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Minnesota First Time Home Buyer Loans

Apply to Get a Mortgage Loan to Buy Your First Home in Minnesota
Loan Program Options - Down Payment Assistance - Fast Loan Approvals

Minnesota First Time Home Buyer – 2019 Loan Programs

Are you looking to purchase your first home? Our first time home buyer programs in Minnesota might be the perfect solution to help you obtain the financing you need to purchase the home you desire. We provide excellent home financing options, and encourage you to compare our offered loan terms to other mortgage lenders.

Minnesota First Time Home Buyer Loans

There are 5 types of first time home buyer loans.  You may select different loan terms, such as a fixed rate or adjustable rate mortgage, and the number of years to repay the loan (such as a 30 year fixed rate mortgage).

Types of Mortgages:

  • Conventional Loans – Conventional loans offer the best loan terms to borrowers with good or excellent credit, as well as those who can afford to place a larger down payment.  If you are able to put 20% or more down, you will be able to avoid paying private mortgage insurance (PMI).  However, conventional loans also offer low down payment options, such as programs that only require 3% down.
  • FHA Loans – FHA loans are a good option for borrowers who may not be able to qualify for a conventional loan.  The qualification requirements for FHA loans are much more lenient than conventional loans.  This includes options for home buyers with credit scores as low as 500 (in order to qualify for a 3.5% down payment, you must have a credit score of at least 580).
  • USDA Loans – USDA loans provide home buyers the opportunity to purchase a home without any down payment.  These loans are intended for borrowers with low-to-moderate income.  In addition to not requiring any money down, you can also finance the closing costs into the loan.  This means you can essentially buy a home with no money out of pocket!
  • VA Loans – Active duty military members and veterans can apply for a VA loan which allows you to buy your first home without any down payment.  These loans are not available to the general public, but exclusively to military/veterans.
  • Jumbo Loans – Any loan that does not meet the conforming or FHA loan limits is a jumbo loan.  The 2019 FHA loan limits for most counties in Minnesota is either $314,827 or $366,850.  You can view the FHA loan limits in Minnesota to see the limits for your county.  For conforming loans, which are used for conventional and VA loans, the maximum loan limits are $484,350 for the entire state.  If you want to buy a more expensive home, and have the income to qualify, we provide what are known as jumbo loans up to $2,000,000.

The above 5 types of loans are the main first time home buyer options that exist.  We can help you determine which loan is the right fit for you based on your particular needs and eligibility.

Minnesota Down Payment Assistance Programs

First time home buyers in Minnesota may be eligible to receive down payment assistance.  This includes programs that are offered statewide, as well as several that are offered exclusively within a city or county.  You may learn about these programs below.

Minnesota Housing Finance Agency – Statewide Programs

The Minnesota Housing Finance Agency (MHFA) offers two different options for down payment assistance with their Start Up Program.  These programs are available throughout the entire state.

  • Start Up – Monthly Payment Loan – The Minnesota Housing Finance Agency offers up to $15,000 in down payment assistance with their monthly payment loan.  The loan is provided at the same interest rate as your first mortgage. To qualify for this program, you must be a first time home buyer.  The maximum purchase price allowed is $200,000.
  • Start Up – Deferred Payment Loan – The Minnesota Housing Finance Agency offers up to $10,000 as a deferred payment loan.  This simply means that you do not have to make payments on it.  To qualify for this program, you must be a first time home buyer.  The maximum home price for the 11 county metro area is $307,300.  For all other counties, it is $258,600.

To learn more about the Start Up program options, as well as the income limits, please visit the Minnesota Housing Finance Agency website.

Dakota County First Time Homebuyer Program

First time home buyers in Dakota County, MN may be eligible for up to $8,500 in assistance.  This comes in the form of a zero percent interest loan.

Requirements

  • Be a first time home buyer.
  • You can buy a new or existing home.
  • The home must be used as your primary residence.
  • You must contribute $1,000 or more towards the purchase.

To learn more about this program, please visit the Dakota County Community Development Agency website.

Coon Rapids Down Payment Assistance

The Coon Rapids Mortgage Assistance Foundation (CRMAF) offers up to $5,000 in down payment assistance to first time home buyers in Coon Rapids.  The fund are provided as a deferred loan, and are not required to be paid back until the home is sold.

Requirements:

  • Prior to closing, you must attend a homebuyer education course.
  • The property must be owner occupied.
  • 1-4 unit properties are eligible.
  • Income is limited to 110% of the median area average.

To learn more about this program, please visit the City of Coon Rapids website.

Ramsey County FirstHOME Buyer Assistance

First time home buyers may be eligible to receive up to $10,000 in down payment assistance.  The funds provided may be used towards your down payment and closing costs.

Requirements

  • The maximum purchase price is $200,000.
  • Contribute at least $2,000 of your own money towards the purchase.
  • Complete a homebuyer education course.
  • Provide proof of that you have been consistently employed for at least 3 years.
  • Your household income must meet the income limits (outlined below).

Income Limits

  • 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

To learn more about this program, visit the official Ramsey County website.

Woodbury First-Time Home Ownership Program

Woodbury offers up to $25,000 in down payment assistance to first time home buyers.  The funds are provided as a low-interest deferred loan.

Requirements

  • Be a first time home buyer (unless buying a foreclosed home, in which case you do not have to be a first time home buyer).
  • The maximum purchase price allowed is $390,000.
  • You must complete a homebuyer education course.
  • The maximum DTI ratio allowed is 50%.
  • Your household income must not exceed $95,000.

To learn more about this program, visit the NeighborWorks Home Partners website.

Three Rivers Community Action – Emerging Markets Gap Program

First time home buyers in Southeast Minnesota may be eligible to receive up to $18,500 in down payment assistance.  The funding comes from the Greater Minnesota Housing Fund (GMHF), and the Minnesota Housing Finance Agency (MHFA).  The funds are offered as a deferred loan, which means you do not have to make payments, and the loan does not have to be paid back until you sell the property.

Requirements

  • New and existing homes are eligible.
  • The maximum purchase price allowed is $253,800.
  • You must contribute at least $500 from your own funds.  If you use an FHA loan, you are required to provide a 3.5% down payment from your own funds.
  • You must complete a homebuyer education course.
  • The property must be located in one of the following 20 counties: Blue Earth, Brown, Dodge, Faribault, Fillmore, Freeborn, Goodhue, Houston, Le Sueur, Martin, Mower, Nicollet, Olmsted, Rice, Sibley, Steele, Wabasha, Waseca, Watonwan, and Winona.
  • Your household income must be 80% or less than the area median average.  You may view these income limits below.

Income Limits for Southern Minnesota

  • 1 person household – $47,150
  • 2 person household – $53,900
  • 3 person household – $60,600
  • 4 person household – $67,350
  • 5 person household – $72,750
  • 6 person household – $78,150
  • 7 person household – $83,550
  • 8 person household – $88,900

Income Limits for Olmstead and Dodge County

  • 1 person household – $50,350
  • 2 person household – $57,550
  • 3 person household – $64,750
  • 4 person household – $71,900
  • 5 person household – $77,700
  • 6 person household – $83,450
  • 7 person household – $89,200
  • 8 person household – $94,950

To learn more about this program, visit the Three Rivers Community Action website.

Minnesota First Time Home Buyer Tax Credits

The Mortgage Credit Certification (MCC) tax credit provides you an opportunity to reduce your tax bill, as well as enhance your home loan application by reducing your debt-to-income ratios.  How this works, is you can deduct up to $2,000 off your federal tax bill each year.  The MCC allows up to 35% of your annual interest to be eliminated (with the cap being at $2,000).  Some great news, is this can be used in addition to standard mortgage interest deductions!

Frequently Asked Questions About Buying Your First Home

How much do I need for a down payment?
It depends on the type of loan you want.  USDA and VA loans often will not require any down payment.  FHA loans require a 3.5% down payment, which if you get down payment assistance, only .5% is required.  Conventional loans typically require either 3% or 5%.

How do I know if I am ready and prepared to own a home?
It is critical to consider the often unexpected expenses of buying a home. This includes repairs, maintenance, and of course furnishing the home, monthly utilities, and all other expenses that are associated with homeownership. A common mistake is to just look at the difference in rent to your total mortgage payment. Almost every year, you can expect to have to pay for various upkeep to keep the property functional. This can include anything from repairing a hot water heater that broke, to landscaping, and various maintenance.

Something else financial consultants advise is that you have at least 3 months of reserves. This means that you could afford to make your new mortgage payment for at least 3 months in the event that you lose a job or have some other unforeseen circumstance that the savings would be needed for. This is not a requirement for most home loans, but it is good advice to consider.

How much can I afford to borrow?
The amount that you can borrow depends on your particular loan type and income. There are maximum loan limits which are set at the county level. Conforming loan limits are the maximum lending amount allowed for conventional mortgages. FHA loans have their own loan limits. You can search the maximum loan amount for your county for each particular loan type by entering your zip code (or any zip code for the county you want to buy a home in). This will display the maximum amount available for all loan types. This is not necessarily how much you can borrow though, but the max amount in your location. Your personal limits will be based upon your income and how much debt you have. For instance, with most loans, you can not have a mortgage payment and debts exceed 43% of your income.

Can I buy a home without a real estate agent?
It depends on your state and the type of loan program.  For some states, you must use an agent.  In other states, you are not required to use a real estate agent for many loan program, such as conventional mortgages.  However, some loan types require that you use a real estate agent regardless of your location, such as USDA loans.

Can I buy a home if I owe tax debt?
For government-backed loans, such as FHA, VA, and USDA loans, you can buy a home with tax debt as long as you have made a payment plan with the IRS and are not behind on the payments. Any federal debt must be in good standing in order to get a government-based mortgage. If your tax debts have moved into the status of a tax lien, this will prevent you from getting a home loan until it is resolved.

Can I buy a home if I have student loans?
As long as you are not delinquent on the student loan payments and the monthly payments do not cause excessive debt-to-income ratios, you can still get a mortgage.

Can I buy a home without my spouse?
A common question is if you can buy a house without your wife or husband.  The short answer is yes. There are numerous reasons someone may want to exclude their spouse from a mortgage application, such as lower credit, lack of job history or income, or one spouse having excessive debt that could prevent an approval. You may be able to qualify and get a home loan without your spouse.

Have more questions about buying your first home?  Give us a call at 1-800-731-3560.

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