How to Buy a House in Detroit: Step-by-Step

Buying in Detroit is not the same as buying in a new subdivision. The housing stock is older, the price range across the city and its suburbs is enormous, and the programs that help first-time buyers are real but require paperwork. This is the sequence that works.

1. Build a budget that includes the boring costs

Start with the monthly payment you can carry, not the price you would like to pay. Then add the costs that a rate quote leaves out:

• Property taxes for the specific municipality
• Homeowners insurance, which can be materially higher in parts of Detroit
• Water and sewer, which in some areas is a meaningful monthly bill
• Maintenance on an older home, budgeted monthly rather than hoped away
• HOA dues if the property has them

Then count the cash you need at closing: down payment, closing costs, prepaid taxes and insurance, and a reserve for repairs.

2. Check assistance before you shop

Michigan has state-level help through MSHDA, and Detroit has local programs tied to specific neighborhoods and property types. Eligibility usually depends on income, purchase price and the loan type.

Two local realities worth understanding early:

• Down payment assistance is often structured as a second lien or a deferred loan, not a gift. Ask what happens if you sell or refinance in the first few years.
• Property tax abatements exist in designated areas, including Neighborhood Enterprise Zones in Detroit. They can change the math substantially, but they have rules about construction date, residency and filing deadlines.

3. Get pre-approved, not just pre-qualified

A pre-approval means a lender has reviewed your documents. That matters in Detroit because listing agents often deal with multiple offers and want evidence the financing will hold.

Read pre-approval vs. pre-qualification before you talk to lenders. Ask at least two for a written Loan Estimate on the same day.

4. Pick the loan type with your eyes open

• FHA: 3.5% down, lower score thresholds, mortgage insurance for the life of most loans, and property condition standards that matter on older homes.
• Conventional: better pricing with stronger credit, mortgage insurance removable at 20% equity, fewer condition requirements.
• VA: 0% down for eligible veterans and service members, no monthly mortgage insurance.
• USDA: 0% down in eligible rural areas; much of Metro Detroit’s outer fringe may qualify, the city itself generally does not.

For a deeper comparison, read FHA vs. Conventional. If you are buying a house that needs work, ask about a 203(k) rehab loan before you rule it out.

5. Choose an agent who knows the block, not just the county

Ask how many buyers they have represented in the last year, what they have sold in the neighborhoods you are considering, and how they handle inspection negotiations on older homes. Since 2024, buyers generally sign a written agreement with their agent before touring homes; read it and ask how the agent is paid.

6. Shop the neighborhood, not just the house

Visit at different times of day. Check the commute. Look up the property tax rate for the municipality. Ask about flood zones, especially near the river and its tributaries. For schools, use official state data rather than a listing portal’s summary.

The neighborhoods guide covers eight places buyers ask about most, with the trade-offs that do not show up in photos.

7. Make an offer with room for reality

Your offer includes price, earnest money, closing date and contingencies. In an older home, an inspection contingency is not a formality. A sewer scope is often worth the money in Detroit.

8. Inspection, appraisal, underwriting

The inspection tells you what you are buying. The appraisal tells the lender whether the price is supported. FHA appraisals also check minimum property standards, which can require repairs before closing.

Keep your finances still during this period: no new debt, no job changes without talking to your lender, no large unexplained deposits.

9. Closing and the first year

At least three business days before closing you should receive a Closing Disclosure. Compare it with your Loan Estimate and ask about differences.

After closing: file the principal residence exemption with your local assessor, set up your escrow, and keep a repair fund. In an older house, the first year is when the surprises show up.

Where to go next

• Estimate your payment, including taxes and insurance, with the payment calculator.
• See what you can afford with the affordability calculator.
• Check state and local programs in the loan programs guide.
• Compare illustrative rates on the Detroit rates page.