Financing Your Home Purchase: Down Payment and Closing Cost Loans
Minnesota Housing strives to make homeownership more accessible by addressing the significant upfront costs associated with buying a home. To assist families in realizing their homeownership dreams, Minnesota Housing offers down payment and closing cost assistance to individuals who are financing their homes with a Minnesota Housing first mortgage.
Through a Minnesota Housing first mortgage, eligible homebuyers gain access to optional down payment and closing cost loans, which can provide substantial financial support. These assistance loans are available in two different forms:
- Monthly Payment Loan
- Compatible with Minnesota Housing’s Start Up or Step Up programs.
- Loan amounts can go up to $17,000.
- Interest rates align with those of your first mortgage.
- Monthly payments are spread over a 10-year loan term.
- Deferred Payment Loan
- Specifically designed for use with the Start-Up program.
- Intended for first-time homebuyers.
- Two options are available:
- Deferred Payment Loan: Loans can reach up to $10,000.
- Deferred Payment Loan Plus: This option extends up to $13,000 for borrowers meeting specific targeting criteria.
It’s important to note that program details and offerings may change over time, so it’s advisable to visit the program’s official website for the most up-to-date information.
Understanding Seller-Funded Down Payment Programs
It’s worth mentioning that seller-funded down payment programs were discontinued following the Housing and Economic Recovery Act of 2008. However, state and local government agencies still have the authority to assist borrowers in financing their homes through second mortgages and grants. These agencies may have varying eligibility criteria, including considerations related to property location, purchase price, and income limits.
Minnesota Housing’s commitment to providing down payment and closing cost assistance underscores its dedication to helping prospective homeowners overcome financial barriers and achieve their homeownership aspirations.