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Minnesota First-Time Homebuyer Programs

House hunting for the first time can be an overwhelming experience. In addition to spending hours on real estate websites and in person looking for just the right home, you have to think about financing a new property — and this can be a pricey process.

Fortunately, Minnesota offers programs designed specifically for first-time homebuyers.

In this guide, we will cover:

Minnesota first-time homebuyer programs

Minnesota offers a few first-time homebuyer programs through government and nonprofit agencies. These programs provide hopeful homeowners options for financing their first homes and education programs that aren’t available to other home buyers.

First-time homebuyers can explore their options beginning with Minnesota Housing, the state’s housing finance agency, and the Minnesota Homeownership Center (HOC).

In January 2019, we researched current information on first-time homebuyer programs in Minnesota, which included reviewing programs offered through Minnesota Housing and the HOC. Here’s what first-time homebuyers in Minnesota need to know.

Eligibility for Minnesota assistance

Minnesota Housing is the state agency that coordinates with local lenders to encourage homebuying and offers specific plans for those looking to enter a mortgage agreement for the first time. Here’s how the agency can help first-time homebuyers:

  • Down payment assistance
  • Closing cost assistance
  • Low mortgage insurance rates and the possibility of avoiding mortgage insurance
  • Low mortgage rates
  • Deferred payment loans
  • Homebuyer education
  • Access to experienced local lenders

There are a few assistance programs that fall under the umbrella of Minnesota Housing, and each has specific eligibility guidelines for borrowers.

In general, however, and depending on the size and type of loan, applicants will have to meet the following requirements to qualify for a Minnesota Housing loan:

  • Purchase price limit — currently $328,200 in the 11-county Twin Cities metro area and $271,100 in rest of state
  • Credit check
  • Down payment from 0% to 3.5%
    • Typically, applicants must put down at least $1,000
  • Income
    • Based on gross household income
      • Meet income limits for 1-2 person household
      • $94,300 for 11-county Twin Cities metro area
      • $90,500 for Dodge and Olmstead Counties
      • $84,200 for all other Minnesota counties
    • Meet income limits for 3-plus-person household
      • $108,400 for 11-county Twin Cities metro area
      • $104,000 for Dodge and Olmstead Counties
      • $96,800 for all other Minnesota counties
    • Meet purchase price limits
      • $328,200 for 11-county Twin Cities metro area
      • $271,000 for remainder of state

Note: You can check current mortgage rates for Minnesota here.

Start Up

Features

  • Fixed, affordable interest rates over the life of the home loan
    • Start Up loan interest rates issued by government agencies, as low as 4.625%
    • Exclusive conventional loans that require down payments as low as 3%
  • Down payment and closing cost loans offered up to $15,000
  • Option for low-to-no mortgage insurance to lower monthly mortgage payments

Eligibility

  • Must be a first-time homebuyer or must not have owned a home in the three years prior to applying
  • Meet credit score requirements
  • Meet income and purchase price limits outlined in the general eligibility section

How it works

Minnesota Housing’s Start Up loan program offers first-time buyers many options to help purchase a home. The website and manual provide a detailed explanation of the program and the conditions and forms required.

Down payment and closing cost loans

Minnesota Housing also offers financing options to help first-time homebuyers secure down payments and funds for closing costs.

These are designed to provide loan options for buyers who don’t have the cash on hand to offer down payments and closing costs in full at the time of sale. The agency offers two types of down payment and closing cost loans: the Monthly Payment Loan and the Deferred Payment Loan.

Monthly Payment Loan features

  • Loans offered through the Start Up program up to $15,000
  • Available through all Minnesota Housing first-mortgage programs
  • Monthly payments made over the course of a 10-year loan life
  • Interest rate will be the same as initial, low mortgage rate
  • Affordable monthly payments at interest rates as low as 4.875%
  • No limit on post-closing cash reserves

Eligibility

  • Only available after being approved for a Minnesota Housing first-mortgage program
  • Meet income and purchase price limits outlined in the general eligibility section

Deferred Payment Loan features

  • Offers deferred payment loans up to $8,000
  • Deferred Payment Loan Plus offers loans up to $10,000
  • Loan term equal to first mortgage term
  • No interest
  • No monthly payments
  • Must repay loan upon moving, selling, paying off first mortgage or refinancing
    • Exceptions made when refinancing through the Step Up program

Eligibility

  • Only available for first-time homebuyers
  • Borrowers subject to Start Up eligibility requirements, including income and purchase price limits
  • Meet income and purchase price limits outlined in the general eligibility section

How it works

Minnesota Housing offers first-time homebuyers the option to explore loan and financing opportunities under the Start Up loan program. Homebuyers can first attend a homebuyer education course where applicants will have access to a homeownership adviser. These courses are available both online and in person.

Next, first-time buyers should contact participating lenders and see whether they prequalify for home loans. From there, buyers can seek advice on how to obtain financing through these and other programs. Learn more about the homebuying process here.

Minnesota Homeownership Center

The Minnesota Homeownership Center offers education programs, counseling and advice for first-time buyers. This program, in conjunction with the Homeownership Opportunity Alliance, is open to anyone and aims to close the homeownership gap in Minnesota, particularly among buyers of color.

Features

  • Access to homeownership advisers
  • Determine eligibility for down payment loans and assistance
  • Guidance through loan programs such as Start Up
  • Home Stretch homebuyer workshops that provide instruction throughout the homebuying process
  • In-person courses across the state of Minnesota

Eligibility

  • No eligibility requirements for education courses and advice

How it works

Contact the Minnesota Homeownership Center to explore education and homebuying options. First-time homebuyers can seek out one-on-one help from an adviser, attend a workshop in person, or take an online course on homebuying. Explore these options here.

National first-time homebuyer programs

In addition to first-time homebuyer programs specific to Minnesota, there are programs available nationwide that can make homeownership more attainable. These include FHA loans, VA loans, Freddie Mac and Fannie Mae loans and others. Check out our guide to first-time homebuyer programs to find out more.

 

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