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Minnesota First-Time Home Buyer Programs of 2018

June 20, 2018
Finding the Right Mortgage, Mortgages
minnesota-first-time-home-buyer-programs
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It’s getting harder to be a first-time home buyer. With mortgage rates and home prices heading higher, the goal of homeownership may feel like it’s slipping out of reach.

But as a first-time home buyer in Minnesota, you can take advantage of loan programs specifically designed to make getting a mortgage more affordable.

Learn more about first-time home buyer programs in Minnesota and across the country, and discover what it takes to qualify.

National first-time home buyer programs

Loans that make it easier for first-timers to buy a home exist in all 50 states. No matter where you live, ask potential lenders about mortgage options to overcome limited income, low credit scores or lack of a down payment.

Conventional mortgage

National program

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Best for

Low down payment

Limited mortgage insurance premiums

What you need to know

First-time home buyers can get a conventional home loan with as little as 3% down if the mortgage meets requirements set by Fannie Mae and Freddie Mac. And if you put at least 20% down, you won’t have to pay mortgage insurance. Most lenders require a minimum credit score of 620 to qualify for a

 

FHA loans

National program

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Best for

Low credit score

Low down payment

What you need to know

Mortgages insured by the Federal Housing Administration, or FHA, offer relaxed qualification requirements, especially when it comes to down payment and credit score. You can qualify for an FHA home loan with a credit score as low as 500, but you’ll need a 10% down payment. If your score is 580 or

 

VA loans

National program

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Best for

Military

Low down payment

What you need to know

Guaranteed by the U.S. Department of Veterans Affairs, these mortgages are available to military members, veterans and surviving spouses. If you qualify, you’ll see benefits such as no minimum credit score and no down payment or mortgage insurance, but you'll likely have to pay a VA funding fee.

 

USDA loans

National program

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Best for

Low down payment

Rural

What you need to know

The USDA home loan program encourages rural and suburban homeownership by offering zero-down-payment mortgages to lower-income buyers. Borrowers with nontraditional credit data, like rent or utility payments, can still apply, but those with a score of 640 or above will experience faster loan

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Minnesota first-time home buyer loan programs

As a first-time home buyer, you may benefit from loan programs offered by the Minnesota Housing Finance Agency, or Minnesota Housing. If you’re eligible for these programs, you’ll also have access to down payment and closing cost assistance. Minnesota Housing defines a first-time home buyer as anyone who hasn’t owned a home in the past three years; however, certain programs are available to repeat buyers as well.

Minnesota Housing highlights and eligibility requirements

Highlights

  • Minimum credit score as low as 640
  • Low down payment and fees
  • Up to $15,000 in down payment and closing cost assistance
  • Options for low-cost or no mortgage insurance

Eligibility

  • Income limits that vary by household size and location
  • Maximum purchase price of $306,000 for metro areas
  • Home buyer education course may be required
  • Must contribute $1,000 to get down payment assistance

Start Up mortgage

State program

Learn more

at Minnesota Housing

Best for

Low credit

Low mortgage insurance

What you need to know

Exclusively for first-time home buyers, this program gives you access to conventional loans with fixed interest rates and low origination fees. The Start Up mortgage requires a down payment as low as 3% and, if necessary, provides options for low-cost or no mortgage insurance. If you qualify for

 

Step Up mortgage

State program

Learn more

at Minnesota Housing

Best for

Low down payment

Low mortgage insurance

What you need to know

Available to repeat buyers — those who’ve owned a home within the past three years — this loan program offers loans with fixed interest rates, affordable mortgage insurance options and low origination fees. Down payment requirements for the Step Up mortgage are as low as 3%. Those who qualify for

Monthly Payment loan

State program

Learn more

at Minnesota Housing

Best for

Down payment assistance

Closing cost assistance

What you need to know

Available to both first-time and repeat home buyers, this assistance program makes up to $15,000 available for a down payment and closing costs. The Monthly Payment option uses the same interest rate as your mortgage and is paid back in monthly installments for 10 years. You must be using either a

 

Deferred Payment loan

State program

Learn more

at Minnesota Housing

Best for

Down payment assistance

Closing cost assistance

What you need to know

This down payment and closing cost assistance program is available only to first-time home buyers using the Start Up mortgage. Most borrowers will be eligible for up to $8,000 through this program. You may be able to borrow up to $10,000 if you meet at least two of the following criteria: ● You’re

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Your next step

If you think one of these Minnesota first-time home buyer programs meets your needs, contact participating lenders. They’ll help you figure out if you qualify and calculate how much assistance you can get.

You’ll also want to make plans to attend an approved home buyer education course, which is required for first-time home buyers before closing.

» MORE: See the best Minnesota mortgage lenders

 

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