Minnesota Realtor Alex Anderson

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MN First Time Homebuyer Programs!

Did you know that first time homebuyers get special-treatment from the State of Minnesota? This is because the US government likes people to own their own home. You are considered a more "stable" and "responsible" citizen since it requires a certain level of commitment to own and maintain your own home. So, to encourage people to buy a home, the government basically offers "spiffs" to encourage new buyers…

What does that mean to the typical 1st time buyer? It means you can buy more home for the same monthly payment, potentially receive down payment assistance, interest rates, qualify for payment assistance as well as other "perks"!

Read below for more information on special first time homebuyers programs, or call/email me with your questions…

~Alex (612) 644-5380 – [email protected]

So now that you know you’re special if you’re buying your first home, let’s look at some of the details and specifics as they might apply to you. Now don’t let all those acronyms down below frighten you. All these programs are great when they’re used to your full advantage.

This is also why you’ll want a partner in the mortgage industry to help make the right recommendations for you. (because that’s THEIR job to know all these programs and their limitations and benefits) If you already know someone (maybe a friend or family member) you can certainly start there, or if you like I can make some recommendations to lenders who SPECIALIZE in First Time Homebuyers. As I mentioned, these are the people who make it their JOB to know all this stuff and be current in the information. (get some recommended lenders)

Now let’s get into what is available and how you get it…

Downpayment Assistance and Payment-Assistance Programs:

Minnesota Housing offers eligible 1st time homebuyers an interest free deferred loan to help with the down payment and/or closing costs. This is known as the HAF, or Homeowners Assistance Fund. To make sure you qualify for this, you must speak to a participating lender. If you choose someone who specializes in 1st time homebuyers, they will already be a participating lender.

If you qualify, you may be eligible for up to $3000 toward down payment and closing costs and up to $75 per month toward your monthly mortgage payment in the early years of your mortgage. (the latter is only available through the “Community Activity Set-Aside Program”, or CASA).

You will qualify in one of 3 ways for this program:

  • CASA – loan program designed to help low to moderate income buyers (annual income of $64,800 for a household of 1-4 persons) in Minnesota with low fixed interest rates on their mortgages to keep the monthly payment affordable. With this option, additional housing education is required of the borrower
  • Targeted Borrower:
    • Single head of household – if you are a single parent with at least one dependant in the household (no partner)
      Household of color – American Indian, Alaska Native, Asian, Black/African American, Hispanic/Latino, or Native Hawaiian/Other Pacific Islander.
    • Disabled – person with uncorrectable physical or mental condition resulting in substantial reduction of functionality in a residential situation. (additional may be required)
    • Low Income – household income below 50% of the broader area at that time
  • Household income 60% or less the area median income

Qualifying:

First time homebuyers must still qualify for their lending as well as these special programs, but when you do qualify, you’ll be eligible for all kinds of special perks!

If your existing credit is not acceptable, there may be some work to do in order to correct it. But the good news is that any lender that specializes in 1st time homebuyers can and will help you do that! They will tell you exactly the steps you need to take & will help out with any phone calls that need to be made to credit bureaus, etc. For example, it may be something as simple as paying off your cell phone bill.

In general however, there are just a few simple conditions that must be met to utilize these great First Time Homebuyer programs:

  • Must not have had ownership in a home for the last 3 years (tax records will be reviewed to verify this information)
  • Must have acceptable credit
  • Home must be owner-occupied
  • Within Twin Cities Metro Area income limits (vary by program)

Home price is within local area limits (vary by area and program)

Other Programs:

Although I’ve been picking on HAF, there are other Minnesota Housing Finance Agency (MHFA) programs available too with different options and benefits.

HOME HELP (or Home Homeowner Entry Loan Program) is another program with very similar qualifying requirements to HAF. Through this program, you may qualify for up to $14,999 in down payment and closing cost assistance.

Another is MCPP or Minnesota City Participation Program in participating cities/counties and are seasonally available (typically April through December).

MMP or Minnesota Mortgage Program is offered specifically through local lenders to low and moderate income households, and offers below market interest rates to those who qualify. They do this by using the proceeds of mortgage revenue bond sales to lower the 1st Time Homebuyers interest rates.

The UIHP, or Urban Indian Housing Program is another mortgage loan program available specifically to Native Americans that assists with down payment/closing costs as well as monthly payment assistance for those who qualify. This is available within our Twin Cities 11-county metro area as well as Duluth and Bemidji. For these loans you must go to a UIHP lending partner.

Again, don’t be intimidated by all the acronyms, this is just meant as a broad overview to give you a general idea of what kinds of perks you can be looking for. Programs change all the time too and new ones are born, so be sure to buddy up with your mortgage guy or gal for the most current information. At the end of the day you could be looking at buying up to $30,000 more home for the same monthly payment than if you were not a 1st Time Homebuyer.

Get started today by enrolling in my Minnesota First Time Homebuyers Program!

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