Mortgage

Minnesota First Time Dwelling Patrons: Packages and Grants for 2021

What You Should Know About Buying a Home in Minnesota

Buying a home can be stressful. But for first-time home buyers in Minnesota, there are plenty of places to go to get help and even financial aid.

The state of North Star can offer homebuyer training, counseling, and specialty mortgage programs.

Best of all, Minnesota can provide down payment assistance to eligible borrowers. And that can help cover your down payment and closing costs so you can move into a home sooner than you thought possible.

Check your eligibility to buy a home in MN. Start here (9.09.2021)

In this article (continue to …)

Minnesota Home Buyer Summary

According to the Minnesota Realtors organization, property prices in Minnesota rose about 13% between mid-2020 and mid-2021.

Such house price increases can be frustrating for first-time buyers whose savings goals need to increase by a similar amount for a down payment.

But many of these first-time buyers will receive cash grants or loans from their state, city, or county that could help them bridge this growing gap. So read on for details on these deposit support programs.

Minnesota Home Buyer Summary

Average house sale price in MN
$ 359,700

Minimum deposit in MN (3%)
$ 10,791

20% deposit in MN
$ 71,940

Average creditworthiness in MN1
739

Maximum grant for MN home buyers2
$ 17,000 Installment Loan (Minnesota Housing) or $ 40,000 Deferred Loan (Saint Paul)

Down payment amounts are based on the last available average home sale price in the state. A “minimum” down payment is assumed to be 3% less than a conventional mortgage with a minimum credit rating of 620.

If you are eligible for a VA loan (supported by the Department of Veterans Affairs) or a USDA loan (supported by the U.S. Department of Agriculture), you may not require a down payment at all.

Check your eligibility to buy a home in MN. Start here (9.09.2021)

Initial Loans for Home Buyers in Minnesota

If you are a first-time home buyer in Minnesota with a 20% down payment, you can get a conventional loan with a low interest rate. And you never have to pay for personal mortgage insurance (PMI).

Of course, only a few first-time buyers have saved enough for 20 percent. But the good news is you don't need that much. By far not.

Borrowers can often move into a new home as little as 3% or even 0% with one of these low down payment mortgage programs:

Conventional 97 – From Freddie Mac or Fannie Mae. 3% down payment and at least 620 credits. You can usually stop paying mortgage insurance after a few yearsFHA loans – Supported by the Federal Housing Administration. Down 3.5% and a credit score of at least 580. But you're usually on the hook for mortgage insurance until you refinance, move to another type of mortgage, or pay off your loanVA loan – Only for veterans and service members, reservists and the National Guard. A zero deposit is required. The minimum credit score varies by lender, but is often 620. No ongoing mortgage insurance upon completion. These are arguably the best mortgages available. So apply when you are eligibleUSDA loan – For low to middle income people who shop in designated rural areas. Zero deposit required. The creditworthiness requirements vary depending on the lender, but often 640. Low mortgage insurance ratesMinnesota apartments – May include competitive interest rates and can be used with down payment assistance. More information below

Depending on the mortgage loan you choose, you may be able to get into your new home with minimal cash out of your pocket.

With these programs, you can even use free cash or Down Payment Assistance (DPA) to help cover down payment and closing costs.

If you are unsure which program to choose for your first mortgage loan, your lender can help you find the right deal based on your finances and your home purchase goals.

Find the best first-time buyer loan for you (September 9, 2021)

MN programs for first time home buyers

Aside from the standard loan types listed above, certain Minnesota buyers may qualify for a state home loan.

The start-up program offers home buyers initial loans with 3% discounts, affordable interest rates, and income caps of up to $ 120,600 (in 2021). Down payment and final grants are availableThe Step Up Program offers loans to recurring homebuyers and existing homeowners. The discounts are similar to those of the start-up program and refinancing / purchase price limits apply

The Minnesota Housing Finance Agency (Minnesota Housing) also says that it "offers several conventional HFA mortgage products that must be combined with one of our mortgage loan programs, offering the reduction or elimination of Mortgage Insurance Costs (MI) with options available of up to 97% . LTV. "

That's a lot of jargon. Broken down it simply means:

You could get one HFA loan By the stateYou only need a 3% down paymentYour mortgage insurance costs would be reduced, which means that you will have monthly mortgage payments cheaper than many other types of loans

As a first-time home buyer in Minnesota, you must expect a credit rating of 620 or better to qualify for this program. And you must take a homebuyer training course to be eligible.

It is helpful that Minnesota Housing has a list of approved courses on its website, including an online course. Just click the + icon next to Homebuyer Training and Resources.

MN grants for first time home buyers

There are several homebuyer grants and loans available in each state. In Minnesota, you should find helpful programs at the city, county, and state levels. You can ask your real estate agent or loan officer to point you in the right direction.

State of Minnesota Housing offers down payment and graduation loans that can help you with your upfront home purchase costs.

It has three main options for deposit support, all of which can also be used for closing costs:

Loan with monthly payment – Take out up to $ 17,000 as a second mortgage and pay it off in parallel with your main mortgage over 10 yearsDeferred loans – Borrow up to $ 11,000 at 0% APR. No monthly payments, but you do have to pay back the loan in full whenever you move, sell, refinance, or pay off your home mortgageExtended Payment Loans Plus – Borrow up to $ 15,000 at 0% APR. No monthly payments, but you do have to pay back the loan in full whenever you move, sell, refinance, or pay off your home mortgage. This has stricter eligibility criteria than the normal deferred loan

You must use a Minnesota Housing approved lender to be eligible for any of these options. And the one you choose will tell you which one to get. Always get quotes from multiple lenders before signing up.

Check your eligibility to buy a home in MN. Start here (9.09.2021)

Buy a home in one of Minnesota's major cities

Home purchase prices in Minnesota's three largest cities have not risen as fast as the rest of the state. In fact, they recently fell in Minneapolis.

Every major city also has at least one deposit support program. And they likely all have similar admission requirements, including having completed a homebuyer course; that you are using an approved lender; and that you meet local income limits. (The lower your income, the more you are likely to get.) Check with the provider for other terms.

First time home buyer in Minneapolis

The average list price in Minneapolis in July 2021 was $ 325,000, according to Realtor.com. This has even fallen by -1.5% year-on-year.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 9,750 for 3% deposit$ 65,000 for 20% deposit

The City of Minneapolis runs a number of deposit support programs. This can be confusing. So please download the PDF of the program, which explains the differences between the programs and lists the eligibility criteria and conditions for each program.

The two most attractive seem to be:

Minneapolis Homes: Home Construction Incentive – Offers up to $ 20,000 for those looking to buy a vacant lot and build a home with 1-4 units. This appears to be an interest-free loan with no monthly payments, given over five years at an interest rate of 1/60 of the monthly loan amount. So by the end of the fifth year, you shouldn't have anythingNeighborhood Stabilization Program – You can get $ 5,000 to $ 17,500 when you buy an existing home that has been refurbished or built under the neighborhood stabilization program. The scheme is similar to the other program: an interest-free loan with no monthly payments that is granted over five years at an interest rate of 1/60 of the monthly borrowed amount. So by the end of the fifth year, you shouldn't have anything

If none of these arguments are true, there are a number of other programs you can choose from. Mostly, however, these are interest-free loans that have to be repaid when moving, selling, refinancing or terminating the main mortgage.

Most are capped at $ 5,000 to $ 10,000 depending on income. But much more is available when you buy a home built through Minneapolis Homes Development Assistance.

Saint Paul first time home buyer

Says Redfin, "In July 2021, house prices in St. Paul were up 8.0% year-over-year and sold at an average price of $ 270,000."

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 8,100 for 3% deposit$ 54,000 for 20% deposit

The city of St. Paul usually offers assistance to first-time home buyers. However, when we went to the website it said, “All funds for the deposit assistance have been reserved. No new requests are currently being accepted. "

Of course, that may have changed by the time you read this article. So click on this link to see if there are currently any funds available.

When operational, the program will offer eligible individuals up to $ 40,000, with amounts varying as needed. And that in the form of an interest-free loan that is only due when you move, sell (unless there are no “net proceeds”), refinance or pay off your main mortgage. Download the full program guidelines (PDF) for all the details.

Rochester first time home buyer

The average list price in Rochester in July 2021 was $ 299,900, according to Realtor.com. That was 11.1% more than in the previous year.

If you want to buy a home at this average price, your down payment options can be between the following options:

$ 9,000 for 3% deposit$ 59,980 for 20% deposit

First Homes is a not-for-profit subsidiary of the Rochester Area Foundation. And it can provide down payment assistance, either through the Minnesota Housing “Start Up” program (above) or through its own First Homes Gap Loan.

For the latter, it is offering up to $ 10,000 to eligible buyers, but that depends on funding being available. This appears to be in the form of an interest-free deferred loan. And you don't have to pay that back until you move out, sell, refinance, or pay off your main mortgage. Check with one of First Home's participating lenders to verify that you are eligible and funds are available.

Where can I find help buying a house in Minnesota

All of the organizations listed above should provide free advice to any first-time Minnesota home purchaser or one purchasing in their area.

In addition to our selections, the US Department of Housing and Urban Development (HUD) offers some lists for statewide, regional, and local resources.

State-wide resources for Minnesota homebuyers

MN Homebuyer Resources by County

City-level homebuyer resources in MN

What are Minnesota Mortgage Rates Today?

Here you can see the latest live mortgage rates in Minnesota.

When you're ready to start buying your home, make sure you get personalized interest rate quotes from at least three mortgage lenders.

Don't just look at the advertised prices online; Indeed, apply for pre-approval and compare the interest rates and fees that are offered to you. This is the only way you can be sure that you are getting the best possible offer for your new home loan.

Confirm your new plan (September 9, 2021)

1 Source: Experian.com 2021 study on 2020 data

2Based on a review of available state DPA grants at the time of this writing

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