Down Payment Assistance in Minnesota — The Programs That Can Get You In Sooner
Do you actually need 20% down to buy a house in Minnesota? No. Quick answer: many first-time buyers here put down 3–5%, and Minnesota Housing's Start Up program offers up to $17,000 in down payment and closing cost assistance for eligible first-time buyers, with a maximum purchase price of $340,000 in the 11-county metro area.
I'm Lesley Chinanga, a Realtor with Bridge Realty in the Twin Cities, and "how much do I actually need saved up" is the question I get asked more than any other — usually followed by someone assuming the answer disqualifies them.
1. "First-time buyer" is more generous than you think. In Minnesota, it means you haven't owned a home in the past three years — not that you've literally never owned one. If you sold a home years ago and have been renting since, you likely still qualify.
2. The Start Up program: up to $17,000. This is Minnesota Housing's flagship down payment and closing cost assistance loan, paired with a Start Up first mortgage. It's designed specifically to shrink the gap between what you've saved and what you need at the closing table.
3. Purchase price limits in the metro. The cap is $340,000 in the 11-county metro and $294,600 elsewhere in the state. That range covers realistic starter homes across farm areas like Brooklyn Park, Brooklyn Center, and St. Paul Park — it's worth knowing before you assume you're priced out.
4. The homebuyer education requirement. You'll need to complete a homebuyer education course to qualify. It's a few hours, often online, and honestly one of the most useful things you'll do before closing — it demystifies the entire process.
5. Low or no mortgage insurance options. Depending on your loan type through the program, you may qualify for reduced or waived mortgage insurance, which lowers your monthly payment beyond just the down payment help.
6. You can often stack assistance. Some counties and cities layer their own first-time buyer programs on top of state assistance — Anoka County, for example, runs its own local program. Part of my job is figuring out what you qualify for at every level, not just the state program.
7. Waiting to save 20% usually costs you more than it saves. Home values in farm areas like Woodbury are forecast to rise another 2–4% this year. If it takes you three more years to save 20% on a $350,000 home, that home may cost $375,000 by the time you get there — and you'll have paid rent the whole time instead of building equity.
FAQ
What credit score do I need? Requirements vary by loan type, but many first-time buyer programs work with scores well below what people assume is required — often in the 640 range or lower depending on the product.
Is this assistance a loan I have to pay back? It depends on the specific program — some are deferred loans repaid when you sell or refinance, others are structured differently. I'll walk you through exactly what applies to your situation.
Can I use this with FHA? Yes, Start Up assistance can be paired with FHA and other loan types through approved lenders.
Does my income disqualify me? Income limits exist and vary by household size and county — many working families qualify even with two incomes.
Next steps: If you've been putting off buying because you assume you need 20% down, let's run your actual numbers — you might be closer than you think.
Lesley Chinanga
Realtor, Bridge Realty
651-734-5045
www.dreamhomesminnesota.com
