Minnesota offers Downpayment Assistance for first-time and Repeat Homebuyers

Can I Get Downpayment Help?

You want to buy a home, but you’re having trouble saving enough money for a down payment. I get it. 

Did you know that you could be eligible for up to $17,000 in downpayment assistance?

In this blog, I tell you about two Minnesota-based loan programs that could help you achieve your dream of home ownership sooner. Keep reading until the end where I talk about three additional options for downpayment assistance and zero downpayment loans.

There are a lot of downpayment assistance (DPA) programs out there. Each has specific requirements. In this article, I focus on programs offered through Minnesota Housing finance agency (now called Minnesota Housing). Minnesota Housing is a government agency focused on making home ownership more affordable. The agency offers downpayment assistance to first-time and repeat home buyers, as well as fix up and remodeling loans.

Start Up Loans for First-time Homebuyers

The agency’s Start Up loan program is for first-time homebuyers, defined as anyone who not has not individually or jointly owned a home within the previous three years. The program is available to all first-time homebuyers in Minnesota who meet the income and other eligibility requirements.

Buyers in the Start Up loan program can borrow up to $17,000 to use for down payment or closing costs or both. The loan is repaid monthly over 10 years.

Start Up Deferred Loans for Lower Income First-time Homebuyers

The agency has deferred payment loan programs low-income and very low-income homebuyers. First-time homebuyers in this program can get up to $15,000 to help with a downpayment or closing costs.

These interest-free deferred payment loans are repaid as a lump sum at the end of the mortgage term, or when you move, sell, or refinanced your home, or when you pay off your first mortgage.

Step Up Loans for Existing Homeowners and Higher Income First-time Homebuyers

If you’re not a first-time homebuyer or if your income exceeds the limits for the Start Up home loan program, you may still qualify for up to $17,0000 in downpayment assistance through the agency’s Step Up loan program.

To find out whether you qualify for a downpayment assistance loan, contact a participating Minnesota Housing lender. You can find a participating lender using the agencies Lender Search Tool

All borrowers in the Start Up and Step Up loan programs must meet income limits and minimum credit score and home purchase price requirements. You must live in the home, and, first-time homebuyers need to complete homebuyer education course.

Other DPA Programs

There are also three other loan government programs that offer below-market interest rates and/or loans with no downpayment.

These include the FHA, VA, and USDA loan programs for low-income borrowers, veterans, and rural homebuyers respectively. I’ve put links in the sidebar for more information on these programs.

When you’re shopping for a mortgage, make sure to ask your loan office to tell you about any downpayment assistance or zero-down financing options available to you. Your lender may also have its own DPA program.

For more information on any of these programs, visit  Minnesota Housing, the Federal Housing Administration, the Veterans Administration, or the US Department of Agriculture Rural Assistance Program.

Interested in learning more about the homebuying process, check out my video “Do You Need 20 Percent Down to Buy a House?

Do You Need 20% Down to Buy a House in Minneapolis?

J Trout Lowen is a Minneapolis REALTOR® and an expert at helping buyers and sellers navigate the Twin Cities housing market.

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