For many people, saving for a down payment is the biggest hurdle when it comes to buying a home. Most do not know there are programs available in many states for assistance. The programs vary based on where they are and what their guidelines are, but these programs could help many buy their first home! The down payment assistance comes in different forms. It may be a grant that doesn’t have to be paid back or it may be a loan that has to be paid back at some time.
In Minnesota we have several programs depending on where you live. MN Housing covers the entire state and they offer two different down payment assistance programs. One is a deferred program that offers up to $8000 interest free. There are income limits to the program and you have to pay back the money when you sell your home or pay off your first mortgage. The second is a monthly payment program. This program offers up to $15,000 in assistance but has to be paid back in the first ten years you own the home. There is an interest rate charged on this money – it is the same as your first mortgage. MN Housing is the main program used here. There are income limits and purchase price limits and they vary based on family size and the county you live in.
There are also many programs around the Minneapolis/St. Paul metro area. Dakota county also has a program similar to MN Housing. They offer up to $8500 in down payment assistance. This is also interest free and is paid back when you sell your home or pay off the first mortgage. Dakota County also offers a Mortgage Credit Certificate (MCC) that is used on your income taxes. This program offers a direct credit against your income tax, so it can save you up to $2000 in taxes.
Woodbury has a program that offers up to $25000 in assistance. You must be a first time homebuyer (cannot have owned a home in the last three years), your income has to be under $95,000 and your home can’t cost more than $390,000. You must pay $5000 towards your home purchase but it can be seller paid closing costs or a gift from family members.
Edina has a similar program. It is called Come Home to Edina. They will give up to $60,000 (up to 25% of the cost of the home) but you do have to pay it back during the first mortgage term. There is interest charged on the money.
Eden Prairie also has a program similar to Woodbury’s program. They will help with up to $25,000 but it depends on your income and assets.
Scott county also has a program that offers a grant up to $4000 if you take their homeowner class. You must complete the class prior to writing a purchase agreement to get the $4000 grant. That does not have to be paid back.
There are programs in different areas of Minneapolis and the programs vary. You can research the area to see what is available. These programs come and go depending on the neighborhood.
Most programs require at least $1000 into the transaction, most have income limits and home purchase price limits. Many require you to be a first time homebuyer (meaning you cannot have owned a home in the last three years). Some programs have different requirements. Many require a first time homebuyer class.
With all the different programs available, there may be ways for you to save up the extra money you need to purchase a home sooner than you thought! In most cases you need at least $1000 into the transaction and the rest can be paid by the program and possibly the seller helping with the closing costs.
Look into the different programs and ask your lender about them. If your lender isn’t aware of the programs, you may want to talk to a different loan officer. Not everyone wants to work with these programs so ask around. Talk to your friends or contact the city you want to live in, they may be able to refer you. I work with most of these programs so I may be able to help you too.
Leslie Vanderwerf, NMLS ID#335509, AMEC Home Loans, An Equal Housing Lender, NMLS#150953 – Email – Website
