For first time home buyers, owning a property in Minnesota is a great idea, financing your property is can be a great challenge. This is because sometimes you may find yourself in a situation where you are tired of renting a house and want to settle into your own home but lack the funds to finance your new home. Worry no more as there are numerous Minnesota down payment assistance programs that can help you buy a home.
If you’re looking for a mortgage such as no down payment mortgage programs, FHA home loans or other low down mortgage programs, there are plenty of those. Bad credit holding you back? There are programs in Minnesota for those too. HUD has several programs for Minnesota residents as do housing agencies in Minnesota which have down payment programs, first time home buyer education and housing assistance.
Below is a list of Minnesota Down Payment Assistance Programs:
No Down Payment Mortgages – mortgages that require no down payment
USDA Rural Loan – the purpose of the Single Family Housing Direct Home Loan is to assist low- and very-low-income applicants obtain decent, safe and sanitary housing in eligible rural areas by providing payment assistance to increase an applicant’s repayment ability. There is no down payment. Payment assistance is a type of subsidy that reduces the mortgage payment for a short time. The amount of assistance is determined by the adjusted family income.
VA Home Loan – VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. There is no down payment as long as the sales price doesn’t exceed the appraised value.
Low Down Payment Mortgages – mortgages that require up to 3.5% down payment
FHA Mortgage Loan – the purpose of the FHA Home Mortgage Loan is to provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD. A down payment of just 3.5 percent is required and may consist entirely from “gift funds.” The credit score requirement is 580.
Home Possible® Advantage Mortgage – the purpose of the Home Possible® Advantage mortgage by Freddie Mac is to offer low down payments for low- to moderate-income homebuyers or buyers in high-cost or underserved communities. Down Payment can come from a variety of sources, including friends and family, employer-assistance programs and secondary financing.
The HomeReady™ Mortgage – the purpose of the HomeReady™ mortgage by Fannie Mae is to provide flexibility for applicants buy home with down payments as low as 3%, below market mortgage rates, co-borrower flexibility, additional income sources and reduced mortgage insurance costs.
Minnesota Down Payment Assistance Programs
Deferred Payment Loan Start Up Program are eligible for two loan options under the Deferred Minnesota down payment assistance plan: the Deferred Payment Loan (amounts ranging from $5,000 to $7,500) and the Deferred Payment Loan Plus (amounts up to $10,000 for Minnesota borrowers who meeting targeting criteria). Loan terms are equal to the first mortgage and come with 0 percent interest. Loans are to be repaid when the property is sold or refinanced, or when it no longer serves as the Minnesota borrower’s primary residence. Qualifying home buyers must have a minimum credit score of 640.
Monthly Payment Loan Program The Start Up and MCC programs are eligible for this Minnesota down payment assistance, which is the greater of either $5,000 or 5 percent of the purchase price or loan amount. Loans have 10 year terms with monthly payments. The interest rate is equal to the rate on the first mortgage. To qualify, Minnesota borrowers must have a minimum credit score of 640, and must meet purchase price and income limits associated with the Start Up Program.
Start Up Program First time home buyers can get a home loan at an affordable rate through this program. To be eligible, buyers must have a credit score of at least 640 and meet income and purchase price limits. Eligible Minnesota borrowers can also qualify for Minnesota down payment assistance and a mortgage credit certificate.
Step Up Program Repeat home buyers can qualify for a purchase loan similar to the Start Up Program. Repeat buyers, however, are only eligible for one of the two Minnesota down payment programs offered by the state.
The US Department of Housing and Urban Development (HUD) offers the following programs:
The Good Neighbor Next Door Program was created by U.S. Department of Housing and Urban Development (HUD) to help law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians buy homes. The biggest benefit of the Good Neighbor Next Door Program is the 50% discount of the home’s list price. The only catch is that the home owner must commit to live in the property for 36 months as their sole residence.
To learn more about the Good Neighbor Next Door Program, click here.
The Section 184 Indian Home Loan Guarantee Program is a mortgage for American Indian and Alaska Native families, Alaska villages, tribes, or tribally designated housing entities. In 1992 Congress created this program to help Native American Communities with homeownership.
Section 184 loans helps borrowers buy homes with a low down payment and flexible underwriting. Moreover, the loan does not need to be used only on properties on native lands. Purchase of an existing home for single-family residences. Also allowed are new construction, rehabilitation, and refinance.
To learn more about Section 184, click here.
Minnesota Housing Agencies
Minnesota housing agencies are your best resource for down payment assistance programs. Through funding from HUD, the purpose of these agencies is to ensure that affordable housing is available for everyone.
- Austin Housing & Redevelopment Authority
- Morris Housing & Redevelopment Authority
- Dakota County Community Development Agency
- Housing and Redevelopment Authority of Duluth
- Fergus Falls Housing & Redevelopment Authority
- Minnesota Housing Authority
- Minneapolis Public Housing Authority
- Northwest Minnesota Multi-County Housing & Redevelopment Authority
- Southeastern Minnesota Multi-County HRA
- St. Paul Public Housing Agency
- Minnesota Housing