First time home buyers in the state of Minnesota are among the most fortunate in the country when it comes to first time home buyer programs. Although the state's housing agency only offers two such programs directly, there are literally dozens of separate programs administered at the county and local level. Some of these programs offer closing cost assistance, while others offer low-cost mortgages or down payment assistance. It's important to note that most of these programs do have restrictions on things like income and residency.
The MHFA
The state authority governing affordable housing in Minnesota is known as the Minnesota Housing Finance Agency (MHFA). This agency is responsible for collecting and administering federal resources as well as being a clearinghouse for state resources and participating lenders. The MHFA currently lists two programs available for first time home buyers in Minnesota. Keep in mind that at the time of this writing, the Minnesota state government was in shutdown. The programs listed at this time may or may not still be available.
Minnesota Housing Mortgage Loan Program
The first state program is the Minnesota Housing Mortgage Loan Program which is aimed directly at first time home buyers. This program provides low interest mortgages to qualified borrowers who meet income qualifications. These are 30-year loans with a fixed interest rate and an additional interest-free loan to assist with down payment and closing costs. The additional loan is treated as a secondary loan which does not need to be repaid until the primary loan is satisfied or the home is sold.
This mortgage program does have some restrictions, the first of which is that the borrower cannot have owned a home at any time within the previous three years. He must also have good credit, meet income guidelines, and provide federal income tax returns for the previous three years. Income eligibility requirements vary according to geographical location. If you're interested in applying for one of these loans your real estate agent can most likely point you to a participating lender.
Homeownership Opportunity Program (HOP)
The second program is known as the Homeownership Opportunity Program (HOP). While this is not exclusive to first time home buyers, these individuals can certainly avail themselves of the program. The goal of this program is to find new owners for properties that are vacant or in danger of foreclosure in the near future.
The program offers short-term loans that enable buyers to purchase a home and rehabilitate it. Once rehabilitation is complete the new homeowner is expected to apply for a traditional mortgage and pay off the short-term loan granted by the state. There are conditions and restrictions attached to this program including income eligibility, mandatory residency, and the overall condition and safety of the home in question.
Other Opportunities for Home Buyers in Minnesota
As mentioned earlier in this article, there is a very long list of additional first time home buyer programs in Minnesota at the county and local levels. These programs may be administered by county agencies, municipalities, or private institutions. The type of assistance these programs offer also will vary from one to the next. Below is a list of such opportunities as listed on the HUD website. Remember that although these programs are currently listed as being active, it is possible the information is outdated.
- Alexandria City Homestead Assistance Program (CHAP)
- Alexandria Greater Minnesota Housing Fund The Trails Development Gap Financing Program (GAP)
- Alexandria HRA Down Payment Assistance Program (DPAP) - Trails Development
- Alexandria MHFA Gap Financing Program (GAP) - Trails Development
- Austin/Mower County Homeownership Fund Program
- Chaska Clover Ridge Owner Occupied Assistance Program (OOAP)
- Duluth Neighborhood Housing Services "Homeownership Program with Employers" in Lincoln Park Grant (HOPE)
- Duluth Neighborhood Housing Services of Duluth Homeownership Incentive Program (HIP)
- Duluth NHS/Hillside Homeownership Incentive Program (HIPP)
- East Grand Forks Down Payment Assistance Program
- East Grand Forks New Construction Incentive (NCI) Program
- Elliot Park Neighborhood Improvement, Inc. Homebuyers Assistance Program
- Hutchinson Housing & Redevelopment Authority Down Payment Assistance Program (DPA)
- Itasca County/Koochiching County KOOTASCA Community Actions Homebuyer Program (HBP)
- Mankato Homeownership Program (HOP) 2nd Lien
- Mankato Revolving Loan Fund (RLF) 3rd Lien
- Minneapolis Equity Participation Loan Program (EPL)
- Minneapolis Folwell Neighborhood Association First Time Home Assistance Program (FTHP)
- Minneapolis Hawthorne Homestead Program (HHIP)
- Minneapolis/MCDA Closing Cost Loan (CCL) Program
- Multi Cities Tri-County Actions Programs, Inc. Homeowner Gap Financing Program (GAP)
- Multi Counties Arrowhead Economic Opportunity Agency Inc Homeownership Opportunity Program (HOP)
- Multi Counties Headwaters Housing Development Corporation Two Note Program (TNP)
- Northfield Housing Assistance Program (NHAP)
- Pennington County Affordable Housing Program (AHP) Community Revitalization Fund Program (CRF) 3rd Lien
- Pennington County Affordable Housing Program (AHP) Loan Pool Funds (LPF) 2nd Lien
- Ramsey County First Time Home Buyer Grants Program (FBAP)
- Red Lake County Affordable Housing Fund (AHF) Affordable Housing Loan Pool Fund (LPF) 2nd Lien
- Red Lake County Affordable Housing Fund (AHF) Community Revitalization Fund (CRF) 3rd Lien
- Rochester First Homes GAP Loan Program (GAP)
- St Paul Community Neighborhood Housing Services, Down Payment Assistance Program (DPAP)
- Thief River Falls Slow Second Mortgage Program (SSMP)
- Washington County First Time Home Buyer Grants Program (FBAP)