Our Michigan DSCR loan page covers the statewide rules, landlord law and the Detroit and Grand Rapids rents. This post does one job: it puts real 2025 millage next to real prices and HUD rents so you can see how much of the rent the tax line eats once the cap comes off. Our companion piece on Grand Rapids rental property runs the same math suburb by suburb in Kent County.

Every number below was checked on November 10, 2026 against the Michigan Department of Treasury's 2025 total millage list, the Michigan Compiled Laws, the State Tax Commission, HUD User's FY2027 Fair Market Rents and Census Bureau QuickFacts.

What Uncapping Means

Uncapping means the taxable value resets to the full state equalized value in the calendar year after a sale.

Michigan assesses property at 50% of its true cash value. Under Proposal A, the taxable value a bill is based on can only grow by the lesser of 5% or inflation each year while one owner holds it. Long time owners therefore sit on taxable values far below half of market. Section 211.27a of the General Property Tax Act says that after a transfer of ownership, the taxable value for the calendar year following the year of the transfer is the state equalized value for that year. In plain words: the gap closes all at once, on the buyer's watch.

That is why the tax figure on a Michigan listing sheet is close to useless for an investor. It reflects the seller's capped value and, very often, the seller's homestead exemption too.

The listing shows the seller's capped, homestead tax. Your first full year shows an uncapped, non homestead tax.

Rentals Pay the School Mills

A rental pays up to 18 more mills than the same house would as an owner's home, because the principal residence exemption does not apply.

The Michigan Department of Treasury describes the Principal Residence Exemption under MCL 211.7cc as exempting a qualifying principal residence from the local school operating millage, up to 18 mills. A rental is not owned and occupied as the owner's principal residence, so it pays the non homestead total. One mill is $1 per $1,000 of taxable value.

The gap is not always a flat 18. In the 2025 list, Detroit, Saginaw, Jackson, Battle Creek, Bay City and Muskegon show exactly 18.0000 mills between the two columns, but the Warren Consolidated district inside Warren shows 14.8626 and the Dearborn City School District shows 15.8190. A few districts levy less than the full 18 for operations, and the rental only pays what the district actually levies.

Eleven Cities Compared

Detroit and Lansing carry the heaviest rental tax as a share of price, and Muskegon the lightest of the eleven.

The table uses the 2025 non homestead total for the city's main school district. Tax as a share of price assumes the taxable value lands at half of the price, which is what an uncapped value looks like when the price equals true cash value. Your parcel's assessment will differ, so treat this as the shape of the bill, not the bill.

Detroit, Warren and Dearborn share one HUD rent because HUD's Detroit area covers Wayne, Macomb, Oakland, Lapeer and St. Clair counties. Its three bedroom benchmark rose from $1,724 to $1,777 for FY2027. The Flint area moved the most of the group, from $1,272 to $1,391. Medians come from the Census Bureau's 2020 to 2024 American Community Survey.

Run the DSCR on your deal

The DSCR Math

At the city medians most of these markets clear 1.00, Kalamazoo and Dearborn fall just short, and every city stops clearing 1.00 somewhere between about $155,000 and $207,000.

The setup: buy at the median with 25% down and a 30 year fixed at Freddie Mac's 7.18% average from November 5, 2026, used as a reference rate only (a conventional loan average, not a DSCR rate and not a rate we are quoting). Tax is the uncapped, non homestead figure from the table. Insurance is $1,800 a year, an example number, not market data and not a quote. Rent is HUD's FY2027 three bedroom benchmark.

Read the last column first. The very high ratios in Detroit, Flint and Saginaw come from medians that include a lot of older houses needing serious work, and a rent ready three bedroom usually costs more than the median. The price that holds 1.00 is the more useful number: it tells you the most you can pay for a three bedroom at the HUD rent before the payment, with an uncapped tax bill, outruns the rent. Our ratio floor is 0.50, so a lower ratio can still be financed, but this is the line where the house pays for itself on paper.

A Seller Versus Buyer Example

In our Lansing example the uncapped rental bill is about double the seller's homestead bill, which moves the ratio from 1.66 to 1.37.

Example numbers, not market data and not a quote: a Lansing house sells for $128,700. The longtime owner's capped taxable value is $41,000 and the owner claims the homestead exemption, so at 62.6447 mills the seller pays about $2,568 a year. The year after you buy it as a rental, the taxable value resets to about $64,350, half the price, and you pay the non homestead 80.0925 mills, about $5,154 a year. That is $2,586 more, or about $215 a month.

Budget the seller's bill and the payment looks like $1,018 a month, a 1.66 ratio on the $1,685 HUD rent. Budget the real bill and it is $1,233, a 1.37 ratio. Both clear 1.00 here, but on a pricier house that same swing is exactly what turns a good looking deal into one that misses.

What Happens After Year One

After the reset, the cap applies again, so the taxable value can rise only by the lesser of 5% or inflation until you sell.

The State Tax Commission set the inflation rate multiplier for 2026 at 1.027, and its bulletin says local units cannot use any other figure this year. On our Lansing example, a $64,350 taxable value could grow to no more than about $66,087 in the next year, plus additions, and only if the state equalized value is at least that high. Millage can still change when voters approve new levies, so the rate side of the bill can move even when the value side is capped.

Financing the Deal

The terms that matter most in Michigan are interest only, cash out on a fixed up house and the first rental path.

• Interest only: ten years interest only on a 40 year term, or a 30 year term with interest only, up to 70% LTV on a purchase and 65% on a cash out. It lifts Kalamazoo from 0.98 to 1.10 in our table.
• Cash out up to 80% LTV with no ownership seasoning, which fits the older Michigan houses that need work before they rent.
• First rental is fine: no primary residence ownership and no VOR required.
• No reserves under $1 million and under 75% LTV, no asset sourcing, no large deposit sourcing and no seasoning, and a 100% gift can cover the down payment, closing costs and reserves.
• DSCR as low as 0.50 and loans up to $5 million.

Low priced houses mean small loan amounts, and those have their own questions we answer per file. For how other states handle the tax line, see our post on Indiana's 2% property tax cap, and for the other big line in the payment, our guide to DSCR loan insurance. Everything else we place is on our loan programs page.

Where It Goes Wrong

It goes wrong when the buyer underwrites the first tax bill instead of the second one.

My Michigan Tax Checklist

1. Find the school district on the parcel, not just the city. The millage follows the district.
2. Use the non homestead column. A rental does not get the principal residence exemption.
3. Estimate the uncapped taxable value at half of what you pay, then multiply by the mills and divide by 1,000.
4. Ignore the seller's tax line on the listing.
5. Get a landlord insurance quote before you offer.
6. Send us the address. We run the DSCR the way the lender will and show you the down payment and the payment.

Sources

All sources checked November 10, 2026. Data changes, so confirm before you rely on it.

1. Michigan Department of Treasury, 2025 Total Property Tax Rates in Michigan (complete list). 2025 total millage, principal residence vs non homestead, by city and school district: Detroit 64.1844 / 82.1844; Lansing (Ingham, Lansing Public) 62.6447 / 80.0925; Flint 52.3352 / 70.1948; Battle Creek 50.7948 / 68.7948; Kalamazoo 50.7886 / 68.4483; Warren (Warren Consolidated) 52.9663 / 67.8289; Jackson 49.5656 / 67.5656; Dearborn 50.8704 / 66.6894; Saginaw 48.3221 / 66.3221; Bay City 46.7281 / 64.7281; Muskegon 42.7984 / 60.7984
2. Michigan Legislature, MCL 211.27a (General Property Tax Act). Assessment at 50% of true cash value; taxable value growth capped at the lesser of 1.05 or the inflation rate; after a transfer of ownership, taxable value for the following calendar year is the state equalized valuation
3. Michigan Department of Treasury, Principal Residence Exemption (MCL 211.7cc). Exempts a qualifying principal residence from local school operating millage, up to 18 mills
4. Michigan State Tax Commission, Bulletin 14 of 2025, Inflation Rate Multiplier for 2026. 2026 inflation rate multiplier 1.027 (2.7%), the only multiplier local units may use in 2026
5. HUD User, FY2027 Fair Market Rents, Michigan areas. 3 bed FY2027 (FY2026): Detroit Warren Livonia $1,777 ($1,724); Lansing East Lansing $1,685 ($1,627); Flint $1,391 ($1,272); Battle Creek $1,469 ($1,410); Kalamazoo Portage $1,545 ($1,531); Jackson $1,576 ($1,534); Saginaw $1,466 ($1,440); Bay City $1,429 ($1,399); Muskegon Norton Shores $1,534 ($1,490)
6. U.S. Census Bureau QuickFacts, Detroit, Warren, Dearborn, Flint, Lansing, Kalamazoo, Saginaw, Jackson, Battle Creek, Bay City and Muskegon, Michigan. Median value of owner occupied housing units, ACS 2020 to 2024: $83,900, $193,400, $218,800, $53,500, $128,700, $179,000, $60,000, $103,200, $141,900, $97,600, $142,300
7. Freddie Mac Primary Mortgage Market Survey. 30 year fixed average 7.18% as of November 5, 2026 (reference only)

Frequently asked questions