The Federal Reserve Bank of Chicago has been reviewing the housing market in Detroit, MI. Like too many others, the city is facing some significant economic challenges, and the Fed's report, published this month, may well provide insights that apply in other metros with similar issues. A key highlight? The value of down payment assistance programs.
Detroit's Numerous Challenges
In March, the Detroit Regional Chamber published a report that found the metro "ranks near-last among peers in most key economic measures." When it summarized the report, which compared the city with 19 other similarly sized metros, Bridge Michigan found that Detroit came:
- 20th on per capita income, $42,100, compared to first-place Austin at $60,900
- 19th on gross domestic product per capita, $6,400, compared to just over twice that for first-place San Francisco
- 18th on educational attainment, with 47% of the population completing a higher education program. The top three regions topped 60%
- 17th on population growth, with 0.2% gain compared to up to 3% elsewhere
Besides these issues, the city is facing high development costs as a result of historical factors. The Fed hosted a conference last year to learn more about the city's housing market, and it says:
"Many participants at our June 2025 conference indicated that high construction costs are a deterrent to increasing housing supply in Detroit to a similar degree as or more than in other places in the U.S.," states the Fed's report.
"Many who are knowledgeable about Detroit housing development told us because of the city’s industrial past and the way it shuttered many homes previously, (re)developing houses and neighborhoods is hindered by the potential or actual presence of hazardous substances, pollutants, or contaminants — i.e., Detroit is one big brownfield site."
One conference participant said that, before he came to Detroit, he "had never seen levels of arsenic or asbestos this high at any site." These and other issues have affected inventory in the housing market, reducing availability and increasing home prices and rentals.
Down Payment Assistance Programs Are Helping Detroit
There are thousands of down payment assistance (DPA) programs operating across the country, most commonly ran by states, cities, counties, lenders, and localized non-profits.
The Detroit City program, for example, provides grants of up to $25,000 that can be used toward the down payment, prepaid expenses, and closing costs when buying a home. Recipients must have household incomes of less than 80% of the Area Median Income (AMI), which can be found on Fannie Mae's look-up tool. In 2026, the AMI in Detroit was $102,700, and 80% of that was $82,160.
Detroit offers outright grants that never need to be repaid, provided the buyer remains in residence for at least 3 years.
"To qualify for the Detroit Down Payment Assistance Program, you must have lived in the City of Detroit for the last 12 months, OR you must prove you lost a home to property tax foreclosure within the City of Detroit between 2010 and 2016," says the website. Applicants must also not have owned a home within the past three years.
The Detroit "DPA has contributed greatly to making the home mortgage marketplace more accessible for African American borrowers," says the Fed report. "DPA participation was high in 2023, and thus, mortgage originations increased greatly in most areas of Detroit."
How Down Payment Assistance Programs Help Elsewhere
While DPA programs can be especially helpful in places like Detroit, they provide lifelines to home buyers everywhere. Those who can't qualify for zero-down-payment mortgages, and who are facing a long period of saving for a down payment, can suddenly find that a program shortens the wait before they can become homeowners.
Each DPA program gets to set its own rules. For eligibility, many set the AMI higher than Detroit does, perhaps at 120% of AMI or without a published limit at all. Most insist that applicants have not owned a home in the previous three years, but some have no such requirement.
Not all programs provide grants. Many offer low-interest loans or silent, 0% forgivable loans, where buyers make no monthly payments, and the loan is forgiven, usually in stages as residency milestones are met. The amount available varies widely from program to program.
The best way for a first-time buyer to know what DPA help is available is to conduct an internet search: "down payment assistance in [your city or county]." This should return a list of programs, including ones managed by the state, those offered by the city or county, and perhaps yet more run by agencies or organizations.
At this point, potential applicants should carefully compare each program. Some are much more generous than others, while eligibility requirements might vary.
Note that not all programs are funded year-round. Sometimes, one has to wait for new funding to be released.
It's amazing how many people have never heard of DPA programs, or assume they're too good to be true. But they really are there to help. And, for many, they can help realize the dream of homeownership years before it would otherwise be possible.
