If you have been saving for a home in Grand Rapids and the down payment feels like the biggest hurdle, there is some new national news worth a look. According to FOX 13 and Zillow (Oct. 28, 2026), Zillow Home Loans is now offering to cover the FHA minimum down payment for buyers in 43 states plus DC, and Michigan is one of them.
That sounds great, and for some buyers it could be. But like most things in real estate, the details matter. Here is a plain look at how it works, where the catch is, and what other options West Michigan buyers have.
How the Zillow FHA Down Payment Program Works
Here is what Zillow and FOX 13 reported:
- A second loan covers your down payment. Zillow Home Loans offers a 0% interest, no-monthly-payment second loan for up to 3.5% of the purchase price or the appraised value, whichever is lower. That 3.5% lines up with the FHA minimum down payment.
- No income cap and no first-time buyer rule. You do not have to be a first-time buyer, and there is no income limit.
- It can be forgiven. The loan is forgiven after 5 years of on-time payments while you live in the home.
- It is available in Michigan. The program covers 43 states plus DC. The states left out are Arizona, Delaware, Florida, Massachusetts, New York, Vermont and Virginia.
The Pros
For a lot of buyers, the down payment is the wall between renting and owning. Having that 3.5% covered with no interest and no monthly payment can mean getting into a home sooner instead of saving for a few more years. The lack of an income cap and first-time buyer requirement also opens the door to people who often do not qualify for assistance programs, like move-up buyers or households that earn a bit too much for other options.
The Catch: What to Watch For
None of this makes it a bad deal. It just means you should go in with your eyes open.
The 5-year clawback
The loan is only forgiven after 5 years of on-time payments while you live in the home. If you sell, move or refinance before year 5, you have to repay it in full. If there is a chance a job change, a growing family or a rate drop could have you moving or refinancing in the next few years, factor that in.
Mortgage insurance still applies
This is still an FHA loan, so FHA mortgage insurance is still required. Getting help with the down payment does not remove that monthly cost.
You are tied to one lender
The program is tied to Zillow Home Loans as the lender. That means you cannot take the down payment help and shop your mortgage to another lender. Your rate and fees come from Zillow Home Loans.
Compare rates and fees
A free down payment is only a good deal if the rest of the loan is competitive. A slightly higher rate or extra fees can add up over the life of a 30-year mortgage. Get a loan estimate from Zillow Home Loans and compare it side by side with other lenders before you decide.
Michigan Has Its Own Down Payment Help, Too
Zillow is not the only option here. The Michigan State Housing Development Authority (MSHDA) has offered homebuyer programs for years. A few worth knowing about:
- MI Home Loan: MSHDA’s own mortgage. It is available statewide to first-time buyers (those who have not owned a home in the previous three years) and to repeat buyers in targeted areas. Household income limits apply, the statewide sales price limit is $566,355 after June 1, 2026, and a minimum credit score of 640 is required. You work directly with a participating lender.
- MI 10K DPA Loan: Up to $10,000 toward down payment, closing costs and prepaid expenses, available statewide to low and moderate income buyers. It is an interest-free loan with no monthly payments, and it must be combined with a MSHDA MI Home Loan. A homebuyer education certificate is required. Repayment is deferred until events like paying off the first mortgage, selling or refinancing the home, or no longer living in it.
MSHDA also lists a Mortgage Credit Certificate and housing education classes on its Pathway to Housing page. Notice the trade-offs are different. MSHDA’s DPA can help with closing costs too, but it has income and price limits. Zillow’s program has no income cap, but it is tied to one lender and has the 5-year clawback. The right fit depends on your situation.
Why Talk to a Local Team First
Every one of these programs has rules that can make or break your plan. The best move is to put them side by side with your real numbers: your income, your budget, how long you plan to stay, and what you can actually afford each month.
That is what we do every day. Our team has helped 2,000+ people buy and sell in West Michigan, and we have earned 1,300+ five-star reviews across Zillow and Google. We will not push you toward one program. We will help you compare every option and connect you with lenders so you can see the true cost before you commit.
FAQ
Is the Zillow down payment program available in Grand Rapids?
Yes. Michigan is one of the 43 states (plus DC) where it is offered.
Do I have to be a first-time buyer?
No. There is no first-time buyer requirement and no income cap.
What happens if I sell before 5 years?
You have to repay the second loan in full if you sell, move or refinance before year 5.
Can I use a different lender?
No. The program is tied to Zillow Home Loans as the lender.
Can I use MSHDA help instead?
Possibly. MSHDA’s MI 10K DPA works with its MI Home Loan and has income and sales price limits. A participating lender can check whether you qualify.
Ready to Compare Your Options?
Whether it is Zillow’s new program, MSHDA, or a traditional loan, we will help you figure out what actually saves you the most.
Talk to Our Team About Down Payment Help
Comment DOWN on our Facebook post or message us and we will walk you through it.
Source: FOX 13, “Zillow Home Loans will cover your FHA down payment”, Oct. 28, 2026. Program details can change; confirm current terms with the lender.
