You want to buy your first home in Royal Oak or Ferndale, but the financing steps feel complex and fast moving. You are not alone. With strong demand in these close-in Oakland County suburbs, the right loan choice and a strong pre-approval can make your offer stand out. This guide breaks down loan options, down-payment assistance, lender comparison steps, and the documents you will need so you can move with confidence. Let’s dive in.
Your loan options at a glance
Conventional loans
Conventional loans are widely available through banks, credit unions, and mortgage lenders. First-time buyers can put as little as 3 percent down when eligible, though many choose 5 to 20 percent. If you put less than 20 percent down, you will likely pay private mortgage insurance that can usually be canceled once you build enough equity. This is a good fit if you have stable income and solid credit and want the option to remove mortgage insurance later.
FHA loans
FHA loans are insured by the Federal Housing Administration and offer flexible credit and down-payment rules. A typical minimum down payment is 3.5 percent for borrowers who meet program thresholds. FHA loans include upfront and annual mortgage insurance premiums that can last longer than conventional PMI. These loans can help if you have a shorter credit history, higher debt-to-income, or limited cash for closing.
VA loans
If you are an eligible veteran, active-duty service member, or qualifying surviving spouse, VA loans can be a powerful option. Many VA buyers finance with no down payment and no monthly mortgage insurance. Check your eligibility and benefits through the VA’s home loan resources, then speak with a participating lender to confirm your entitlement and next steps.
USDA loans
USDA Rural Development loans offer zero down payment in designated rural areas, subject to income limits. Royal Oak and Ferndale are typically within the Detroit metro urbanized area, which usually does not qualify. If you are considering a home outside these cities, verify an address on the USDA property eligibility map.
Down-payment help in Michigan
MSHDA programs
The Michigan State Housing Development Authority is the primary statewide source of first-time buyer mortgages and down-payment assistance. Program details change, including how “first-time buyer” is defined, income and purchase price limits, and whether assistance is a forgivable grant or a repayable second mortgage. Start with MSHDA’s homeownership pages to review current programs, eligibility tools, and participating lenders. Ask lenders whether their loans pair with MSHDA assistance and what that means for timelines and costs.
County and city resources
Oakland County and nearby cities sometimes offer supplemental assistance, education, or referrals through community development offices. Check the City of Royal Oak and City of Ferndale sites for current information and referrals to partner agencies:
Homebuyer education and counseling
Many assistance programs require a homebuyer education course or counseling session. HUD-approved housing counselors provide budgeting help and program guidance. Use HUD’s housing counselor locator to find nearby agencies in Oakland County.
Pre-approval vs. pre-qualification
Why it matters locally
In Royal Oak and Ferndale, multiple offers are common on well-priced homes. A verified pre-approval shows sellers you can obtain financing, shortens the path to closing, and reduces the risk of delays. A simple pre-qualification is only an estimate based on self-reported information and does not carry the same weight.
What a strong pre-approval includes
- Loan type and tentative loan amount
- Names of all borrowers
- The level of underwriting completed, ask the lender to clarify
- Lender contact information and date of issuance
- Proof of funds for down payment and closing costs, usually bank or investment statements
Pre-approvals expire, often in 30 to 90 days. If your search takes longer, update documents with your lender.
How to compare lenders and total cost
What to compare beyond rate
- APR compared across the same loan type and term
- Rate and points, ask about the cost to buy down the rate
- Lender fees and third-party costs, title, appraisal
- Mortgage insurance rules, PMI cancellability vs. FHA MIP duration
- Fixed vs. adjustable options and 15 vs. 30-year terms
- Compatibility with MSHDA or other assistance, and whether assistance adds a second mortgage
- Seller concession limits by loan type
- Lender responsiveness and turn times, important when you are competing
Practical steps
- Request standardized Loan Estimates from at least two or three lenders. The CFPB’s Loan Estimate guide explains each section so you can compare apples to apples.
- Ask each lender to run scenarios with different down payments and with or without down-payment assistance.
- Confirm if the lender participates in MSHDA or other local programs.
- Watch for red flags such as vague fees or “guaranteed approval” without documentation.
Documents you will need
Getting organized early helps you move fast when the right home hits the market. Most lenders ask for the following during pre-approval:
Personal and income
- Government photo ID and Social Security number
- Recent pay stubs for the last 30 days
- W-2s for the past two years
- Federal tax returns if self-employed or if you report additional income
- Employer contact information and, in some cases, a verification letter
Assets and funds
- Bank statements for the last 60 to 90 days
- Retirement or investment account statements if funds are used for closing
- Gift letters and proof of source if a relative is helping with funds
- Proof of earnest money and any required cash reserves
Credit and obligations
- Authorization for the lender to pull credit
- Documentation for other debts such as student or auto loans, and any support obligations
Once under contract
- Signed purchase agreement
- Proof of homeowners insurance before closing
- HOA documents if buying a condominium
- Any letters of explanation for credit items, plus bankruptcy or foreclosure discharge papers if they apply
Tip: Save these in a secure folder so updates are quick.
Offer strategies that work locally
- Include a strong pre-approval letter and proof of funds with your offer.
- Choose a responsive lender with clear timelines. Local experience with Oakland County title companies can help keep things smooth.
- Understand the risks before limiting financing or appraisal contingencies. Your agent and lender can help you weigh tradeoffs.
- If you are using down-payment assistance, confirm whether the program adds steps that affect closing timing and share that timeline with the listing agent.
- Keep inspections and deadlines reasonable and transparent.
What to do next
- Review current programs on MSHDA’s site and list your questions.
- Schedule a session with a HUD-approved counselor using the HUD locator.
- Ask two or three lenders for Loan Estimates and confirm whether they participate in assistance programs you might use.
- If you are eligible for VA benefits, review the VA home loan overview and gather your Certificate of Eligibility.
- Start your document file so you can refresh your pre-approval quickly as you shop.
Ready for local guidance tailored to Royal Oak and Ferndale, from tour planning to offer strategy and closing coordination? Reach out to the Cindy Kahn Team for a friendly, concierge-style plan to help you compete with confidence.
FAQs
What counts as a first-time buyer for MSHDA?
- Many MSHDA programs target first-time buyers as defined by not owning a home within a recent period. Always verify the current definition and rules on MSHDA’s site.
Can I combine down-payment assistance with FHA or conventional loans?
- Often yes, but it depends on the specific assistance program. Confirm compatibility with your lender and the program administrator before you apply.
Is pre-approval enough to make a competitive offer in Royal Oak and Ferndale?
- A strong, verified pre-approval significantly improves your position, but it is not a final commitment. Sellers may also request proof of funds and timely underwriting updates.
Will my mortgage insurance go away?
- With conventional loans, PMI is usually cancellable when you reach about 20 percent equity. FHA mortgage insurance rules differ and may last longer unless you refinance.
Are there income limits for assistance in Oakland County?
- Many programs use income limits that vary by county and household size. Check the latest limits with program administrators such as MSHDA or local community development offices.