Minnesota First Time Home Buyer Programs



Minnesota First Time Home Buyer Programs

Are you thinking of buying your first home in Minnesota? Would you like a free gift of money to help you purchase that first home? The state of Minnesota provides free grant money for its residents who are first time home buyers and need help with the down payment and closing costs. This assistance is in the form of an interest-free loan, and if you remain in your home for 6 years or longer, 70% of the loan is forgiven, which means it is effectively a grant. There is also Federal Grant money available as well as grants from private foundations. This is free money that shouldn’t be passed up! The grant awards can be in the thousands of dollars. Also, there are various programs throughout various cities and counties in Minnesota. We provide all the details below, along with contact information. It will be well worth your time to educate yourself about the grant programs that are available to Minnesota residents.


Minnesota Housing Finance Agency provides affordable housing for low- and moderate-income households while fostering strong communities. They offer mortgage programs that provide affordable interest rate loans to eligible first-time homebuyers, including downpayment and closing cost assistance programs.

Here is an overview of grants and programs offered:

The Homeownership Assistance Fund (HAF) and HOME Homeowner Entry Loan Program (HOME HELP) offer interest-free, deferred downpayment and closing cost assistance loans to help low to moderate income first-time homebuyers who qualify for a Minnesota Housing loan. HOME HELP cannot be used with HAF.

HAF

• Deferred payment, interest-free loan up to $4,500
• Borrower must be eligible for the CASA program
OR
• Borrower must be eligible for MMP and meet one
of the following criteria:
• 60% of MMP median income 1, OR
• Purchasing a home in a MMP Spotlight Area
(information located on our website)
• Borrower must have $1,000 of their own funds in
the transaction and have limited assets in order to
qualify
• The loan must be fully repaid when the loan
matures, the first mortgage is refinanced, or the
property is sold or no longer owner-occupied

HOME HELP

• $10,000 deferred payment, interest-free loan
available depending on borrower eligibility
• Borrower must be eligible to receive a CASA 1st
mortgage.
• Borrower must have $1,000 of their own funds in
the transaction and have limited assets in order
to qualify
• 70% of the loan is forgiven after the sixth year
and 30% is repaid when the loan matures, the
first mortgage is refinanced, or the property is
sold or no longer owner-occupied
• Loan must be fully repaid within the first six years
if the borrower sells or vacates the property

To get complete details of the home buyer programs available, visit their website by going to here. You can also directly download a PDF that outlines the programs available and details the income requirements as well as eligibility. For a direct download, you can use this pdf.

The contact information for the Minnesota Housing Finance Agency is:

MHFA
400 Sibley Street
Suite #300
St. Paul, MN 55101
E-Mail: [email protected]
Phone Numbers:
General Information: 651.296.7608 or 1.800.657.3769
Single Family Housing: 651.296.8215 or 1.800.710.8871


 

Local Programs Throughout Minnesota

In addition to the grant programs described above, the U.S. Department of Housing and Urban Development provides home buyer assistance and grants in every state. There are multiple grant programs designed specifically for people that meet certain requirements, such as grants for people with disabilities so they can continue to live independently at home. It is worth visiting HUD’s website to see what assistance is currently available. For your convenience, simply go to this website.

Here is the contact information for the HUD office in Minnesota:

Minneapolis Field Office
International Center
920 Second Avenue South
Suite 1300
Minneapolis MN 55402-4012
Phone: (612) 370-3000
Fax: (612) 370-3220

There are also these local programs:

Alexandria City Homestead Assistance Program (CHAP) (320) 762-1311

Alexandria Greater Minnesota Housing Fund The Trails Development Gap Financing Program (GAP) (651) 221-1997

“The HRA offers GAP financing to help in purchasing a home.  This is a deferred 30 year loan.  The maximum loan amount is $15,000 per household.  There is no interest associated with this loan. At the time of loan payoff the borrower is only required to pay the original amount of the funds back to the HRA in one lump sum.  In order to access these funds buyers maximum income cannot be greater than 80% of the state median income.  This maximum income amount is $ 58,400.00.  The amount of GAP money recieved will be based on the first mortgage product as well as income.  ”

Alexandria HRA Down Payment Assistance Program (DPAP) (320) 762-1311

“Produced by the Minnesota Home Ownership Center, this tool is designed primarily for industry professionals, such as for housing counselors and realtors, to use when assisting their homebuyer customers.
If you are a homebuyer using this tool to learn more about available programs, we encourage you to contact a housing counselor in our network for free, professional information. Housing counselors can help you understand what program is best for you and how to meet the homebuyer education requirements, mandatory for many of the
programs. To find a local housing counselor or Home Stretch workshop near you visit www.hocmn.org or call the Minnesota Home Ownership Center at 651-659-9336.”

Alexandria MHFA Gap Financing Program (GAP) (320) 762-1311

“The GMHF gap loan program provides deferred second mortgages to buyers purchasing newly constructed homes in approved developments or foreclosed homes as part of targeted acquisition/rehabilitation projects approved by GMHF.
GMHF gap loans for this project are offered on the following terms:
• Zero percent interest, deferred second mortgage* with a term of 30-40 years (coterminous with the first mortgage). There are a number of factors that can trigger an earlier due date, the most typical being: when the home is sold, the buyer fails to occupy it as a primary residence, or the first mortgage is satisfied. Please refer to the full listing in the Repayment Notice (included in this packet with the other sample documents).
*if the borrower has a HAF equity contribution loan, the GMHF gap loan will be a third mortgage
• Need based gap financing. The gap loan amount for each household is determined using a needs-based formula. A spreadsheet that calculates the gap loan amount, along with instructions for using it, is available at www.gmhf.com. The maximum gap loan amount per household, regardless of need, is $15,000. The minimum gap loan amount for qualified buyers is $2,000. An additional $10,000 of need-based financing (up to a total of $25,000) may be available for households with documented handicapped-accessibility requirements.
o To provide additional gap financing,”

Austin/Mower County Homeownership Fund Program (507) 864-7741

“Applying for A/MCHF Funds: A homebuyer who is considering purchasing a home should visit a mortgage lender to determine if they qualify for a mortgage. This will help them to determine the maximum price of a home they can afford. At this stage, they can also determine how much of the down-payment and closing costs they can contribute, and how much in secondary gap financing they will need.
If it is determined that the homebuyer does not have the funds to afford a full down-payment and/or closing costs, and does not qualify or have access to other programs (such as MHFA ECHO) then an A/MCHF application and “Borrower Profile” form are filled out and sent or faxed/mailed/emailed to the City of Austin by the lender.”

Brooklyn ReNew Buyer Incentive Program Grant (612) 588-3033

“The ReNew Grant offers a grant of 3.5% of the acquisition cost (purchase price plus rehab costs) up to $7,000 to be used for down payment and closing cost assistance. Buyer must be using a FHA 203k Purchase Rehab loan, or other approved purchase rehab loan. Property must be foreclosed and registered as vacant. Income limits apply: 1-2 member households $83,900; 3 or more household members $96,485.”

Chaska Clover Ridge Owner Occupied Assistance Program (OOAP) (952) 448-2851

Crystal Homebuyer Assistance Program (612) 588-3033

“Homebuyers that are purchasing a vacant single-family detached home using an FHA 203k purchase rehab loan can qualify for a forgivable no-interest loan for down payment and closing cost assistance. The maximum loan is 3% of acquisition cost (purchase price plus rehab costs) up to $5,000. Income limits apply: 1-2 member household $83,900; 3 or more household members $96,485.”

Duluth Neighborhood Housing Services “Homeownership Program with Employers” in Lincoln Park Grant (HOPE) (218) 727-8604

Duluth Neighborhood Housing Services of Duluth Homeownership Incentive Program (HIP) (218) 628-1057

“Housing and Redevelopment Authority (HRA) Homeownership Program: This program is for those low-to-moderate income families who would otherwise be unable to afford homeownership through traditional mortgage financing. Homes needing substantial rehabilitation are purchased by the HRA, improved to quality standards, and sold to eligible families through a low interest mortgage or contract for deed by the HRA. No down payment required. Applicants must complete the Homebuyers Education Workshops. Call for details call 218-529-6327 or visit www.duluthhousing.com and click on the programs/rehabilitation link.”

Duluth NHS/Hillside Homeownership Incentive Program (HIPP) (218) 628-1057

East Grand Forks Downpayment Assistance Program (218) 773-2371

“The Downpayment Assistance Program (DPA) will be available to qualified buyers for a
portion of their down payment and closing costs, up to a maximum of seven thousand five
hundred ($7,500.00) dollars. The East Grand Forks Economic Development Housing
Authority (EDHA) will secure their loan with a second mortgage.”

East Grand Forks New Construction Incentive (NCI) Program (218) 773-2371

“Down Payment Assistance Program
 Up to $7,500 toward closing costs
 1st Year No Payment/No Interest
 New Higher Home Purchase Price
 New Higher Income Parameters
 Up To 5 Years Repayment Plan
 Interest Rate at 5%”

Elliot Park Neighborhood Improvement, Inc. Homebuyers Assistance Program (612) 335-5885

Hutchinson Housing & Redevelopment Authority Down Payment Assistance Program (DPA) (320) 234-4451

“SCDP Housing Affordability Gap Loan and HRA Entry Cost Loan Subordinations will be submitted and reviewed by the Hutchinson Housing & Redevelopment Authority who shall demonstrate careful documentation to support their decision. Since these are revolving loan programs to assist people in getting into homeownership, at the time the first mortgage is paid off, the loan will be due and payable to revolve to another homebuyer. Therefore, subordination will be allowed only under the following limited conditions”

Itasca County/Koochiching County KOOTASCA Community Action Homebuyer Program (HBP) (218) 326-8539

Mankato Homeownership Program (HOP) (507) 387-8636

First Home is a basic program geared for residents of rental assisted housing. Families and individuals who participate in the Housing Choice Voucher Program, Affordable Rental Housing Program, Public Housing, Section 42 tax credit properties, Section 236 and 4D tax properties are eligible to apply. First Home is 15-18 hours of classroom instruction taught in a small group (“club”) format. Half of the curriculum is financial literacy; half is home maintenance. Program participants are required to meet individually with a credit counselor who will help them budget and repair credit issues that may prevent them from getting a mortgage approved. Participants are taught basic maintenance that includes hanging light fixtures, clearing drains, changing furnace filters, home weatherization, etc. Program graduates obtain the tools needed to become a homeowner in the future. This course is offered at no cost. To apply for First Home, please call (507) 387-8636. ”

Mankato Revolving Loan Fund (RLF) (507) 387-8636

“Through grants from the local, state and federal government, Housing makes affordable mortgage products and downpayment assistance available to area citizens. Currently we have $6 million of Community Activity Set Aside (CASA) mortgage money from Minnesota Housing that is available to those employed in the City of Mankato who hold Housing Choice Vouchers, or who are graduates of the First Home Program. CASA mortgages carry a below market interest rate and have closing cost and monthly payment assistance available. CASA mortgages can be obtained from seven area partner lenders: Northern Star Bank, Pioneer Bank, Pro-Growth Bank, USBank, Voyager Bank, Wells Fargo Home Mortgage and Wells Federal Bank. The City of Mankato also participates in the Minnesota City Participation Program to provide an additional mortgage product. When funding is available, Housing will offer downpayment assistance. ”

Minneapolis Advantage Wells Loan Program (EPL) (612) 588-3033

“No interest deferred loan available for households whose income is at or below 100% area median income, purchasing a single-family home in an eligible neighborhood.  The funds can be used to bring the housing ratio (principal, interest, taxes, homeowner’s insurance and mortgage insurance, if any) to 25%.  The maximum loan amount is $5,000”

Minneapolis Central Homebuyer Assistance Loan (612) 588-3033

“Down payment and closing cost assistance for up to $5,000 for a standard purchase or $10,000 for a vacant home purchase is available for 1 to 2 unit properties in the Central Neighborhood. The property can be owner-occupied or a rental property. Properties must be rehabilitated if required by the City to comply with zoning and code requirements. The loan is 0% interest deferred. The entire amount is forgiven if the borrower continues to own the property for 5 years following the close of the loan”

Minneapolis McKinley Homebuyer Assistance Program (612) 588-3033

“Down payment and closing cost assistance for up to $4,000 is available for homebuyers in the McKinley Neighborhood. The loan is forgivable if the buyer occupies the home for at least 5 years. Single-family homes, duplexes, condominiums, and town homes are eligible. No income limits apply.”

Minneapolis Sheridan Homebuyer Assistance Program (612) 588-3033

“Down payment and closing cost assistance for up to $5,000 is available for households at or below 80% of HUD’s area median income. The home may be 1 to 4 units and must be owner-occupied. The loan is 0% interest deferred. The entire amount is forgiven if the homeowner resides in the property for six years following the close of the loan.”

Minneapolis Ventura Village Homebuyer Assistance Program (612) 722-7141

“This program can be used to finance the purchaser’s closing costs, and/or be applied towards the actual purchase price of the property. The property must be located in the Ventura Village neighborhood. The property must be homesteaded and owner-occupied by the applicant. Single-family homes, duplexes, triplexes, condominiums, and townhomes are eligible. Purchasers of a property through a Community Land Trust or purchasers of a co-operative are ineligible. No match is required. The maximum loan amount is $5,000 and the minimum amount is $2,000. There is a 0% interest rate and the loan is forgiven after 5 year if the property remains owner-occupied during the five year period.”

Multi Cities Tri-County Actions Programs, Inc. Homeowner Gap Financing Program (GAP) (320) 255-0705

Multi Counties First Time Homebuyers (FTH) Program (218) 637-2431

” FTH participants must meet income and program guidelines. The HRA works with the counties of Kittson, Marshall, Norman, Pennington, Polk, Red Lake and Roseau.  Funding for the FTH program is made available annually by the Minnesota Housing Finance Agency.  Please view this listing of local lending agencies.”

Multi Counties Arrowhead Economic Opportunity Agency Inc Homeownership Opportunity Program (HOP) (800) 662-5711

“Provides a matched savings opportunity for low-income individuals or families at 200% of the federal poverty level to save money towards the down payment and closing costs associated with a first time home purchase. Participants can save up to $960 in two years and be granted a 3:1 match on their savings, or up to $2,880 of free grant money, for a total of $3,840. Contact Community Action at 726-1665”

Multi Counties Headwaters Housing Development Corporation Two Note Program (TNP) (218) 444-4732

Northfield Housing Assistance Program (NHAP) (507) 645-8833

“The objective of the City of Northfield Housing Assistance Program is to help eligible Households purchase or build affordable single-family residences in Northfield, Minnesota. Financial assistance up to $5,000 in a zero-percent interest deferred loan will be provided to assist with required down payment and/or closing costs incurred by a low to moderate-income homebuyer. Such loans shall be repaid in whole upon the sale of the residences, the transfer of ownership, or changes in occupancy of the residents of the home that is purchased using this program, whichever is applicable. This program is funded with an appropriation from the Community Development Block Grant Program. Funding from this source varies on a yearly basis.”

Pennington County Affordable Housing Program (AHP) Community Revitalization Fund Program (CRF) (218) 637-2431

Pennington County Affordable Housing Program (AHP) Loan Pool Funds (LPF) (218) 637-2431

Ramsey County FirstHome Buyer Grants Program (FBAP) (651) 266-8025

“Ramsey County’s FirstHOME Buyer Assistance Program is available through responsible local financial institutions. The program helps first home buyers purchase homes more affordably by providing deferred loans that can be used for downpayment assistance, closing costs, and occasionally, health/safety/code improvements. Eligible buyers may qualify for up to $10,000 with 0% interest to help bring their monthly housing costs down to 30% of income. The principle-only subordinate mortgage must be repaid when the property is sold. Eligible buyers should ask their lenders to reserve funds on their behalf.”

Red Lake County Affordable Housing Fund (AHF) Affordable Housing Loan Pool Fund (LPF) (218) 637-2431

Red Lake County Affordable Housing Fund (AHF) Community Revitalization Fund (CRF) (218) 637-2431

Rochester First Homes GAP Loan Program (GAP) (507) 281-7396

“Most people don’t realize that Federal, state and local governments provide hundreds of millions of dollars to help homebuyers. Based on your eligibility, this site will generate a list of assistance programs that could be available to you.”

St Paul Community Neighborhood Housing Services, Down Payment Assistance Program (DPAP) (651) 292-8710

Thief River Falls Slow Second Mortgage Program (SSMP) (218) 681-2500

Washington County First Buyer Grants Program (FBAP) (651) 202-2808

“The Washington County HRA offers counseling and education (Home Stretch) for people who want to purchase a home. Counseling is FREE and Home Stretch is $30 per houshold.

Washington County HRA is HUD-approved and is approved for NSP (Neighborhood Stabilization Program) participants.”

Woodbury First-Time Homeownership Program (651) 486-7401

“First-time home buyers can qualify for a loan up to $25,000 to use for down payment and closing costs on a single-family home, condominium, town home, or twin home with a maximum purchase price of $256,500. Home buyer’s gross annual household income cannot exceed 80% of the Area Median Income, adjusted by household size, as annually determined by the U.S. Department of Housing and Urban Development (HUD).”


About Jennifer Cribsly

I'm a former real estate broker who specialized in helping first time buyers be able to purchase a home. Now full time mom, part time real estate owner/investor.
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