If you plan to buy your first home in Minnesota, you might be 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, you might also qualify for city- and county-specific programs.

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. The loan can be paired with down payment or closing cost assistance through the agency.

To qualify, you must be a first-time homebuyer, defined as someone who hasn’t owned a home in the past three years. In addition, your income can’t exceed Minnesota Housing income limits, and you can’t buy a home costing more than the agency’s purchase price limit. You’ll also need to satisfactorily complete a homebuyer education class.

The Start Up conventional loan requires just 3 percent down; however, you’ll also be required to pay private mortgage insurance (PMI). FHA, VA and USDA loans have their own set of requirements.

Minnesota down payment assistance

Minnesota Housing Monthly Payment Loan

Minnesota Housing’s Monthly Payment Loan program offers first-time homebuyers in the state up to $18,000 for a down payment or closing costs. You must qualify for the Start Up or another Minnesota Housing loan and contribute at least $1,000 of your own funds to the purchase, 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.

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 $16,500 for a down payment or closing costs, whereas the Deferred Payment Plus option can go up to $18,000. You’ll repay the funds in one lump-sum when you pay off the first mortgage, or sell the home or move.

Other first-time homebuyer loan programs

While you’re considering first-time buyer programs in Minnesota, be sure to explore nationally available loan programs like:

  • FHA loans – If you have a lower credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
  • VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which doesn’t require a down payment.
  • USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
  • Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.

Get started

As you prepare to become a first-time homebuyer, here are some next steps:

  • Do your homework. First-time homebuyers in Minnesota can explore their options through the Minnesota Housing website. Before contacting 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.
  • Work on your credit score. It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
  • Compare lenders. 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.