly, drops off automatically at 78% LTV.
Loan limit (Wayne County 2026): Approximately $806,500 for a single-family home (conforming).
Best for: Buyers with credit 700+ and at least 5% down — typically cheaper long-term than FHA because PMI drops off.
VA Loans
VA loans are guaranteed by the Department of Veterans Affairs and available to qualifying service members, veterans, and certain spouses.
Down payment: 0%.
Credit score minimum: No VA minimum, but most lenders require 580–620.
DTI: Flexible; 41% is the standard guide but exceptions are common.
Mortgage insurance: NONE. There is a one-time VA funding fee (1.25–3.3%, can be financed) that varies based on first-time use and down payment.
Loan limit: No limit for full-entitlement borrowers in 2026.
Best for: Any eligible veteran, active-duty service member, or surviving spouse. VA is typically the strongest option when available.
Quick Comparison
| Feature | FHA | Conventional | VA |
|---|---|---|---|
| Min down payment | 3.5% | 3–5% | 0% |
| Min credit score | 580 | 620 | No VA min |
| Mortgage insurance | Life of loan | Drops at 78% LTV | None |
| Best DTI | Up to 50% | Up to 45% | Flexible |
Frequently Asked Questions
Which loan type is best for a first-time home buyer in Michigan?
If you’re a veteran, VA is almost always best. Otherwise, FHA is the easiest path with credit under 700 and limited down payment. Conventional 3% Down (Home Possible / HomeReady) can be better than FHA if your credit is 720+.
Does FHA mortgage insurance ever go away?
For most FHA loans originated after 2013, mortgage insurance (MIP) lasts the LIFE of the loan unless you put 10% or more down (in which case it drops after 11 years). Most FHA borrowers refinance to conventional once they have 20% equity to eliminate MIP.
What credit score do I need for a conventional loan?
Minimum is typically 620, but rates and PMI rates improve significantly at 720, 740, and 760+.
Can I use a VA loan more than once?
Yes — VA loans are not one-time-use. You can use VA multiple times as long as you have entitlement available.
What is the FHA loan limit in Wayne County Michigan in 2026?
The 2026 FHA loan limit for a single-family home in Wayne County is approximately $498,257.
Are there closing cost differences between loan types?
Closing costs are similar across loan types (~2–5% of purchase price), but FHA charges an upfront 1.75% MIP and VA charges a 1.25–3.3% funding fee. Both can typically be financed into the loan.
Need Help Choosing?
We work with local lenders who specialize in FHA, conventional, and VA in Downriver Michigan. Fill out our contact form or text 734-977-1405 and we’ll connect you with the right lender for your situation.
Chris Bujaki with The Saward Team, brokered by eXp Realty