Michigan Pay As You Stay (PAYS) Program: Eligibility, Application, and How It Saves Your Home
If you are a low-income Michigan homeowner who has fallen behind on property taxes, the Pay As You Stay (PAYS) program may be the most powerful tool available to keep your home. PAYS can wipe out the interest, fees, and penalties on your delinquent taxes, and reduce the principal owed to a manageable amount based on your home value. Most Michigan homeowners who qualify do not know the program exists. This guide explains exactly what PAYS is, who qualifies, and how to apply.
What Is the Pay As You Stay Program?
Pay As You Stay (PAYS) is a Michigan property tax relief program created in 2020. It works in conjunction with the Poverty Tax Exemption (PTE) to help low-income homeowners who have delinquent property taxes avoid tax foreclosure. When a homeowner qualifies for the Poverty Tax Exemption (full or partial), the local government can also apply PAYS to reduce the delinquent tax debt itself.
The combined effect: PAYS waives all interest, fees, and penalties on the delinquent taxes, AND caps the principal owed at the lesser of the actual back taxes OR 10 percent of the home Taxable Value. For low-income homeowners with significant tax debt, this can reduce a $25,000 delinquent balance down to under $5,000.
Who Qualifies for PAYS?
To qualify for PAYS you must first qualify for the Poverty Tax Exemption (PTE) on your home. The PTE is a Michigan property tax exemption administered by your local board of review for homeowners whose income falls below state guidelines. Income limits vary by county and are tied to the federal poverty guidelines (typically 100 to 200 percent of poverty depending on local rules).
Beyond the income test, you must own the home as your primary residence (have a Principal Residence Exemption on file), have delinquent property taxes that you cannot pay in full, and not be in active bankruptcy.
Income Guidelines (2025)
Specific income limits vary by county and are updated annually. As a general benchmark: a single-person household typically qualifies up to roughly $20,000 to $25,000 annual income; a family of four typically qualifies up to roughly $40,000 to $50,000 annual income. Some counties offer partial exemptions for homeowners just over the full-exemption threshold. Always check with your local assessor for current limits in your specific municipality.
How Much Can PAYS Save You?
Real example: a Detroit homeowner with $18,000 in delinquent property taxes (including 18 percent interest, fees, and penalties accumulated over three years) on a home with a Taxable Value of $35,000. Without PAYS, they owe the full $18,000 to avoid foreclosure. With PAYS, all interest, fees, and penalties are waived (saving roughly $9,000). The principal owed is capped at 10 percent of Taxable Value ($3,500) OR the actual back taxes if lower. Final amount owed: $3,500. Savings: $14,500.
How to Apply for PAYS
Step 1: Apply for the Poverty Tax Exemption
PAYS is only available to homeowners who have been granted the Poverty Tax Exemption. Apply at your local assessor office. You will need to complete the Application for Poverty Tax Exemption form (Form 5737 in most municipalities), provide income documentation (tax returns, pay stubs, Social Security statements, retirement income statements), and provide documentation of household members and any dependents.
Step 2: Have Your PTE Approved by the Local Board of Review
Your local Board of Review reviews the PTE application during their March, July, or December meetings. The Board can approve full or partial exemption depending on your specific income relative to local guidelines.
Step 3: Apply for PAYS Through the County Treasurer
Once your PTE is approved, contact your county treasurer office to apply for PAYS on the delinquent tax balance. The treasurer applies the PAYS calculation, waives interest and fees, and caps the principal. You sign an agreement to pay the reduced balance, typically over a multi-year payment plan.
Step 4: Make Payments and Stay Current Going Forward
You make scheduled payments on the reduced PAYS balance, AND you must keep current on new property taxes going forward. If you fall behind on the new taxes, your PAYS agreement can be voided.
What If I Do Not Qualify for PAYS?
If your income is too high for PAYS, several other options can help. Wayne County IRSPA reduces interest from 18 percent to 6 percent. The Michigan Homeowner Assistance Fund (MIHAF) provides direct grants for homeowners impacted by COVID. The Michigan Homestead Property Tax Credit can provide up to $1,700 per year on the income tax return. And selling for cash before tax foreclosure preserves your equity.
Common PAYS Application Mistakes
- Not applying for the Poverty Tax Exemption first (PAYS is only available with PTE)
- Missing the Board of Review March, July, or December meetings
- Submitting incomplete income documentation
- Forgetting to include all household members on the application
- Falling behind on new tax bills after PAYS is granted (voids the agreement)
- Not following up with the county treasurer to actually apply PAYS to the delinquent balance
- Assuming PAYS is automatic for low-income homeowners (you must apply)
- Paying scammers who claim to file for you (the application is free)
When PAYS Is Not Enough
Even with PAYS, some homeowners face delinquent balances they cannot pay. If the home is no longer sustainable for any reason — fixed income, deferred maintenance, ongoing carrying costs — selling for cash before the March 31 foreclosure deadline may be the better outcome. Selling preserves whatever equity you have and avoids the auction discount that comes with tax foreclosure. Offer Now Michigan can close in seven to 14 days, paying off any delinquent taxes at closing and putting the remaining equity in your pocket.
Get Help
If you are facing delinquent Michigan property taxes and unsure whether PAYS, payment plans, or selling makes the most sense, call (810) 547-1135. We will walk you through your options honestly, including whether selling makes sense or whether to pursue PAYS first.