Minnesota First-Time Homebuyer Resources: A 2023 Guide

Minnesota Housing's Start Up Program

The state's flagship first-time buyer program is Start Up, administered by Minnesota Housing, the state housing finance agency. Start Up provides 30-year fixed-rate loans with interest rates that are typically competitive with or lower than the broader market, allows as little as 3 percent down, and can be used with conventional, FHA, VA, or USDA Rural Development loans. A first-time homebuyer for Start Up purposes is generally defined as someone who has not had an ownership interest in a principal residence in the past three years, which means many buyers who owned a home years ago can still qualify.

Income limits vary by county and household size, and were set at $134,800 for most of the state in 2023. Buyers purchasing in targeted areas generally face higher income limits. Minnesota Housing requires at least one first-time buyer on the loan to complete an approved homebuyer education course before closing.

Downpayment and Closing Cost Assistance

Minnesota Housing pairs Start Up with several downpayment and closing cost loan options. The Monthly Payment Loan provides up to $18,000 as a second mortgage that the borrower repays in installments over 10 years, alongside the main mortgage. The Deferred Payment Loan offers up to $14,000 with no monthly payments and repayment deferred until the home is sold, refinanced, or the first mortgage is paid off. The Deferred Payment Plus Loan increases the ceiling to $18,000 for borrowers meeting additional criteria, such as lower incomes or single-parent households. These programs can be layered with Start Up to significantly reduce the out-of-pocket costs of buying a first home.

The First-Generation Homebuyers Community Down Payment Assistance Fund

In May 2023, the Minnesota Legislature created the First-Generation Homebuyers Community Down Payment Assistance Fund, targeting buyers whose parents did not own a home. The program offers forgivable assistance of up to 10 percent of the home's purchase price, capped at $32,000. Because parental homeownership is one of the strongest predictors of a child's future homeownership, the program is designed to address a persistent intergenerational gap, particularly in communities of color.

Step Up for Repeat Buyers

For Minnesotans who already own a home but want to upgrade, Minnesota Housing offers Step Up, which provides similar interest-rate advantages and down payment assistance to repeat buyers who meet income and home price limits. Step Up is often the right fit for households moving up from a starter home or relocating within the state.

Local Programs for Minneapolis, St. Paul, and More

Cities and counties layer their own programs on top of the state's. The City of Minneapolis runs Homeownership Opportunity Minneapolis (HOM), which offers up to $10,000 in zero-interest, 30-year forgivable loan assistance for buyers between 61 and 80 percent of area median income, and up to $20,000 for buyers at or below 60 percent. St. Paul, Ramsey County, Anoka County, and Duluth operate similar programs. Many of these local programs require participation in an approved first-time homebuyer education course and a minimum homebuyer contribution from savings.

Getting Started

The best first step for Minnesota buyers is to connect with a HUD-approved housing counseling agency or a Minnesota Housing participating lender. Counselors can help review credit, build a budget, identify the combination of programs that best fit the household's situation, and provide certified homebuyer education. Because some of these programs have limited funding rounds, starting early and getting preapproved can make the difference between securing assistance and missing out.