Minnesota Mortgage and Refinance Rates

Current mortgage rates in Minnesota

After a decade of low rates, mortgage interest rates climbed in 2023 to their highest levels since 2000. As of Tuesday, December 3, 2024, current interest rates in Minnesota are 6.46% for a 30-year fixed mortgage and 5.88% for a 15-year fixed mortgage.

Elevated mortgage rates continue to make housing affordability a challenge for Minnesota homebuyers, and refinances far less desirable for homeowners. While mortgage rates are difficult to predict, many economists expect them to remain well above their historical lows for the foreseeable future.

Home prices remain high, too, with the median sale price in Minnesota up 4.9 percent year-over-year as of Feb. 2024, according to Redfin. Minneapolis’ median sale price ($325,000) was up 8.3 percent year-over-year, and St. Paul’s median sale price ($281,400) was up 10.6 percent.

Refinance rates in Minnesota

Refinance rates in Minnesota have risen significantly in the past two years, making refinancing less of an option for Minnesotans. Refinancing might be challenging in the current high-rate environment, but you could save thousands if rates dip and you snag a lower rate. Check out our mortgage refinance calculator to understand whether refinancing in Minnesota would be a smart move for you.

Along with rising rates, home values have grown significantly. Minnesota borrowers who saw their home equity rise in recent years might still be interested in refinancing as a way to tap those funds.

Minnesota mortgage rate trends

As of October 2023, mortgage rates nationally and in Minnesota rose to their highest levels since 2000, according to Bankrate’s national survey of lenders. As the Federal Reserve may cut rates this year, rates are expected to trend downward in 2024 and into 2025.

National mortgage rates by loan type

Mortgage statistics for Minnesota

Minnesota’s home prices have registered robust appreciation for years. Here are some statistics about mortgages and the housing market in The Land of 10,000 Lakes:

• Average home value (as of Mar. 2024): $323,034 (Zillow)
• Homeownership rate (as of Q4 2023): 73.9% (U.S. Census Bureau)
• Number of homes for sale (as of Feb. 2024): 13,483 (Redfin)
• Homes with price drops (as of Feb. 2024): 21.9% (Redfin)

Mortgage options in Minnesota

If you want to make Minnesota your home, you have several mortgage options to choose from:

• Minnesota conventional mortgages: To qualify for a conventional mortgage, you’ll need a minimum credit score of 620 and a debt-to-income (DTI) ratio of no more than 45 percent. If you make a down payment of less than 20 percent, you’ll need to pay private mortgage insurance (PMI) premiums, as well.
• Minnesota FHA loans: If your credit history disqualifies you from a conventional mortgage, you might be able to obtain a loan insured by the Federal Housing Administration (FHA). If you have a down payment of at least 3.5 percent, you could qualify for this type of loan with a credit score as low as 580.
• Minnesota VA loans: If you’re a veteran or active-duty member of the military, you might qualify for a mortgage guaranteed by the Department of Veterans Affairs (VA). A VA loan doesn’t require a down payment or mortgage insurance, but you do need to pay a funding fee, which ranges from 1.25 percent to 3.3 percent.

First-time homebuyer programs in Minnesota

Minnesota offers first-time homebuyer programs that can help those who haven’t owned a home in the past three years find low-interest mortgages. These programs, administered through the Minnesota Housing Finance Agency, also offer smaller loans to help pay fees and closing costs. Here’s an overview:

• Minnesota Housing Start Up: If you’re a first-time homebuyer or haven’t owned a home in the past three years, you might be eligible for the Minnesota Housing Start Up program. This program includes fixed-interest mortgages with as little as 3 percent down, along with closing cost and down payment assistance loans up to $18,000. To help lower your monthly mortgage payment, the Start Up program also includes low- or no-mortgage insurance options. To qualify, you must meet Minnesota Housing income limits (up to $142,800 based on county) and purchase price limits ($659,550 in the 11-County Twin Cities Metro and $604,400 in all other counties as of 2024).
• Minnesota Housing Monthly Payment Loan: If you qualify for Start Up or another Minnesota Housing loan, you might be eligible for up to $18,000 toward your down payment or closing costs.
• Minnesota Housing Deferred Payment Loans: Minnesota Housing offers two other down payment assistance options, as well: a Deferred Payment loan up to $16,500 for a down payment or closing costs; or a Deferred Payment Plus option offering as much as $18,000. These come with zero interest and no monthly payments, but you’ll have a large balloon payment due at the end of the loan term. To learn the eligibility criteria, you’ll need to contact a participating lender.

How to find the best mortgage rate in Minnesota for you

• Step 1: Strengthen your credit score - Long before you start looking for a mortgage lender or applying for a loan, give your finances a checkup, and improve your credit score if needed.
• Step 2: Determine your budget - To find the right mortgage, you’ll need a good handle on how much house you can afford.
• Step 3: Know your mortgage options - There are a few different types of mortgages.
• Step 4: Compare rates and terms from several lenders - Rate-shop with at least three different banks or mortgage companies.
• Step 5: Get preapproved for a mortgage - Getting a mortgage preapproval is the only way to get accurate loan pricing for your specific situation.

Additional Minnesota mortgage resources

• Minnesota loan limits by county: Learn the conforming loan limit for your city or town.
• Minnesota mortgage lenders: Explore mortgage lenders in your state.
• Minnesota homeowners insurance: Shop homeowners insurance policies to find the right one for your home.
• How to buy a house in Minnesota: Learn the latest info on buying a home in Minnesota.
• Minnesota housing market: Check out everything you need to know about the housing market in Minnesota.

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Laurie Dupnock, Editor, Home Lending

I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English. 

Read more from Laurie Dupnock