Chirstine is Realtor in
Southwest Michigan
Alright, homebuyers (or future homebuyers who are currently stalking Zillow at 2 AM while eating leftover pizza), let’s talk about how to actually pay for a house.
Unless you have a vault of cash like Scrooge McDuck, you’re going to need financing—aka, a mortgage. But not all mortgages are created equal. Some work better for certain buyers, while others are about as user-friendly as an IKEA instruction manual.
So today, I’m breaking down the four main ways people buy homes in Southwest Michigan:
Conventional Loans – The “gold standard” for buyers with strong credit.
FHA Loans – Perfect for first-timers who don’t have 20% down.
USDA Loans – The hidden gem for rural homebuyers (seriously, free money).
Cash Buyers – No mortgage, no lender, just straight-up money moves.
By the time you finish reading this, you’ll know exactly which loan type is right for you—and how to avoid common pitfalls that can derail your home purchase.
Let’s dive in.
2. FHA Loans: The First-Time Buyer’s Best Friend
FHA loans are government-backed loans designed for buyers who might not have a huge down payment or perfect credit. If your credit score is meh or you’re struggling to save up 20%, this might be your best bet.
Key Benefits of an FHA Loan:
Low Down Payment: Only 3.5% down required
Lower Credit Score Requirements: You can qualify with a 580+ score
More Forgiving on Debt-to-Income Ratios
What You Need to Qualify:
Credit Score: 580+ for 3.5% down, 500-579 requires 10% down
Down Payment: 3.5% (so for a $250,000 home, that’s just $8,750)
Debt-to-Income Ratio: Can go up to 50% in some cases
The Catch:
Mortgage Insurance Sticks Around – Unlike conventional loans, FHA loans require mortgage insurance for the life of the loan (unless you refinance into a conventional loan later).
House Condition Rules – FHA has stricter rules about property condition, so if the house needs major repairs, the lender might say “nope.”
Pro Tip:
If you’re using an FHA loan, try to negotiate for seller concessions to help cover closing costs. Sellers can pay up to 6% of the purchase price toward your closing fees, which can save you thousands.
Best for: First-time buyers, lower credit score buyers, or anyone struggling with the 20% down payment requirement of a conventional loan.
USDA loans are amazing if you qualify—but most buyers don’t even know they exist. If you’re buying a home in a rural or suburban area, you could get a zero down payment loan. Yes, you read that right—ZERO DOWN.
Key Benefits of a USDA Loan:
No Down Payment (100% financing!)
Lower Mortgage Insurance Costs than FHA
Lower Interest Rates than conventional loans
What You Need to Qualify:
Location: Home must be in an eligible rural or suburban area (check the USDA map)
Income Limits: Your household income must be below a certain level (varies by county)
Credit Score: Usually 640+
The Catch:
Property Restrictions – Not all homes qualify. The property must be in a USDA-approved location.
Income Limits Apply – If you make too much money, you won’t qualify.
Pro Tip:
Check the USDA eligibility map before house shopping. You might be surprised which areas qualify (some “rural” areas are just outside city limits).
Best for: Buyers looking in suburban/rural areas who want to buy a home with zero down.
Christine is a Real Estate Agent based in Niles MI.
She has sold more than 800 Million Dollars in Real Estate.
She is a great woman of Real Estate.
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