Purchasing a home in Minnesota isn’t too far out of reach, especially if you’re able to take advantage of first-time homebuyer programs in the state. There are both mortgages and down payment assistance available to first-time buyers through the Minnesota Housing Finance Agency (Minnesota Housing). Depending on where you live, there are also city- and county-specific programs you might qualify for.

Minnesota first-time homebuyer loan programs

Minnesota Housing Start Up

Minnesota Housing’s Start Up first-time homebuyer program offers loans with low fixed rates — including conventional, FHA, VA and USDA loans — through approved mortgage lenders. Loans can be paired with down payment or closing cost assistance through the agency. To qualify, borrowers must be a first-time homebuyer, defined as someone who hasn’t owned a home in the past three years.

The Start Up conventional loan requires just 3 percent down; however, you’ll also be required to pay private mortgage insurance (PMI). Government-backed loans have their own down payment and mortgage insurance requirements.

Borrower requirements:

  • 3 percent down payment for conventional loan (down payment assistance available)
  • Must meet minimum credit score
  • Must complete homebuyer education course (if all borrowers are first-time buyers)
  • Must meet Minnesota Housing income limits

Property requirements:

  • Must meet purchase price limits

Minnesota down payment assistance

Minnesota Housing Monthly Payment Loan

Minnesota Housing’s Monthly Payment Loan program offers first-time homebuyers in the state the opportunity to borrow up to $17,000 for a down payment or closing costs. Borrowers must qualify for the Start Up or another Minnesota Housing loan to take advantage of this assistance. The Monthly Payment Loan term is 10 years, to be paid back in monthly installments at the same interest rate as the one on your first mortgage.

Borrowers must meet the same requirements as the Start Up program, and generally must contribute at least $1,000 of their own funds to the purchase.

Minnesota Housing Deferred Payment Loans

First-time homebuyers in Minnesota can also obtain down payment assistance through a Deferred Payment or Deferred Payment Plus loan. The Deferred Payment option offers up to $11,000 for a down payment or closing costs, whereas the Deferred Payment Plus option can go up to $15,000.

In addition to meeting the standard requirements for a Minnesota Housing first mortgage, Deferred Payment Plus borrowers must meet certain “targeting criteria,” according to the agency’s website.

Other first-time homebuyer loan programs

First-time homebuyers can take advantage of mortgages that allow for a low down payment, a lower credit score, or both, such as FHA loans or the Good Neighbor Next Door program, which offers half-off homes to those in qualifying professions, such as law enforcement. There are a whole host of first-time homebuyer programs available — check out Bankrate’s first-time homebuyer loan guide for more.

Get started

First-time homebuyers in Minnesota can explore their options through the Minnesota Housing website. Before speaking to a mortgage lender, check to see if you meet eligibility requirements. A lender can help you figure out how much assistance you might qualify for.

Whether or not you get a mortgage through one of these programs, it’s still important to shop around with multiple lenders in your area to find the most competitive rates. Doing so can save you tens of thousands in interest through the life of your loan.

First-time homebuyer programs in nearby states