Mortgage Blog

Despite the implosion of the real estate market, homeownership remains part of the American dream. That dream is a distant reality for most low and moderate-income families. With little or no savings, it is not easy for these families to have the required down payment to purchase a home.

Even though the housing bubble crippled the real estate industry, homebuyer down payment assistance programs still exist. Billions of dollars are available to support state and local housing programs throughout the country. This creates affordable housing opportunities for low income and moderate income families.

The Minnesota Housing Finance Agency (MHFA) offers 30-year fixed rate loans to qualified individuals who are first-time homebuyers. Anyone who has not owned a home in the previous three years may qualify for Minnesota down payment assistance. Additional qualifications include having acceptable credit and a valid income/purchase price ratio.

Types of Homebuyer Down Payment Assistance Programs in Minnesota

The programs for first-time homebuyers in Minnesota offer substantial benefits for purchasing a home. The interest rates with lending partners are below market. There are no additional fees typically associated with traditional home purchases. Additionally, individuals may qualify for interest free loans between $3,000 and $8,500 towards down payment and closing costs.

The Minnesota Mortgage Program (MMP) is available throughout the state. First-time homebuyers can receive up to $3,000 in funding assistance for a down payment and closing costs. A key difference with this program is there are higher income limit requirements for borrowers.

The Community Set-Aside (CASA) offers funding assistance ranging from $4,500 to $8,500 is select communities. With an affordable interest rate, homebuyers also receive a purchase and repair option to fix existing houses needing repairs.

HOME HELP supports the CASA initiative by providing interest-free loans to first-time homebuyers. Individuals need to have $1,000 and limited assets to receive the loan. After six years, 70 percent is forgiven. If a borrower sells the house or moves out, full repayment is required within six years.

The Homeownership Assistance Fund (HAF) is for either CASA or MMP participants. To qualify, individuals must have $1,000, earn 60 percent of the median income and agree to buy a house in a specific area.

Minnesota down payment assistance programs are designed to improve the quality of life for residents and strengthen communities. Along with the financial assistance, first-time homebuyers are required to attend a Qualified Homebuyer Education session. These sessions cover valuable information on the true costs and responsibilities for owning a home.