First-Time Homebuyer Grants and Down Payment Assistance: What You Should Know
Buying a home in Minnesota can feel out of reach when you’re staring down a big down payment. But the truth is, Minnesota offers some of the most robust down payment assistance (DPA) programs in the country — and many buyers don’t even know they qualify.
If you’re exploring homeownership in the Twin Cities or anywhere across the state, here’s a clear, compliant breakdown of the most helpful programs available right now.
Minnesota Housing: Start Up and Step Up Programs
Minnesota Housing (the state’s housing finance agency) offers several programs designed to lower the upfront costs of buying a home.
Start Up Program (First‑Time Homebuyers)
If you haven’t owned a home in the last three years, you may qualify as a first‑time buyer. The Start Up program offers:
Down payment and closing cost loans up to $18,000
House price limits up to $659,550 in the 11‑county metro and $604,400 elsewhere
3% down options and affordable fixed‑rate mortgages through approved lenders
Homebuyer education requirement for at least one borrower
Step Up Program (Repeat Buyers + Higher Income Limits)
If you’re not a first‑time buyer or you exceed Start Up income limits, the Step Up program offers:
Purchase price limits similar to Start Up
Down payment and closing cost loans up to $14,000
Options for both purchase and refinance
Monthly payment and deferred second loan options with specific program requirements
Minnesota’s First‑Generation Homebuyer Programs
Minnesota recently expanded assistance for first‑generation buyers — and these programs may offer the largest amounts of forgivable support in the state.
According to the Minnesota Reformer:
First‑Generation Homebuyer Loan (Through Start Up Mortgage)
Up to $35,000 in down payment and closing cost loans
Can be combined with other Minnesota Housing loans for up to $53,000 total assistance
Half forgiven after 10 years; half forgiven after 20 years
Must use a Minnesota Housing Start Up first mortgage
First‑Generation Community Down Payment Assistance Fund
Up to $32,000 or 10% of the purchase price, whichever is lower
Fully forgiven over 5 years (20% per year)
Can be used with non‑Minnesota‑Housing mortgages
Both programs require:
Minnesota residency
First‑time homebuyer status
Parents who have never owned a home (or lost a home to foreclosure)
Minneapolis Down Payment Assistance (City Program)
For buyers specifically within Minneapolis city limits:
Up to $20,000 in assistance
30‑year deferred, zero‑interest loan
Income‑based requirements
Available through partner nonprofits: Build Wealth, NeighborWorks Home Partners, City of Lakes Community Land Trust
This program is designed for low‑income first‑time homebuyers purchasing within Minneapolis.
Other Options Minnesota Buyers May Qualify For
USDA Loans
100% financing in eligible rural and some suburban areas
Income and location requirements apply
VA Loans
Zero down for eligible service members, veterans, and surviving spouses
Minnesota Housing Conventional Loans
3% down
Reduced mortgage insurance requirements
Must be layered with a Minnesota Housing mortgage product
What You Need to Qualify
While every program is different, most require:
Income limits (varies by county and household size)
Credit score minimums (typically 620–640+ depending on program)
Owner‑occupied primary residence
Completion of homebuyer education for first‑time buyers
At least $1,000 of your own funds toward the purchase for Minnesota Housing programs
Why Minnesota Has Some of the Best Assistance in the U.S.
A state audit found Minnesota ranks among the top five states for the amount of down payment assistance provided — and this was before the new first‑generation programs launched.
That means if you’re shopping for a home in Minnesota, you may have more support available to you than buyers in almost any other state.
How to Get Started
If you’re thinking about buying in Minnesota and want to explore which programs fit your situation, I help clients:
Review their eligibility
Compare DPA programs side‑by‑side
Connect with Minnesota Housing‑approved education providers
Understand which options pair with their preferred loan type
The right assistance can make a dramatic difference in your upfront costs — and it may be more within reach than you think.
Important Disclosures
This information is for educational purposes only and does not constitute a commitment to lend, credit decision, or financial advice. Program availability, eligibility requirements, income limits, purchase price limits, and benefit amounts are subject to change at any time without notice. All loans are subject to credit approval and underwriting guidelines. Please review the official program documents and consult with tax and legal advisors as needed. Equal Housing Lender.