Twin Cities Down Payment Assistance and First-Time Homebuyer Programs

Down payment assistance programs in Twin Cities

Down payment assistance and first time home buyer programs aim to help home buyers make a larger down payment, cover closing costs, or a combination of both. There are several types of home buyer benefits, including grants, forgivable loans, and interest rate reductions and tax credits.

A grant is similar to a scholarship for college. You apply, and if you qualify for the program (i.e. meet all the criteria and the entity still has the money), you can receive funds toward your down payment or for another upfront cost related to your home purchase. 

A down payment loan (or second mortgage loan) is a loan you acquire in order to have the funds for a down payment. Many loan types require a minimum down payment between 3% and 20%. If you don’t have this money saved (many first-time home buyers don’t) then a down payment loan is an option to help you qualify. Some loans are even forgivable if you meet certain requirements like staying in the home for a few years.

Less commonly, some programs come with lower interest rates and tax credits (e.g., mortgage credit certificates) to help lower your monthly payments.

Twin Cities TruePath Mortgage

The True Path mortgage is run by TCHFH Lending Inc., the Twin Cities Habitat for Humanity’s mortgage company. It’s designed to help low and moderate income borrowers by homes in the seven-county metro area.

Sponsor: Twin Cities Habitat for Humanity

Income limit: Minimum: $45,000, Maximum: $94,650 for a family of four. To see income limits for other family sizes, visit their website: Income limits

Minimum borrower contribution: $3,000 plus the first year of homeowner insurance

Minimum credit score: 580, though 620 is preferred

Other Eligibility requirements:

• First-time homebuyer
• Complete Twin Cities Habitat for Humanity’s Homeownership Program
• Primary residence
• 6 months employment at current job with two years of employment history
• At least two years since bankruptcy and three years since foreclosure or short sale

Assistance amount: Limits monthly payments to 30% of household income for entirety of the loan

*For all DPA programs, income limits are regularly reviewed and updated. Be sure to check the most current limits before assuming you don’t qualify.

Statewide down payment assistance programs available in Twin Cities

Minnesota Housing Start Up Program

The Minnesota Housing Finance Agency sponsors several programs designed to create more homebuyers. Start Up is a Minnesota Housing first mortgage that is designed specifically for first-time homebuyers, defined as someone who “has not had an ownership interest in a principal residence in the last three years.”

Sponsor: Minnesota Housing Finance Agency

Income limit: Up to $142,800 in 11 County Metro area, $135,700 in Dodge and Olmsted counties, $128,400 all other counties, depending on household size

Purchase price limit: $515,200 in 11 County Metro area, $472,030 in all other counties

Minimum borrower contribution: $1,000

Minimum credit score: 640

Other Eligibility requirements:

• First-time homebuyer
• At least one buyer must complete homebuyer education course
• Must live in the home

Borrowers who use the Start Up program are eligible for two different types of down payment assistance, a Monthly Payment Loan and a Deferred Payment Loan. For more information on the benefits and eligibility requirements, see below.

Monthly Payment Loan

Assistance amount: Up to $18,000

Interest rate: Same as the first loan

Repayment term: 10 years

Deferred Payment Loan

Assistance amount: Up to $16,500 ($18,000 if eligible for Deferred Payment Loan Plus)

Interest rate: 0%

Repayment term: 10 years. No monthly payments. Balloon payment due in full at the end of the mortgage term, or when the borrower moves, the property is sold or refinanced (unless refinancing with Step Up) or the first mortgage is paid off.

Minnesota Housing Step Up Program

The Step Up program is designed for a wider range of borrowers than the Start Up program. There is no first time homebuyer requirement, and the income limits are higher. That means that first time homebuyers who don’t qualify for Start Up can still qualify for Step Up to take advantage of a down payment assistance program.

Sponsor: Minnesota Housing Finance Agency

Income limit: Up to $185,000 in 11 County Metro area, $167,000 in all other counties, depending on household size

Purchase price limit: $659,550 in 11 County Metro area, $637,950 in all other counties

Minimum borrower contribution: $1,000

Minimum credit score: 640

Other Eligibility requirements:

• First-time homebuyer
• At least one buyer must complete homebuyer education course if all borrowers are first time buyers
• Must live in the home

Borrowers who use the Step Up program are eligible for a downpayment assistance program: Monthly Payment Loan. For more information on the benefits and eligibility requirements, see below.

Monthly Payment Loan

Assistance amount: Up to $18,000

Interest rate: Same as the first loan

Repayment term: 10 years

Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.