Minnesota First Time Home Buyer Guide 2026
Minnesota Housing programs, down payment assistance, income limits by region, and a step-by-step path to buying your first home in Minnesota.
Who Qualifies as a First-Time Home Buyer in Minnesota?
For Minnesota Housing’s Start Up program, a “first-time home buyer” is generally defined as anyone who has not owned their primary residence in the past three years. Minnesota Housing’s Step Up program, by contrast, is open to both first-time and repeat buyers with no ownership-history restriction.
Veterans and target-area exception: The three-year first-time buyer requirement is often waived for qualified veterans and for buyers purchasing in certain federally designated target areas. Ask a Minnesota Housing participating lender whether your situation qualifies for an exception.
Minnesota Housing Loan Programs
Minnesota Housing is the state’s housing finance agency. It offers below-market mortgage rates on fixed-rate loans, paired with down payment assistance, exclusively through approved participating lenders. Minnesota Housing loans generally require:
- Completion of a homebuyer education course for at least one borrower
- A minimum borrower contribution of the lesser of $1,000 or 1% of the purchase price
- Owner-occupied primary residence only
- Financing through a Minnesota Housing participating lender
| Program | Who It’s For | Loan Type Support | Key Feature |
|---|---|---|---|
| Start Up | First-time buyers (or haven’t owned in 3+ years) | FHA, VA, USDA, or Conventional | Below-market rate; regional income & purchase price limits apply; only program eligible for Deferred Payment Loan / DPL+ |
| Step Up | First-time & repeat buyers | FHA, VA, USDA, or Conventional | Flat $196,600 statewide income limit; no first-time buyer requirement |
Down payment assistance is program-specific. Both Start Up and Step Up support the Monthly Payment Loan (up to $14,000, amortized over 15 years). Only Start Up supports the two 0%-interest deferred options: the Deferred Payment Loan (up to $14,000) and Deferred Payment Loan Plus (up to $18,000, with additional targeting criteria).
Minnesota Housing Income & Purchase Price Limits
Start Up income and purchase price limits vary by region — the 11-county Twin Cities metro and Dodge/Olmsted counties (Rochester) have higher limits than the rest of the state. Step Up uses one flat statewide income limit. Figures below are effective July 1, 2026, sourced directly from Minnesota Housing’s Homeownership Lender Toolkit.
| Region | Start Up Income (1–2 person) | Start Up Income (3+ person) | Start Up Purchase Price Limit |
|---|---|---|---|
| 11-county Twin Cities metro* | $131,500 | $151,200 | $515,200 (1-unit) |
| Dodge & Olmsted counties (Rochester) | $135,800 | $156,100 | $515,200 (1-unit) |
| All other Minnesota counties | $118,900 | $136,700 | $472,030 (1-unit) |
*11-county Twin Cities metro: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright counties.
Step Up uses one statewide limit. Step Up’s income limit is a flat $196,600 across all Minnesota regions, with purchase price limits of $515,200 in the 11-county metro and $498,257 elsewhere. Because Step Up’s income ceiling is higher and has no first-time buyer requirement, it’s a common fallback for buyers who exceed Start Up’s regional limits. Always verify current limits directly with a Minnesota Housing participating lender, as they are updated periodically.
Down Payment Assistance Options in Minnesota
Monthly Payment Loan
Available with either Start Up or Step Up. Provides up to $14,000 toward down payment, closing costs, or mortgage insurance costs. Carries the same interest rate as your first mortgage, amortized over a 15-year term with required monthly payments.
Deferred Payment Loan (DPL)
Available with Start Up only. Provides up to $14,000 at 0% interest with no monthly payments. The loan term matches your first mortgage term, and the balance becomes due as a balloon payment when you sell, transfer title, or refinance.
Deferred Payment Loan Plus (DPL+)
Available with Start Up only, for buyers who meet additional targeting criteria. Provides up to $18,000 at 0% interest with no monthly payments, using the same balloon-payment structure as the standard DPL. DPL+ includes a 25% minimum housing-ratio requirement and a $13,000 post-closing liquid asset limit.
DPA funds cover more than the down payment. All three Minnesota Housing DPA options can be used toward down payment, buyer closing costs, and mortgage insurance costs — not the down payment alone. Ask your participating lender which option best matches your available savings and monthly budget.
Step-by-Step: Buying Your First Home in Minnesota
| Step | What to Do | Notes |
|---|---|---|
| 1 | Check your credit score | 640+ is typical for Minnesota Housing programs |
| 2 | Calculate your household income against regional limits | Twin Cities metro and Dodge/Olmsted allow higher Start Up income |
| 3 | Complete homebuyer education | Required for Minnesota Housing loans before closing |
| 4 | Find a Minnesota Housing participating lender | Start Up and Step Up loans are only available through approved lenders |
| 5 | Get pre-approved | Ask your lender to compare Start Up, Step Up, and standard loan options |
| 6 | Choose a down payment assistance option | Monthly Payment Loan, DPL, or DPL+ depending on program eligibility |
| 7 | Make an offer with a pre-approval letter | A full pre-approval strengthens your offer in competitive metro submarkets |
| 8 | Open escrow and complete inspections | Don’t waive the inspection contingency |
| 9 | Final loan approval and closing disclosure | Review all fees, including Minnesota’s deed and mortgage registry taxes |
| 10 | Close and fund | Bring certified funds for closing costs minus DPA received |
