Recently, a family preparing to move to Ann Arbor requested a pre-consultation before making an offer. They wanted to check what types of loans were available before deciding on an offer price.

According to Redfin, as of June 2026, the median sale price of homes in Ann Arbor over the last three months was $475,000, which is a 3.0% increase compared to the same period last year. The standard home value (ZHVI) reported by Zillow as of June 30 was $489,157, and when looking at the entire Washtenaw County, the standard home value drops to $351,613. This indicates a significant price difference between the city of Ann Arbor and its outskirts, even within the same county.

The first thing to check in this price range is the loan limit. The FHFA announced that the national conforming loan limit for 2026 is $832,750 for a single-family home, and since there are no counties designated as high-cost areas in Michigan, Washtenaw County follows this limit. Because Ann Arbor's median price is below this limit, most listings can be adequately covered by a conventional loan. If the down payment is less than 20%, PMI will apply, but it can be canceled once the equity exceeds 20%.

For first-time homebuyers like that family, FHA loans are also compared. If the credit score is above 580, they can start with a down payment of 3.5%, significantly reducing the initial financial burden. However, it should be noted that if the down payment is less than 10%, the mortgage insurance premium (MIP) will apply throughout the loan term, which is different from the PMI of conventional loans. In simpler terms, while FHA loans have a lower initial barrier to entry, the insurance premium burden may continue in the long run.

Interest rates vary significantly based on credit scores of 620, 680, and 700. That family was able to get approved for a conventional loan with a credit score in the 620 range, but after reducing their credit card balances over a few months to exceed 680, they found a noticeable difference in monthly payments when they got a new quote. This case illustrates that checking the credit score before rushing to make an offer can be beneficial in the long run.

During the pre-approval stage, it was pointed out that different lenders present varying interest rate conditions and closing costs. Generally, closing costs are known to be around 2-5% of the loan amount, which includes appraisal fees and title insurance. It is advisable to compare estimates from at least two or three lenders rather than deciding based on just one to reduce initial costs.

Ann Arbor has a steady rental demand centered around the University of Michigan, so there are also inquiries for investment purposes. However, unlike owner-occupied properties, investment properties often have higher down payment requirements for conventional loans, and considering vacancy periods is essential. Therefore, it is safer to look at rental prices and vacancy rates rather than making definitive profit predictions.

For families considering school districts, it is recommended to refer to test score-based ratings from sites like GreatSchools or Niche, but since school district boundaries change frequently, it is advisable to verify the assigned school for the actual address before closing.

If moving from another state, it is also important to review Michigan's property tax system. Even if the tax rate feels lower than the previous residence, the local millage rates vary, so it is wise to include property taxes in the closing cost estimate. For those just arriving from Korea and preparing to settle in, it may be challenging to get approved for a conventional loan due to a short credit history, so starting with relatively accessible programs like FHA seems to be a realistic choice.

Ultimately, that family decided on a conventional loan, but there are certainly cases where FHA could be more advantageous depending on credit scores and available cash. Comparing the monthly payments and initial costs of both options before making an offer is a practical takeaway. This article is not investment or legal advice, and it is recommended to consult with lenders and professionals before finalizing any contracts.