In 2023, the Minnesota State Legislature passed a bill to create the First-Generation Homebuyers Community Down Payment Assistance Fund. Signed into law by Governor Tim Walz, the fund provides $100 million in funding for forgivable down payment assistance accessible specifically for first-generation homebuyers. Up to ten percent of the home’s purchase price is available to qualifying individuals (capped at $32,000), and the funds are structured as a loan which is forgivable over five years of owning the home as the buyer’s primary residence.
The focus on first-generation homebuyers was very deliberate, as this population is the least likely to be able to access generational wealth to facilitate a down payment. (For the purposes of this fund, you are a First-Generation Homebuyer if you AND your parent[s] or legal guardian[s] never owned a home in any country, OR owned a home but lost it due to foreclosure. You also must be a current resident of Minnesota.) While the program is available to any qualifying potential first-generation homebuyer, regardless of race, the program should help to reduce Minnesota’s overall racial homeownership gap, one of the largest such gaps in the country, simply due to our state’s statistical realities.
The First-Generation Homebuyers Community Down Payment Assistance Fund allows buyers to purchase a 1–2 unit home located in anywhere Minnesota. Shared equity, community land trusts and other resale restricted purchases are permitted. The program also has maximum home purchase price limits. The program is fully explained online at FirstGenDPA.org.
In addition to the main qualification of a First-Generation Homebuyer, here are some additional important qualifying factors:
- Co-Borrowers – At least one buyer must be a First-Generation Homebuyer and a resident of Minnesota. All other buyers (co-borrowers) must be first-time homebuyers, meaning they haven’t owned a home in the last three years. Non-occupant co-borrowers and co-signors are not allowed.
- Income Limit – The total income of all buyers (everyone listed on the mortgage loan) must be at or below:
- $124,200 for buyers currently living in the 11-county Twin Cities Metro (Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington and Wright);
- $117,200 for buyers living in Dodge or Olmsted County;
- $111,800 for buyers living in any other Minnesota county.
- Homebuyer Education – Within the last 12 months, the First-Generation buyer on the loan must have completed an approved homebuyer education workshop. These include Home Stretch and Realizing the American Dream. Framework, which is a self-guided online course, is also acceptable. This workshop must be completed BEFORE submitting a Purchase Agreement.
Applications for the First-Generation Homebuyers Community Down Payment Assistance Fund can be submitted via the program website. Before applying, you need a fully underwritten conditional preapproval for a fixed-rate mortgage from the lender of your choice. (Note that Sharia Compliant and Individual Taxpayer Identification Number (ITIN) mortgages are eligible.) Applications are accepted on a first come, first served basis. Having your application accepted is NOT a guarantee that you will receive funds, but rather the first step in a multi-step process. Once this process is complete, approved applicants will receive a Fund Reservation Letter documenting the funds reserved for 90 days on the applicant’s behalf. Once you have this letter in hand, you can start shopping for a house using the Realtor® of your choice. Please note: Buyers should not start shopping for a home until they have been approved and issued a Fund Reservation Letter.
The First-Generation Homebuyers Community Down Payment Assistance Fund is a unique opportunity for those who have never experienced homeownership to explore it for themselves. The best place to start is to enlist the free services of a professional Homeownership Advisor. These experts can determine your current mortgage readiness, and create a road-map action plan to pursue as you begin your homebuying journey. For more information on Homeownership Advisors, visit the nonprofit Minnesota Homeownership Center’s website at HOCMN.org.
MORE SPONSORED CONTENT FROM MINNESOTA HOMEOWNERSHIP CENTER
Homebuyer Advising and Education Complement First-Generation Down Payment Assistance
Last week, we talked about the First-Generation Homebuyers Community Down Payment Assistance Fund. This initiative offers up to $32,000 in forgivable down payment assistance for qualifying first-generation homebuyers. But buying a house is a complicated process. Where do you start? How do you know you’re getting a good deal? How can you avoid paying interest…
Homebuyer Education and Advising
Buying a home is one of the biggest financial transactions most of us will ever make. It’s also a complicated process, with many important choices and decisions involved along the way. Yet this doesn’t stop people from diving head-first into house hunting without the right tools or knowledge to ensure success. In the end, success…
Debunking Homeownership Myths
When it comes to buying a home, it’s easy to get intimidated. The purchase process is complicated, the amount of money being borrowed is usually substantial, and competition with other buyers is tough. Add in some of the persistent myths that are out there around buying a home, and it may seem like homeownership would…
