Michigan has a property tax trap built for investors: when a home sells, its capped taxable value resets, and a rental loses the principal residence exemption. The tax bill after you buy can be far larger than the seller's.
In short: LendingStreet's jumbo DSCR loans cover about $1.5M to $5M+ on Michigan investment properties of 1 to 8 units, and they qualify on rental income rather than W-2s or tax returns. In Michigan, jumbo balances usually come from Birmingham, Bloomfield Hills and Ann Arbor homes, Lake Michigan shoreline rentals from Saugatuck to Harbor Springs, Traverse City, and multi-unit buildings and portfolios in metro Detroit and Grand Rapids. Uncapping and non-homestead school millage are the local issues that matter most.
In metro Detroit, Birmingham, Bloomfield Hills, Royal Oak and Northville have large homes near the auto industry's offices and engineering centers. Ann Arbor has strong long-term demand from the University of Michigan and Michigan Medicine, and small multi-unit buildings there can reach jumbo balances.
Along Lake Michigan, Saugatuck, South Haven, Holland, Grand Haven, Traverse City, Petoskey and Harbor Springs have lakefront and resort homes rented by the week in summer. East Grand Rapids and Ada have larger homes near Grand Rapids.
| Area | What a jumbo balance usually buys | Main underwriting issue |
|---|---|---|
| Birmingham and Bloomfield | Executive home on a 12-month lease | Uncapped taxes, comparable leases |
| Ann Arbor | 5-8 unit building or large home | City rental licensing, student turnover |
| Lake Michigan shoreline | Lake home rented weekly | Local STR rules, shoreline erosion |
| Detroit and Grand Rapids | Portfolio or multi-unit building | Combined rent, older systems |
Under Proposal A, a property's taxable value can rise each year by no more than inflation or 5%, whichever is less. When the property sells, taxable value uncaps to its state equalized value, which is half of market value. A long-held home can have a taxable value far below that, so the bill can jump in the year after you buy.
On top of that, a rental does not get the principal residence exemption, so it pays the non-homestead school operating millage. Budget your taxes on the uncapped, non-homestead figure.
Michigan charges a state real estate transfer tax and a county transfer tax, both customarily paid by the seller. They matter mainly when you plan your exit, and some sellers build them into their price.
Buyers pay recording, title and lender costs. Ask the local assessor for the property's state equalized value so you can estimate the post-sale tax bill before closing.
Michigan's common claims are basement water, sewer backups, frozen pipes and wind damage. Lakefront homes can face shoreline erosion after high-water years, and some riverfront areas sit in mapped flood zones. Insurers will look at roof age, basement waterproofing and sump systems.
This example is illustrative and not a quote. An investor buys a Birmingham home for $1,650,000 that leases for $10,500 a month. The seller paid about $1,100 a month in taxes. After uncapping and without the principal residence exemption, taxes are budgeted at $2,300 a month. Insurance is $450.
At 70% LTV the loan is $1,155,000 and estimated principal and interest is about $7,879, for a total monthly payment of about $10,629 and a DSCR of about 0.99x. At 60% LTV the loan is $990,000, estimated principal and interest is about $6,754, the payment is about $9,504 and DSCR is about 1.10x.
Using the seller's tax bill would overstate DSCR by a wide margin. Always budget on the uncapped non-homestead figure.
| Item | 70% LTV | 60% LTV |
|---|---|---|
| Purchase price | $1,650,000 | $1,650,000 |
| Loan amount | $1,155,000 | $990,000 |
| Estimated principal and interest | $7,879 | $6,754 |
| Property taxes | $2,300 | $2,300 |
| Insurance | $450 | $450 |
| Total monthly payment | $10,629 | $9,504 |
| Monthly rent | $10,500 | $10,500 |
| DSCR | About 0.99x | About 1.10x |
Ann Arbor, Detroit, Grand Rapids and many other cities require rental registration or licensing and periodic inspections. Lake Michigan towns such as Saugatuck, South Haven and Traverse City regulate short-term rentals by zone, and some cap them. Confirm current rules before you buy.
Some programs qualify a short-term rental on projected revenue. Most metro Detroit and Ann Arbor jumbo files run on 12-month leases.
The test is simple: does the property's rent cover its payment? Lenders add principal, interest, taxes, insurance and HOA dues, divide the rent by that total and generally want 1.0x or more. Some programs accept a ratio under 1.0x with other strengths in the file.
As the loan gets bigger, the file gets more scrutiny. Reserves are typically higher, appraisals are reviewed more closely and the highest LTVs are often reserved for smaller balances. Specific limits vary by program.
If one high-value property does not cover its payment at the leverage you want, there are other routes. Five or more rentals can go under one blanket portfolio loan, qualified on combined cash flow with one closing, one payment and release provisions when a property sells. A 5-8 unit building qualifies on the combined rent of every unit, with leverage that varies by program.
You can also bring more cash, take a smaller loan, or look at a sub-1.0 DSCR program. Buildings of 9 or more units are commercial; see our multifamily loans page for those.
Start with these items:
Our investor loans are business-purpose loans on non-owner-occupied property. Share the property details and your target leverage, and we will size the loan on realistic costs, show the ratio at a few loan amounts and lay out the options. Use the form below or call (877) 298-1001. For broader context, see our Michigan DSCR loans page.
When a property sells, its taxable value resets to its state equalized value, which is half of market value. The tax bill can jump the year after you buy.
Yes. Rentals do not get the principal residence exemption, so they pay the non-homestead school operating millage.
On some programs, using projected short-term revenue, if the town allows the rental. Shoreline condition and insurance also get a close look.
Our DSCR programs have no stated maximum. Above about $1.5M, expect closer review, higher reserves and often a lower maximum LTV.
Yes. Cash-out goes up to 75% LTV, often lower on large balances, and the rent must still cover the new payment. Seasoning rules vary by program.
Yes. Underwriting uses the property's rent instead of W-2s or tax returns. You will still need a 620 or higher credit score and proof of funds.
No. Our investor loans are business-purpose loans on non-owner-occupied property only.
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