Programs to help first time homebuyers

There are some specialty programs geared towards first time homebuyers and some will also help those that are trying to buy their second or third home!  Some of these programs may require you to be a first time homebuyer, some may not allow you to own other property when you close on the new home.

Conventional 3% down programs – there are three different programs.  Fannie's standard 3% down program requires you to be a first time homebuyer, there is not an income limit and mortgage insurance is normal.  Fannie's Home Ready does not require you to be a first time homebuyer, you may own other property when you close (this is a new change this month), you can get reduced mortgage insurance and you may be able to use "boarder income" to help you qualify.  Freddie Mac also has a 3% down program, you do not need to be a first time homebuyer, you cannot own other property when you close on your home and you can also get reduced mortgage insurance.  All three will allow you to ask the seller to help contribute towards your closing costs.

FHA loans for condos – FHA updated their rules for condos and started requiring condos to update their condo approvals.  Many condos that were approved either no longer could qualify or the association didn't want to go through the process.  In 2015 there were some more changes and we may see more condos get FHA approval moving forward.  This will help those buying condos to get in with 3.5% down and have parents help with co-signing if need be.

Piggyback loans – for a long time many homebuyers were doing an 80/10/10 or even an 80/20, using a 2nd mortgage to help lower the down payment and avoid mortgage insurance.  That lost popularity with all the changes as it was harder to get the 2nd mortgage and 80/20's were no longer an option.  Now we are seeing more buyers look at an 80/10/10 if they have 10% for a down payment. The 2nd mortgage allows you to avoid MI and may be a cheaper overall payment – it's something buyers may want to look at.

State and county first time homebuyer programs – these are directed at first time homebuyers but Minnesota also has a Move Up program to help those buyers that need assistance to get the required down payment.  There are income limits and most require a first time homebuyer class.  There are some areas that have grants that do not need to be paid back. Others have deferred second mortgages where you do not need to make payments on the assistance but it has to be paid back when you sell the home.  These vary based on the location and your income.

Talk to your loan officer and make sure you understand what the requirements are, but it may help you buy a home sooner than later! Rates are great, so are home prices.  It's worth doing a bit of homework to see what options you may have!

Leslie Vanderwerf,  NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website

Written By

Currently a Senior Loan Officer at Cross Country Mortgage LLC, it's hard to believe I have been in the mortgage business for more than 25 years and have worked with Sharlene since 2000! I love sharing mortgage insights here each week and helping people finance their homes. Listening helps me find the right program for you!

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