Minnesota first-time homebuyer assistance programs
The Land of 10,000 Lakes may be known for cold winter temperatures, but the Minnesota housing market continues to be relatively hot. Between January 2024 and January 2025, the median sales price increased by nearly 5 percent, according to figures from the Minnesota Realtors. Part of the reason for that continued climb may be that there hasn’t been an influx of inventory. The state’s housing inventory stayed flat at two months of supply — well short of the six months that reflects a balanced market.
If you’re a first-time homebuyer in Minnesota, however, it isn’t all bad news: Minnesota Housing, the state’s housing agency, offers programs designed to make becoming a homeowner easier.
- Median sales price, as of January 2025: $343,100 (Redfin)
- Median down payment, as of December 2024: $45,000 (Attom)
- Most affordable counties: Mahnomen, Lac qui Parle, Lincoln, Faribault, Kittson
Minnesota first-time homebuyer loan programs
Minnesota Housing Start Up
The Minnesota Housing Start Up first-time homebuyer program offers loans with low fixed rates — including conventional, FHA, VA and USDA loans — through approved mortgage lenders. The loan can be paired with down payment or closing cost assistance through the agency.
Note that if you’re not a first-time buyer, you may be eligible for the Step Up program — which offers significantly higher income limits and a slightly higher purchase price limit ($637,950) for counties outside of the 11-county Twin Cities metro area.
Minnesota down payment assistance
Minnesota Housing Monthly Payment Loan
Minnesota Housing’s Monthly Payment Loan program offers homebuyers in the state up to $14,000 for a down payment or closing costs. You’ll need to qualify for Minnesota Housing’s Start Up or Step Up loan, and you must contribute at least $1,000 or 1 percent of the purchase price (whichever is less) to the transaction
Minnesota Housing Deferred Payment Loans
First-time homebuyers in Minnesota can also obtain down payment assistance through a Deferred Payment (up to $14,000) or Deferred Payment Plus loan (up to $18,000), which allows you to delay payments. You must pair this assistance with a Start Up loan.
Other first-time homebuyer loan programs
While you’re considering first-time buyer programs in Minnesota, be sure to explore nationally available loan programs like:
- FHA loans – If you have a lower credit score or limited savings, consider an FHA loan. These loans are widely available, have a minimum credit score of 580 and require a down payment as little as 3.5 percent.
- VA loans – If you’re a member of the military or veteran, you could qualify for a VA loan, which doesn’t require a down payment.
- USDA loans – USDA loans don’t have a down payment requirement, but are only available to borrowers buying in a USDA-eligible rural area. You typically need a credit score of 640 or higher to qualify.
- Good Neighbor Next Door program – This HUD program has a very low down payment requirement on homes in certain areas, coupled with the ability to save 50 percent on the purchase price.
Get started
- Work on your credit score: It’s the most important factor in determining your mortgage rate, so focus on boosting your number.
- Find approved Minnesota Housing lenders: If you’re interested in exploring which first-time buyer programs in Minnesota can work for your needs, use this tool to find a loan officer who works with a participating lender. Since income limits vary by county and different credit score minimums apply to different debt-to-income ratios, a loan officer can analyze your financial situation to offer customized recommendations.
- Check out different lenders: Don’t just go with your first option. Read reviews of several Minnesota mortgage lenders and see what other borrowers have to say about their experience to find a lender that offers the best service.
- Compare Minnesota mortgage rates: In addition to learning about each lender’s customer experience, make sure you have a good grasp on average rates in the state so you can recognize a competitive offer.
- Estimate your homeowners insurance costs: In addition to paying for principal and interest, you’re going to need an insurance policy to protect the property. Start your search with the best homeowners insurance companies in Minnesota.
