Last Updated on August 23, 2023 by Hannah Stevens
Mortgage Assistance for Homebuyers in Minnesota
Down Payment and Closing Cost Loans
Minnesota Housing recognizes that the high upfront costs of buying a home can prove to be difficult for many families. That is why they provide closing cost assistance and down payment assistance to people who finance their home with a Minnesota Housing mortgage.
Minnesota Housing first mortgages are eligible for homebuyers who qualify. They can also get a closing cost and optional down payment loan of up to $17,000. Two forms of this assistance loan are available:
Monthly Payment Loan
The Monthly Payment Loan is available in conjunction with the Minnesota Housing Start Up and Step Up programs. Then, you can loan for up to $17,000 in Loans. Additionally, the interest rate on your second mortgage is the same as it was for the first one. However, you’ll have to commit to monthly payments for a 10-year term.
Deferred Payment Loan
Although the Start Up loan can be combined with the Deferred Payment Loan, it is only for first-time homebuyers. There are two options available: A deferred payment loan, up to $10,000 is the first option. Secondly, a Deferred Payment Loan Plus with loans up to $13,000 for borrowers who meet the criteria.
First Time Homebuyer Program
Dakota County Community Development Agency (CDA) is the initiator of the First Time Homebuyer Program. Since 1983, the First Time Homebuyer Program of the CDA has provided homebuyers with fixed-interest mortgages, down payment assistance and closing cost assistance to help them achieve their homeownership dreams.
First-time homebuyers can receive up to $10,000 in closing costs assistance and down payment assistance through a second mortgage. However, this amount is dependent on the household’s size and income. But, the good thing is that this loan is zero-interest and requires no monthly payments. Additionally, only the principal mortgage must be paid off. This can happen through amortization, the sale of the house, or refinance. The second mortgage can be prepaid in whole or in part at any moment.
All borrowers must contribute at least $1,000 toward the purchase of their home. Each applicant is eligible for assistance funds based on their household income and the purchase price of the house. However, the income thresholds that determine eligibility for assistance are three:
- An applicant whose household income is at or below 50% of the AMI (area median income) may be eligible for 10 percent of purchase price up to $10,000.
- A maximum of $7,500 can be granted to households whose AMI is between 50-80%.
- All persons over 80 percent of AMI and within the program income limits can receive 3.5 percent off the purchase price up to $7,500.
At or below 50% AMI
- 1 person household: $31,650
- 2 person household: $36,200
- 3 person household: $40,700
- 4 person household: $45,200
- 5 person household: $48,850
- 6 person household: $52,450
- 7 person household: $56,050
- 8 person household: $59,700
Between 50% AMI and 80% AMI
- 1 person household: $47,600
- 2 person household: $54,400
- 3 person household: $61,200
- 4 person household: $68,000
- 5 person household: $73,450
- 6 person household: $78,900
- 7 person household: $84,350
- 8 person household: $89,800
Above 80% AMI
- 1 person household: $90,400
- 2 person household: $90,400
- 3 person household: $103,900
- 4 person household: $103,900
- 5 person household: $103,900
- 6 person household: $103,900
- 7 person household: $103,900
- 8 person household: $103,900
This programme is quite different to the First-Time Homebuyer Assistance Programs in Michigan, Minnesota has chosen to go at a different path.
They help people in the Minneapolis and Saint Paul areas achieve their homeownership dreams.
NeighborhoodLIFT offers eligible applicants matching funds of up to $7500 for down payment assistance on qualifying properties. The program also includes education for homebuyers to help them find and finance a home, and take on the financial responsibilities that go with it.
To be eligible for NeighborhoodLIFT, applicants must follow certain guidelines. There is no requirement for first-time homebuyers, but all household incomes must be at least 80 percent of the Minneapolis/Saint Paul area median income (AMI).
NeighborhoodLIFT homes must be the applicant’s primary residence. They must also be within the Minneapolis or Saint Paul city limits. You can qualify for the NeighborhoodLIFT program if you own detached homes, townhouses or condominiums.
Applicants must have a household income of at least 80 percent of their AMI.
- 1 person household: $72,300
- 2 person household: $72,300
- 3 person household: $72,300
- 4 person household: $72,300
- 5 person household: $78,100
- 6 person household: $83,900
- 7 person household: $89,700
- 8 person household: $95,450
Project Reinvest provides down payment assistance funds for eligible applicants to offset the high upfront costs of the mortgage process.
Eligible applicants may receive assistance funds up to $10,500 to help pay the down payment for a Minneapolis or Saint Paul home. Additionally, the assistance is in the form a zero-interest loan with no monthly payments. However, only the borrower can repay the loan if they sell their home.
All applicants must meet certain criteria to be eligible for Project Reinvest. Homebuyers must have an annual household net income of at least 100 percent of the area median (limits below). However, the home must be within the Minneapolis and Saint Paul city limits. It must also be financed using a Project Reinvest-certified loan officer as a primary mortgage. But a homebuyer education must be completed by all applicants. Landlord Education is also required for those who are buying a four-plex, triplex or duplex.
Project Reinvest applicants must have a household income of at least 100 percent of their AMI.
- 1 person household: $63,300
- 2 person household: $72,400
- 3 person household: $81,400
- 4 person household: $90,400
- 5 person household: $97,700
- 6 person household: $104,900
- 7 person household: $112,100
- 8 person household: $119,400
Are you interested in the First-Time Homebuyer Assistance Programs in Mississippi?